Wired for change: a new era of broadband competition

The US broadband market is undergoing a meaningful transformation as cable operators face intense competition from fixed wireless access (FWA) and fibre providers. These emerging alternatives, backed by technological advances, supportive regulatory developments and strategic investments, are steadily eroding cable’s long-held dominance.

While incumbents are responding through product bundling and infrastructure upgrades, they continue to lose price-sensitive subscribers to telecoms carriers and data-hungry customers to higher-bandwidth fibre. In a dynamic and competitive market landscape, we believe credit investors need to take a highly selective approach in their pursuit of risk-adjusted returns.

Severing the dominance of cable

Until recently, most US households have typically had a choice of between one and three cable broadband providers. Operators like Charter Communications and Comcast have maintained local monopolies or duopolies, with minimal overlap between major players’ regional coverage, due to mergers and regulatory constraints. This has supported pricing power and higher levels of leverage.

This market structure is being disrupted by the emergence of FWA and fibre alternatives that are, respectively, cheaper and quicker than cable broadband services. Both Charter and Comcast have seen their once-consistent growth in residential cable subscriptions reverse.

Source: Company filings, 2021 to 2025.

FWA has quickly evolved into a competitive broadband option that can be easily rolled out to less-populated areas at low cost. Although less reliable than wired services, it can be particularly appealing to price-sensitive households with moderate data needs. Having been initially seen as a way to monetise their excess 5G spectrum, wireless carriers have targeted FWA services in regions where network usage is low and where cable providers have a strong presence. By leveraging existing infrastructure originally intended for mobile users, FWA subscribers can be added with relatively minimal additional investment.

Despite concerns about spectral capacity limits, especially in densely populated areas, technological advances mean that macro cell towers can support a significant number of FWA subscribers without significantly compromising mobile network quality.

Regulatory developments are also supportive. With the Federal Communications Commission recently regaining authority for spectrum auctions until 2034, more network capacity is expected to be made available to FWA providers.¹

Wireless carriers like T-Mobile, Verizon, and AT&T have pursued different strategies for spectrum acquisition and usage. T-Mobile, which acquired competitor Sprint in 2020, has leveraged its expanded network to aggressively push into FWA. Verizon and AT&T have meanwhile built out mid and low-band spectrum capabilities well-suited to rural broadband services.

In parallel, telecoms companies have ramped up their investments in fibre networks. Within the past couple of years, Verizon acquired the fibre assets of Frontier for US$20bn; A&T acquired Lumen’s fibre-to-the-home business for US$5.75bn; and T-Mobile has formed multiple fibre joint ventures. The recent reinstatement of full bonus depreciation on investments in depreciable assets should encourage further fibre network expansion.²

The superior bandwidth and reliability of fibre services make them more attractive to consumers if priced competitively with cable. Although fibre networks are currently limited geographically, their rollout only adds to the long-term margin pressure facing cable operators.

Incumbents are fighting the tide

Cable providers are responding by bundling products, improving infrastructure and re-evaluating their long-term strategies.

First, they are offering wireless services to their broadband customers through mobile virtual network operator (MVNO) agreements. Charter and Comcast are leasing network capacity from T-Mobile, for example, to offer mobile 5G services to their business customers.³ Bundling services can slow broadband churn, especially when combined with promotional strategies, like free wireless for limited periods, but looks unlikely to fully offset the structural migration of customers to FWA and fibre alternatives.

Second, cable operators have gradually upgraded their ageing infrastructure. While DOCSIS 4.0 technology enables cable broadband speeds of up to 10 Gbps, this remains uncompetitive with fibre.

Third, the loss of broadband market share has prompted cable companies to diversify their strategies. For example, Comcast is investing in streaming services, content and theme parks. Charter meanwhile is doubling down on broadband and expanding through its acquisition of cable peer Cox Communications.⁴

Credit investors need to be selective

Cable companies are by no means down and out, but dynamics in the US broadband market clearly appear to favour wireless providers. They are gaining net subscribers and boast stronger balance sheets to support growth in a capital-intensive industry.

This is, to a large extent, reflected in bond yields: comparable issuances by pure-play cable providers generally trade on higher yields. Overall, though, we do not believe that yields offer investors sufficient compensation for the additional risks associated with secular headwinds faced by cable operators.  

Investor selectivity is particularly important in the cable space, not only because of higher debt levels but also because corporate strategies are diverging with potentially significant credit implications. Additionally, split capital structures mean that secured and unsecured bonds from the same issuer can offer very different value propositions.

The US broadband sector is, and will remain, too large for credit investors to ignore. An increasingly competitive marketplace is not large enough, however, for all of today’s major providers to thrive. We therefore believe that investors need to pay close attention to structural shifts and individual company strategies in their pursuit of risk-adjusted returns.

¹ US Congress, July 2025: One Big Beautiful Bill Act
² Shaw, T., 6 March 2025: Trump Pledges to Restore TCJA Full Bonus Depreciation. Thomson Reuters Tax & Accounting
³ Charter Commications, 22 July 2025: Charter and Comcast Announce Agreement to Leverage T-Mobile 5G For Wireless Business Customers
⁴ Charter Communications and Cox Communications announced a definitive agreement to merge in May 2025

References to specific securities are for illustrative purposes only and should not be considered as a recommendation to buy or sell. Nothing presented herein is intended to constitute investment advice and no investment decision should be made solely based on this information. Nothing presented should be construed as a recommendation to purchase or sell a particular type of security or follow any investment technique or strategy. Information presented herein reflects Impax Asset Management’s views at a particular time. Such views are subject to change at any point and Impax Asset Management shall not be obligated to provide any notice. Any forward-looking statements or forecasts are based on assumptions and actual results are expected to vary. While Impax Asset Management has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability or completeness of third-party information presented herein. No guarantee of investment performance is being provided and no inference to the contrary should be made.