The demand for broadband skidded sharply during the fourth quarter of 2008. We went through the latest quarterly financials of all the major broadband service providers and collated the net new subscriber additions –- and so far, things aren’t looking good. Of the 12 majors, five companies, including Cablevision (s cvc), aren’t due to report their quarterly results until later this month or early March.
Nevertheless, the sharp decline in net new additions is pretty clear (see the chart below). The downturn has been particularly hard on cable companies, especially Time Warner Cable (s TWC), which saw a 44 percent decline in new additions.
Verizon (s VZ) has posted the best performance so far, while AT&T (s T) is seeing some benefit from the rollout of its Internet TV service, U-verse, which commands higher bandwidth. AT&T lost about 1,600 DSL subscribers in the most recent 3-month period.
Qwest (s Q), Embarq (s WBQ) and Windstream all saw declines in their subscriber additions – mostly because they cover territories where the housing downturn has taken its toll. Now even if the remaining companies report the same number of new subscriber additions for the fourth quarter of 2008, the overall broadband additions for the last three months of 2008 will still be down sharply.
| Q3 | Q4 | |
|---|---|---|
| Comcast | 382,000 | 331,000 |
| Cablevision | 32,000 | TBA 2/26/2009 |
| Cox | 60,000 | TBA 03/04/2009 |
| TimeWarner | 222,000 | 124,000 |
| Insight | 20,500 | TBA |
| Verizon | 225,000 | 282,000 |
| ATT | 148,000 | 236,000 |
| Qwest | 61,000 | 54,000 |
| Embarq | 24,000 | 24,000 |
| Windstream | 28,400 | 16,000 |
| CenturyTel | 21,000 | TBA 2/19/09 |
| Total | 1.371M | 1.06M |
Source: Company Filings
Dear Sir,
Respectfully I disagree with the analysis, although I value your opinion. Your total Q3 number accounts the total subs for all the carriers, but Q4 adds only the filings announced. Since that data is pending for some carriers. It will not be correct to use that in your totals. If you remove the subscribers for Q3 for the TBA carriers, you will find that the drop in subscribers is only 2% as opposed to the 22% it currently looks. Which you will agree is marginal. Indeed TWC seems to have had the biggest loss, but it is hard to conclude whether this was the effect of the economy or possible churn to AT&T and Verizon.
Did you compare to cable subs / services growth? Be curious to see how broadband ranked against TV etc …
Broadband service is on high in India, now Google Internet Bus is on roll too.
Om, been waiting to get your take on Microsoft coming out with retail stores, I know you got something to say a out this!!
i sell cheap used computers. many of my customers are first time buyers. almost no one sign up for DSL or cable for there internet access. some just use wifi with there laptops out and about. quite a few live in apartments with free wifi; still more share a neighbors wifi connection. but nearly everyone who pays a monthly fee of some kind is going with one of the cell phone company options. here in denver that overwhelmingly means crikit for leap wireless. $40.00 a month gets a high speed link that works anyplace in the city. it is technically limited to 5 GB per month by the FUP. but myself and several other have been using it much more than that without noting any significant slowdown.
i believe the rate at which cellular broadband will be taking over from cable and DSL is very underestimated. most people will take even a pretty big sacrifice in speed for the convience.
Broadband: an overpriced product with a stupid business model and a terrible access method. Business slowing? Oh, the humanity. I cannot have any sympathy for an industry which mucks up a product/service that has a huge demand. Demand is still there, airheads! Even worse management than the Detroit auto industry. Go cry in your beer together!
Yep, Wi-Fi will be the future, not “broadband” in its existant form (unless prices drastically change). DSL will probably be near dead in 10 years or so; based on old technology.
@Jason
I have pointed out in the piece that there are quite a few that have not reported their numbers. I am assuming flat growth for them – unlikely – and that means a decline of around 150K new connections or just over 10% decline. I think it is pretty substantial.
@Jonathan
I have not, though that is a pretty good suggestion. I am going to try and compare those numbers.
@Wifiguy, I have not been able to find time to collect my thoughts on Microsoft’s retail store news and didn’t want to just make an off the cuff remark, like eight years after apple, Microsoft gets the religion. etc! There are plenty of people who made that obvious point.
I am thinking more from Microsoft’s larger strategy.
I think that broadband must be considered as an information service similar to telephony. These two (broadband and telephony) hold different qualities than other information goods such as Television and Radio. On one hand TV and Radio require a comparably significant but one-off purchase of the set. Even more, second hand markets (ie further reduced pricing) is an additional enabler for broadcasting market.
On the other hand both broadband and telephony are considered by the consumer as a monthly expenditure that is required to have the service available.
On these terms, it can prove useful to estimate the impact of the current economic and social situation on broadband drawing from previous experience on telephony. This particular and highly necessary differentiation between information goods and information services is what makes universal service debate relevant to broadband and telephony and not to TV/Radio. And this also can explain the growth rates of each respectively, throughout the years.