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Broadband Access
Broadband scorecard update: Cable outpaces DSL as Internet access market contracts
Overall growth at lowest levels in seven years
by Doug Allen
Not even the broadband Internet access market can withstand the ever-tightening clutches of the economy, it seems. A new report from Liechtman Research Group provided an overview of the broadband landscape for calendar year 2008, and found the net additions in subscribers at its lowest ebb since the analyst firm began tracking the market seven years ago.
2008’s total subscriber base of 5.4 million is substantially lower than that recorded for 2007, at 8.5 million. The high point in subscriber count over the last seven years came in 2006, at 10.4 million.
As has long been the trend, cable providers continue to enjoy a sizable lead over its telco rivals. The two segments own 94 percent of the broadband market, accounting for nearly 67.7 subscribers, with 36.9 million cable subscribers to 30.7 million telco (DSL) customers.
2008’s total net additions represent just 63 percent of the number of subscribers added in 2007. Moreover, the report reveals several interesting trends. First, the top tier cable providers or MSOs appear to be pulling away from their telco counterparts in terms of subscriber additions. The top MSOs accounted for 3.2 million broadband subscribers in 2008, or 77 percent of the figure added by the same segment in 2007, and the top cable companies landed 59 percent of all broadband additions in 2008.
The Tier 1 MSOs include Comcast, Time Warner, Cox, Charter, Cablevsion, Mediacom, Insight, and Cable ONE, RCN. The final MSO category, “Other Major Private Cable Companies,” had just over 2 million new subscribers in 2008, more than all but the first five MSOs listed.
Most industry observers credit the cable operators’ success to ongoing bandwidth increases at little or (more often) no cost, as well as additional high-speed service tiers at more customer-friendly price points. MSOs have also been successful in marketing their Triple Play packages, which include VoIP, high-speed Internet access, and digital TV (often featuring HD or extended channel tiers). While telcos continue to hold an edge in VoIP deployment and perceived QoS, some lag behind in digital TV content, although this gap is narrowing.
By contrast, the top telcos were responsible for 2.2 million broadband additions in 2008, or just 50 percent of their total haul in 2007. However, telcos reversed this equation in Q4 2008, by outpacing MSOs in net additions; the telcos brought in 570,000 subscribers to the MSOs 460,000. This is probably due to the increased availability and adoption of Fiber-to-the-X (FTTx) broadband services led by bellwethers AT&T (with U-verse) and Verizon Communications (FiOS).
So it appears that FTTx, when added to the telco DSL market penetration stats, may bring telcos to overall parity in market share with MSO in the near-term. As one measure of this, consider the fact that Comcast, long the number one broadband provider in the country subscriber-wise, now comes in at the number two slot, as AT&T’s Q4 U-Verse subscriber additions pulled the venerable telco ahead into the leading broadband provider slot, with 15,077,000 subscribers to Comcast’s 14,929,000.
(The “top telcos” cited in the report include AT&T, Verizon, Qwest, Embarq, Windstream, CenturyTel, Frontier, FairPoint, and Cincinnati Bell.)
“The total number of broadband subscribers I the U.,S. doubled in the past four years, growing to nearly 69 million at the end of 2008,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, summing up the report findings. “With increased market penetration, growth inevitably had to slow, but there was still room for 5.4 million more broadband subscribers in 2008.”
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