Kiplinger Outlook: Telecom Companies Brace for Tough Times

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Predictable growth, solid profits, pricing power.

For years, that’s the story many wireless and wired telecom companies could tell investors. But the industry is entering a new era of stiffening competition and slowing growth in a saturated market.

“The U.S. broadband industry is now growing at just a 2% growth rate,” says a recent report by MoffettNathanson, an equity research company covering media and communications. MoffettNathanson notes that is the slowest growth on record, though it very nearly matches the previous low before COVID.

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Consider two glaring problems for telecom companies.

First, there’s less differentiation between each other than during the past 15 or so years. Wired and wireless providers no longer boast noticeable differences in network speed, reliability and cost. To the benefit of consumers and businesses, networks have gotten fast across the board.

Second, there are many more choices than just 10 years ago. By 2026, most homes will have access to wireless service from at least five big carriers, and home broadband from at least four providers, according to a recent report by Moody’s, the ratings and research firm. That includes speedy satellite service from SpaceX’s Starlink. Starlink is a godsend for folks in very remote spots since it’s available virtually everywhere in the U.S. where there’s electricity and a clear view of the sky.

There’s choice even when it comes to superfast plans. “Most U.S. homes will have a choice of 1 gigabit or faster service within two years,” says Moody’s.

The cable industry is bearing the brunt of the new competitive forces. After years of piling up video losses, now cable faces broadband losses, too: A sea change after being able to lean on broadband for sales growth and fat profits.

Last year, Comcast lost broadband subscribers for the first time. Charter had only a tiny rise. This year’s second quarter was the worst ever, and 2025 will see declines, as well. The recent declines were worsened by the ending of COVID-era consumer broadband subsidies and programs, directly leading to customer losses. But the trend will continue, and cable appears stuck at its current 75 million residential broadband subscribers.

Cable is competing with 5G home internet, which uses 5G cellular signals to beam internet to a Wi-Fi router, enabling new fast web plans in more locations. Most of the broadband growth of late comes from these wireless plans, according to MoffettNathanson. Leader T-Mobile has 6 million subscribers, with a goal of 12 million by 2028. Verizon has 4 million and will aim for 10 million or so. AT&T lags the others. Total customers for these 5G fixed wireless access plans will hit 14 million next year.

Meanwhile, cable giants have entered the mobile market with cellular plans. Comcast and Charter combine for 16 million mobile subscribers, a bright spot for them. The big three cellular carriers are in a pitched battle for mobile customers, having to fend off the cable giants and smaller players that offer cheap service. AT&T, Verizon and T-Mobile are trying to push more subscribers into their costlier plans.

To cope with this new era of competition, one of the major tactics is expanding network footprints to cover more homes and gain economies of scale. For example, AT&T and Verizon are expanding their fiber-to-the-home networks. Comcast and Charter are expanding their footprints to reach more homes, including pushing into rural spots.

Many smaller providers are upgrading networks or looking to enter new areas. A $42.5 billion program by the feds to deploy broadband in areas without it will buoy the trend when projects start in 2026.

Companies were already hunting for ways to consolidate and enter new markets, but that will only increase when President-elect Donald Trump takes office next year. Expect major mergers and acquisitions to meet less scrutiny and be more likely to be approved.

Recent examples include Verizon’s $20 billion purchase of Frontier, which will give it 2.2 million more fiber customers in 25 states. T-Mobile has partnered with Lumos and Metronet to expand its fiber offerings.

These efforts come with big costs and plenty of risk, especially at a time when providers are trying to trim costs elsewhere.

Tough times for providers spell more deals for customers. It’s worth shopping around and regularly checking for deals. Consider plans that bundle home broadband and mobile service from one provider to eke out some savings. Look for price guarantees to lock in rates for a year or two. In rural spots, keep an eye out for new providers. No other option? Check out Starlink’s service.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.