RSSAnalysts: Cable broadband growing faster than telcos and DSL
By Jacqueline Emigh | Published September 3, 2008, 6:57 PM
The current growth of DSL in the US remains less compelling than that of broadband cable, say the latest industry surveys. What may be more compelling, though, is that cable is now overtaking telcos.
Four years ago, only 20 percent of US homes subscribed to a broadband service, compared to 57 percent this year, according to a recent report by Leichtman Research Group (LRG) entitled "Broadband Access & Service in the Home 2008."
But by now, the US broadband market has peaked, making it a lot tougher for cable and DSL providers alike to lure new customers, industry analysts tend to agree.
What they don't appear to agree upon, are the reasons why. Some cite cable's greater bandwidth, while others suggest that telcos must return to more aggressive pricing on DSL while awaiting fuller deployment of emerging technologies such as fiber-to-the-premises (FTTP), used for Verizon's FiOS and AT&T's U-verse.
Broadband service providers added only about one million (net) additional subscriptions in the second quarter of 2008, compared with two million in the first quarter of the year, says a new report from Strategy Analytics called "US Broadband - Is DSL the New Dial-up?"
Although telcos were especially hard hit, cable providers did only somewhat better, according to Ben Piper, an analyst for the research firm.
"Cable pricing has always been slightly higher," Piper acknowledged, during an interview with BetaNews.
Regardless of any financial impact, however, many customers prefer cable, because cable providers are building out their existing networks. "In some cases, [users] can get twice as much speed on cable as on DSL," the analyst from Strategy Analytics told BetaNews.
Piper took issue with the usage-based pricing model now being tested by Time Warner Cable (TWC), labeling it a "bad PR move on TWC's part."
But, he contended, some of the bandwidth caps now being considered by cable companies -- such as the 250 GB monthly limit being planned by Comcast -- "really aren't unreasonable" for most customers.
Piper admitted that cable's current bandwidth advantages will be usurped by newer telco technologies such as FTTP (also known as fiber-to-the-home, or FTTH). Yet for their part, he added, the cable providers have ultra-fast DOCSIS 3.0 technology now on the way.
According to another analyst, however, bandwidth differences are not generally the biggest factor behind customers' increasing preferences for cable right now.
In one of LRG's recent studies, 72% of cable broadband subscribers rated the quality of their Internet connections between "8" and "10" on a 10-point scale -- but so, too, did 62% of telco broadband subscribers.
Bruce Leichtman, president and principal analyst for LRG, first took note of DSL's downward slide in adding new customers in reviewing his company's research for the first quarter of 2008. At that time, top cable providers gained 1.2 million subscribers, representing 54% of the net broadband additions versus the top telephone companies.
"This is the first quarter since 3Q 2004 that cable added more broadband subscribers than telephone providers (did)," Leichtman observed in May, when the Q1 report was released.
At the time, he also pointed out that "with telephone companies generally curtailing prior aggressive price-based offers to woo subscribers, the telcos added [only] about two-thirds as many broadband subscribers as a year ago."
Then, in a report released in August, Leichtman found that the situation of the telcos had actually worsened in Q2, with cable companies adding 670,000 new subscribers, or 76% of the net broadband additions for the quarter.
In an interview with BetaNews today, the LRG analyst maintained that the DSL businesses of companies such as Verizon and AT&T have been fading as these telcos pay increasing attention to emerging services such as FiOS and U-verse.
Verizon, however, has now announced a new promotion offering six months of free DSL service to its existing landline customers.
"With FiOS, Verizon has really been going after higher-end customers, seeing them as more difficult to acquire, but also as more valuable," Leichtman told BetaNews. "But now, it looks as though Verizon is trying to go back after the lower end of the [broadband] market, too."
Especially when considering the increased cost of commuting, high broadband connectivity to the home, whether over High Broadband Cable, or a FTTH service will be an essential part of our new economy.
Although traditionally, speed has been the key selling point for consumers, I think we are starting to see that security, and bundled services (land line phone, if desired, HDTV signals) will become more and more important.
Timbercon - Fiber Optic Cables
http://www.timbercon.com/
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If phone companies would sell naked DSL, they'd probably sell a lot more DSL. I have a mobile phone and I don't want a home phone so someone can sell me something when I'm trying to eat.
Cable has their foot in the door because of municipal monopolies and the fact that there are restrictions against satellite dishes in some communities.
Of course, when the phone company doesn't bother upgrading their equipment for the 21st century, what else buy cable-based internet can you choose?
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DSL will not become the "new dial-up" because it lacks the range. Comparatively, cable has a much greater spread and has a natural monopoly in many markets.
On the flip side, cable can also become dramatically over-saturated with customers in a neighborhood such as my own. This results in far less bandwidth for your buck (on top of it being throttled) and frequent outages. It is terrible service for a premium price. That's why I am on DSL. Just wish that Verizon would get around to rolling out FiOS in my city.
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This is an initiative that a progressive presidential administration should focus on:
just like was done in the past re elecricity, pots telephone, and other utilities: ultra-fast broadband-- and i'm not talking just 10-20mb-- needs to be widespread & affordable(with NO caps) if our nation is to not fall behind.
Just this alone would be a jump start for education, the general economy, and invidual industries from medicine to media to whatever.
We're going to miss out on lots of inventions & technological innovations, jobs of the future, etc. until...
For the good of the country, some future administration is going to have to take the reins...all they need to do is look at examples of how Japan & the EU enact things for the common good.
But Bush seems to think everything's peachy keen with our country-- when your family has money and connections, it's very hard to know what's really going on outside your immediate sphere.
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Stupid telcos are just sitting on their bums playing with their antiquated copper wire system, which does not provide enough bandwidth to fill the growing demand. Verizon is taking action with FiOS, but jeez, they are taking their time rolling it out.
Some cities have taken the initiative and built city-wide fiber internet for all residents because they can't stand waiting for the telcos to do anything. Such a pity.
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