A pair of studies issued this week by Digitalsmith and by the Centers for Disease Control and Prevention (CDC) depict the transformative impact of the cord-cutting or cord-reducing phenomenon on the cable industry—in which 56.3% of consumers now obtain programming from over-the-top (OTT) online video services such as Netflix and Hulu—and on the phone service market in which nearly half of U.S. households currently use cell phones as their sole source of voice service.
Statistics on wireless substitution published this week by the CDC are based on preliminary data that was gathered from members of 21,000 U.S. households during the first half of 2015. According to the CDC study, more than 47% of U.S. households use cell phones exclusively, and an additional 42% of households subscribe to both landline and wireless phone service. Just twelve years ago, only three percent of U.S. households relied on cell phones exclusively, and the ongoing cord-cutting trend has left a mere 8% of U.S. households with a landline as their sole source of voice service. (Among the survey respondents, three percent also reported that they have neither a landline connection nor a wireless phone.) A vast majority of young adults in their late 20s (71%) rely exclusively on cell phones whereas only 19% of respondents over the age of 65 have cut the cord. Predicting that more than half of U.S. homes will “go wireless” within a year, Stephen Blumberg, the author of the CDC study, remarked: “the tipping point is approaching.”
Meanwhile, 4.8% of pay TV subscribers surveyed recently by Digitalsmith, a unit of TiVO, confirmed plans to terminate their cable or satellite TV subscriptions which represents an increase over the 4.3% figure of a year ago and the 2.9% figure of 2013. An additional 2.7% intend to exchange their cable subscriptions for online OTT services. (During the same period last year, 1.7% confirmed plans to switch to OTT services, and 2% noted during the third quarter of 2013 that they would switch to OTT.) Among survey respondents who do not have a cable or satellite TV subscription, 19.3% confirmed that they had cut the cord during the past twelve months, and 42% reported cutting the cord more than a year ago. (Another 38.6% were classified as “cord nevers” who have never subscribed to cable or satellite TV services.) While 7.2% of respondents confirmed plans to change their cable or satellite providers, 48.2% they would keep their existing pay TV subscriptions if rates went down or if their provider offered greater choice and ease of program selection.