Cable Isn’t The Only Cord Getting Cut, As 1 Percent Of American Homes Drop Internet Subscriptions

The conventional wisdom about cable cord-cutting is that people who cancel their cable subscriptions are doing so as a matter of preference, and in favor of the internet. Whether they’re millenials who have no attachment to watching television in the timeslot, and are happy to watch programming a day or two after on Hulu or a year late on Netflix, or parents who don’t want to expose their children to what they might find by clicking around, or to the advertising that airs during children’s programming, relying on streaming services seems like a better bet to them. The wrench in that theory? An even larger percentage of American households cut the cord last year on their home internet service than ditched their cable:

Hundreds of thousands of Americans canceled their home Internet service last year, surveys suggest, taking advantage of the proliferation of Wi-Fi hot spots and fast new wireless networks that have made Web connections on smartphones and tablets ubiquitous.

Last year around 1% of U.S. households stopped paying for home Internet subscriptions and relied on wireless access instead, according to consumer surveys by Leichtman Research Group Inc. Just 0.4% of households in the last year canceled their pay-television subscriptions in favor of getting video entertainment over the Internet via services such as Hulu or Netflix NFLX +1.98% ….

Since canceling her $40-a-month Internet service from Comcast Corp. CMCSA -0.26% this year, ChloĆ© French, a 27-year-old hotel worker in Ocean City, Md., has relied on her Verizon iPhone for email and Facebook at home. She taps into Wi-Fi service at a Starbucks SBUX +1.32% to watch “Grey’s Anatomy” and travels to the library to do online coursework as she trains to be a midwife.

The Wall Street Journal suggests that most of these cuts are a response to economic circumstances, rather than a matter of a preference for getting content another way. Consumers who are ditching their home internet either are extremely light internet users who are giving up the ability to stream perhaps one or two shows in recognition of the fact that their main internet use is for email and a social network or two, or they’re people who would like to use the internet more heavily, but can’t afford to continue doing so, and who may catch a core show on free wireless elsewhere.

If folks are getting rid of their home internet for economic reasons, this complicates the narrative of cord-cutting in two ways. Folks who don’t have or ditch cable may not actually be planning to consume as much or more content than they consumed previously through their internet connections if they’re giving up the services because they can’t afford them. Someone who cuts both cords, or who never had cable and gave up the internet isn’t necessarily going to generate revenue for television networks by streaming shows through Hulu and creating ad impressions, or subscribe to Netflix, and they might be less likely to subscribe to a service like stand-alone HBO Go if it were rolled out through internet subscriptions as well as through cable ones if they’re trying to avoid both home internet subscriptions and busting their cellular data caps. And if people are cutting one or both cords for economic rather than preferential reasons, the shifts in television consumption might be less dramatic than the conversation around cord-cutting suggests. These figures are a reminder that, while there’s no question that television viewing habits seem to be changing given this year’s ratings collapse and the huge gains some shows are making in DVR, it’s probably too soon, and too close to a devastating recession to know what the TV and streaming video landscape is going to look like yet.