Robert Wyrzykowski, Micah Sachs and Chris Mills
- Opensignal data shows much faster performance for Broadband Download Speed on ISP-provided routers than on those third-party ones — around 60% faster for cablecos and telcos and around 45% for overbuilders
- For cablecos, we observe a much greater concentration of low-speed readings among Bring Your Own (BYO) routers, while ISP-provided routers have higher concentrations of download speed readings at faster speeds.
- Opensignal data demonstrates a correlation between a higher share of ISP-provided routers among a cablecos’ customer base and cablecos’ lower levels of churn among non-mover switchers (i.e. those who did not change addresses).
- The case study of four cablecos that experienced a significant shift in ISP-provided router share over time shows reduced churn for two providers who increased their share of ISP-provided routers, and increased churn for those two whose share of ISP-provided routers declined.
- Delivering a first-class Wi-Fi experience, powered with high-quality and reliable ISP-provided routers, should be an important component of providers’ broadband customer retention strategy.
In this analysis, Opensignal investigates whether Wi-Fi experience delivered with ISP-provided routers leads to reduced customer churn. As our analysis demonstrates, in the U.S., routers provided by broadband providers generally outperform those that consumers purchase independently. To explore the impact of this outperformance on customer retention, we looked for links between the penetration of company-provided routers in cable providers’ customer base and churn.
We needed to control for changes in providers’ footprints and underlying technology to isolate the impact of ISP-provided router mix on churn. Since major network upgrades (eg, copper to fiber) and footprint expansion have major impacts on churn, we limited our analysis to cable providers. These ISPs have only expanded their footprints by a limited extent in recent years — unlike overbuilders like Metronet or fixed wireless providers like T-Mobile 5G Home Internet, whose major network expansions have driven subscriber gains. Similarly, few cable providers have made dramatic upgrades to their network that would explain improved churn.
Our data shows that around 70% of cable subscribers use an ISP-provided router for their home Wi-Fi — high ISP-provided router penetration rates at the biggest cable providers largely drive this ratio. Looking at the average broadband download speed on cable providers’ networks, Wi-Fi performance differs between ISP-provided and third-party routers. Users who connect to broadband internet services using ISP-provided routers enjoy average overall download speeds clocking in at 180.6Mbps. This is 62.3% faster than the speeds experienced by subscribers who purchased their own routers.
While our analysis focuses mainly on cable providers, we also observe a similar effect across other types of broadband providers, with ISP-provided routers enhancing users’ experience immensely, compared to third-party routers acquired by customers themselves. Our users with subscriptions to telco (ILEC) service providers enjoy nearly 60% faster average broadband download than their peers using routers purchased independently, while those on overbuilder services experience speeds 46.7% faster.
Looking at the distribution of broadband speed readings per router type, we observe a much greater concentration of low-speed readings among consumer-provided routers. Conversely, ISP-provided routers have higher concentrations of download speed readings at faster speeds. This likely reflects a mix of factors: ISP-provided routers are more likely to be optimized to ensure superior performance, but also customers who opt for lower-cost, lower-speed tiers would be more hesitant to pay $10-$20 a month for an ISP-provided router rental. Opensignal’s measurements capture users’ experience, regardless of the plan that they have purchased from their provider.
To measure the churn impacts of router mix, we leveraged data from our Broadband CarrierVision product that tracks more than one million unique residential broadband customer switches per quarter in the U.S. We used a metric called non-mover loss ratio. This metric assesses whether a carrier is losing more or less than its “fair share” of customers at a given point in time. It is calculated by dividing a carrier’s share of non-mover switching losses in its footprint by its market share in its footprint. Non-mover refers to switches where a customer changed broadband providers but did not move to a new address. These types of switches are 100% determined by customers’ perception of the relative value of their current provider against a competitive provider serving their address.
Opensignal data demonstrate a positive relationship between a higher share of ISP-provided routers among a cablecos’ customer base and cablecos’ overall level of churn among competitive switchers (i.e. excluding switchers who change providers because they’ve moved addresses). The chart above shows 15 of the the top 20 cable companies in the U.S. — excluding the biggest three cable providers (Comcast, Charter, and Cox), and any cable operator with a share of 70% or higher ISP-provided routers in Q3 2023. We excluded the big three cable operators because they have been at the vanguard of marketing company-provided routers to their customers and have achieved high levels of penetration of their customer base. Our interest is more in the less mature Tier 2 operators who typically “fast follow” technology choices and go-to-market strategies pioneered by the big three. For that reason, we also excluded providers with a high share of ISP-provided routers, as we would expect — and saw — diminishing returns once providers achieved the threshold of 70% ISP-provided router share.
In the case of Cableco 1 and Cableco 2, we observed significant shifts toward ISP-provided routers in the customer bases — increasing by 4.4 and 5.9 percentage points between Q2 2022 and Q3 2023, respectively. Within the same timeframe, non-mover loss ratios have improved for both cable companies — dropping to 0.78 for Cableco 1 and 0.60 for Cableco 2.
These major increases in the proportions of ISP-provided routers in cable companies’ customer bases are driven by either the influx of new customers that receive ISP-provided routers or by the provider upselling existing customers to company-provided WiFi rental, or offering a company-provided WiFi router as part of an upgrade to a premium tier or premium bundle.
In contrast, Cableco 3 and Cableco 4 observed substantial reductions in the proportions of ISP-provided routers in their customer bases between Q2 2022 and Q3 2023 along with worsening non-mover loss ratios. The decline in ISP-provided router share is likely due to a mix of new customers opting for lower-priced tiers and not willing to pay for router rental and existing customers downgrading from ISP-provided routers either due to cost or performance.
ISP-provided routers are associated with several positive indicators for customer experience. They are associated with much higher speeds experienced by users as well as reduced churn. A complex mix of factors is at play. ISP-provided routers improve the customer experience at any tier because the provider’s customer care team can more easily and quickly diagnose in-home Wi-Fi issues. They are also more likely to be optimized for usage of the higher-capacity 5GHz band and typically are on Wi-Fi 5 or Wi-Fi 6 vs. earlier Wi-Fi generations. But there is also customer self-selection at play: customers who opt for lower tiers are less likely to pay for Wi-Fi router rental. And gig tier customers are often provided a Wi-Fi router at no additional cost.
When we analyzed four cablecos who saw a significant shift in ISP-provided router share, we observed reduced churn for providers who increased their share of company-provided routers, and increased churn for those two whose share of ISP-provided routers decreased. This suggests that delivering a first-class Wi-Fi experience, powered with high-quality and reliable ISP-provided routers, should be an important component of providers’ broadband customer retention strategy.
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