Cable companies, thanks to their faster broadband offerings, are zooming ahead of their phone company rivals. Phone companies are losing DSL customers faster than they are gaining subscribers for their faster broadband offerings, a problem that continues to get worse with every passing quarter. During the second quarter of 2012, cable companies took a 140 percent share of broadband flow during the quarter, according to UBS Research telecom analyst John Hodulik. In the April-to-June 2012 time period, AT&T (s T) and Verizon (s VZ) lost 94,000 broadband subscribers in total.
The news isn’t all that bad. For example, Verizon continues to add subscribers for its fiber broadband service FiOS. It added 134,000 net subscribers in the second quarter of 2012, down from 189,000 it added in Q2 2011. It lost 132,000 DSL subscribers in Q2 2012. AT&T added 553,000 net subscribers for its U-Verse High Speed Internet but lost 649,000 DSL subscribers.
In the end, phone companies added 687,000 higher-speed broadband customers but lost 781,000 DSL customers. So in order for AT&T and Verizon to keep fighting cable, it is pretty clear: they need to keep offering better broadband services and higher speed packages.
“We estimate that cable added 240K subscribers in 2Q while the total broadband market only added 172k subscribers,” writes Hodulik in a note to his clients. “Given slowing industry subscriber growth, the Bells’ maturing fiber initiatives, VZ’s new DSL policies, and recent price initiatives, we believe this trend could continue and expect the telcos as a group to lose subs in 2H12 and 2013.”
In addition to the broadband losses, the two phone giants lost 720,000 residential voice lines during the quarter, down from 839,000 voice subscribers they lost during the same three months of 2011. On the upside, they added 275,000 video subscribers, though that is less than 368,000 subscribers they added during the same three months last year.
12 thoughts on “In U.S. broadband, cable is eating the Bells' lunch”
Part of the problem is the two major telcos are delusional enough to believe that LTE is a viable replacement for broadband. Even if it were true, that residential users could get sustained 10 Mbps bandwidth over LTE, it would still put the US at the bottom of the developed world.
Their fantasy is to force subscribers to use LTE, and charge by the bit. Even the cable companies can do better than that, but the telcos cannot comprehend the threat.
Amen to that keninca
I have a couple of questions;
1. Isn’t it true that with very little investment telcos could still realize tremendous gains in DSL delivery speeds; if this is true and I believe it to be true, then the question is why they aren’t making the investment.
2. Is it because of the now ‘cozy’ relationship between the major telcos and the major cablecos– a result of SpectrumCo/Verizon cross-marketing deal.
I think the answer to your question is #2 question itself. In forcing people into opting for LTE, they can bypass the net-neutrality issues and charge whatever the hell they want from consumers who don’t have much choice. I think that is a travesty.
To question 1, yes they can (relatively) cheaply scale DSL speeds upwards. A lot of telcos in Europe have deployed VDSL (up to 50 Mbit + IPTV) as a cheap interim solution while they wait to deploy FTTH.
Yes, it’s true. Probably for about the cost of one month of service, Verizon could upgrade my 5 Mbps DSL line to 20 Mbps. My office is less than 4000 feet from the CO, so there is no reason they couldn’t swap out the ADSL modem/line card for a VDSL modem, and not have to do anything to the wiring. But they choose not to, and it’s not because they are offering FiOS in the area. They simply choose not to. This is in a compact small city, laid out in a grid, not a suburb or rural area. And they charge more for 5 Mbps than Google is charging for 1 Gbps.
Where do you live?
It’s not quite as easy as that. On a 4,000 foot loop length, VDSL’s advantage over ADSL is marginal. That’s why in almost 100% of deployments, VDSL is run from a node in the neighborhood (FTTN) rather than from the CO. This is what makes VDSL expensive – obtaining right-of-ways, trenching fiber, running electricity to the remote, hardened & air conditioned cabinets, ongoing energy costs, increased maintenance, etc.
It’s still cheaper than FTTH, but it’s not as easy as swapping out the line card at the CO.
ok, VDSL2, and it’s actually less than 4000 feet, maybe 3500. The speed will still be far greater than 5 Mbps.
This is BS; the author does not understand how the landline or even the broadband market works in the US. here’s a hint: I can get Comcast, RCN, or Verizon to my home. Guess who actually operates the wries that power all three? And that’s one region in the North American market.
All of these numbers are disingenuous, publicly reported figures, not accurate depictions of the market. It’s foolish to push them out as if they were accurate representations of who actually consumes what infrastructure.
Lets not bother with the hot air around capacity to the home user and all that marketing jazz. It’s all oversubscribed, and these networks are not finite, and the big owners know it, and are playing a PR game for the hoi polloi in order to stave of investing in actual infrastructure.
DSL will always suck over an unsheilded copper wire. It’s just physics and economics colliding. The phone companies should have started rewiring fifty years ago when cable providers made it perfectly obvious that coax was vastly superior. Unfortunately, due to a mixture of monopoly thinking and monopoly regulations, that was unthinkable. Fiber will never be profitable with long underutilzed runs in the country. It only makes sense in dense urban environments and suburban green fields. LTE will soon be the only alternative to cable as that rotting copper loop decays into oblivion.