A rare glimpse at broadband competition in Twin Cities metro area shows that wireless service is surging along with the popularity of smartphones, tablet computers and cellular connections for laptops.
The wireless share of the Twin Cities Internet market rose nearly 7.5 percent in the 12 months ended in March, while traditional broadband providers -- Comcast cable and CenturyLink (formerly Qwest telephone) -- saw their market shares decline slightly, according to a study by ID Insight of St. Paul.
The trend suggests a big shift in an Internet market long dominated by companies with wires in the ground. In the coming months, cable and telephone broadband will face even more competition from wireless as its speeds increase tenfold with new 4G networks. Consumers who have wired Internet broadband at home and wireless access via a smartphone could soon be choosing between one or the other.
"The reason that cable and telephone company broadband are not growing is that we have reached the limits of the people who are either able to afford it or are interested in having it," said Roger Entner, an analyst with Recon Analytics in Boston. "There are a lot of people who don't want broadband on a computer, but want it on a cellphone."
For competitive reasons, the telecommunications companies rarely, if ever, disclose local market share information. The ID Insight study affirmed that Comcast had the most broadband customers in the Twin Cities (37.6 percent, or about 345,000 households) for the 12 months ending in March, followed by CenturyLink (27.8 percent, or about 255,000 residential customers).
Wireless broadband -- which includes the cellular providers and the Minneapolis Wi-Fi network -- ranked third (16.6 percent, or about 152,000 households). The number for wireless customers does not include Wi-Fi networks inside homes.
Among Twin Cities wireless customers, about 131,000 appear to be smartphone, laptop or tablet computers users with data plans. The other 21,000 wireless customers belong to the Minneapolis Wi-Fi network, said Joe Caldwell, the CEO of USI Wireless of Minnetonka, which runs the network.
One factor driving wireless broadband growth is that consumers are "cutting the cord" of their traditional broadband providers to go wireless, just as wired phone customers did over the past five years, said Dan Hays, a telecommunications consultant at the PRTM Management Consulting unit of PricewaterhouseCoopers, based in Waltham, Mass.
In addition, some wireless broadband customers are what Hays calls "wireless natives," people who opted for wireless broadband initially, and have never had a wired broadband connection.
Comcast declined to comment on the study of Twin Cities broadband use, but said that, at the national level, "our high-speed Internet service is capturing market share."
While the study showed Comcast ahead in the Twin Cities in the number of broadband customers, CenturyLink considers itself to be in a dead heat with cable broadband. Tyler Middleton, CenturyLink's vice president and general manager for Twin Cities metro area, said wireless growth is not coming at the expense of CenturyLink's customer base.
"It's certainly clear that wireless devices are changing the way we do things, but we see them as complementary to wired broadband connections, not mutually exclusive," Middleton said. "We continue to see wired broadband subscriber growth" because it offers more consistent speed and reliability than wireless data services.
Hays said that may be true outside of core metro areas.
"It's very difficult to have pervasive wireless broadband coverage," Hays said. "Areas that are less densely populated probably will still need wired broadband connections for many years to come."
ID Insight ranked the local broadband providers by using its proprietary analysis software, called Broadband Scout, to sample the IP (Internet protocol) addresses of about 15 percent of Twin Cities Internet households. The IP addresses were used to identify the companies providing the Internet service.
ID Insight said there are about 917,600 Internet households in the seven-county Twin Cities metro area. More than 90 percent are broadband customers, although their download speeds vary widely.
"The growth of wireless is really about smartphones and laptops," said Hays, the PRTM consultant. "So far, only about 10 percent of tablet computers are using cellular broadband connections."
The use of cellular broadband is likely to increase with the growth of still-nascent 4G, or fourth-generation, cellular networks, Hays said. Indeed, 4G is fast and offers download speeds of 10 million to 12 million bits per second. That's comparable to the most widely used cable broadband speeds, and in many cases is faster than telephone company broadband, called DSL (digital subscriber line.)
"The key question is, with the increase in speeds over wireless networks, will wireless displace a significant portion of traditional cable and telephone company broadband?" said Adam Elliott, president of ID Insight.
Steve Alexander • 612-673-4553