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Telcos Routed: DSL Customers Fleeing to Cable Broadband

Posted Aug 04, 2008 09:40am EDT by Dan Frommer in Telecom, Products and Trends

From Silicon Alley Insider, August 4, 2008:

Verizon and AT&T can't build out their next-generation, fiberoptic networks fast enough: While they spend a fortune upgrading their pipes to offer faster Internet access and digital TV service, little by little, the cable industry is sucking their DSL subscribers away.

As cable and telcos report Q2 results, one trend is clear: Cable companies are taking the majority of new broadband subscribers. So far, 69% of 476,000 total Q2 net broadband subscriber additions have gone to two cable companies -- Comcast (CMCSA) and Cablevision (CVC). And just 31% have gone to five phone companies, including the two biggest -- AT&T (T) and Verizon (VZ), whose results were both boosted by sign-ups to their new, faster, fiber-based services.

Why the shift? We think consumers are increasingly willing to pay a little more -- cable Internet is about $6 more a month than DSL, according to Pew -- for significantly faster download speeds, as bandwidth-intensive stuff like video streaming catches on. During its Q2 call, Comcast said that two-thirds of its new broadband subscribers were coming from DSL.

We've created a spreadsheet so you can watch the share shift happen live. We'll update it daily as companies report Q2 results; check here for the latest.

Several companies still haven't reported, such as Time Warner Cable (TWC), Charter (CHTR), and Qwest (Q). But Wall Street expects cable to continue its rout: Bernstein's Craig Moffett thinks that once it's all done, cable will have gotten 85%-90% of broadband net additions for the quarter.

23 Comments

you
boland1958@att.net - Monday August 04, 2008 09:59AM EDT

I am sorry but I would rather do business with AT&T than Charter. Charter has the worse customer service record in the industry AND is the same company whose executives were convicted of stock fraud for manipulating subscriber counts. Also, isn't Cablevision run by the Dolan family out of NYC?? I can only imagine how they're running a cable company in light of their misadventures with the NY Knicks.

you
boland1958@att.net - Monday August 04, 2008 09:59AM EDT

I am sorry but I would rather do business with AT&T than Charter. Charter has the worse customer service record in the industry AND is the same company whose executives were convicted of stock fraud for manipulating subscriber counts. Also, isn't Cablevision run by the Dolan family out of NYC?? I can only imagine how they're running a cable company in light of their misadventures with the NY Knicks.

you
eseyfried - Monday August 04, 2008 10:15AM EDT

First of all the article states that the cable companies are taking the majority of NEW broadband subscribers. It is likely that those people don't have a choice between cable and telephone broadband. I know that I live in an area (which is not a rural area) where the telephone company still has not made broadband available to us. I believe that a lot of people would like to have the telephone broadband because the price difference is a lot more than the $6.00 a month as the article claims.

you
wiz141us - Monday August 04, 2008 10:16AM EDT

Everyone needs to look into AT&t's UVerse service, 10 meg DSL speeds, 100's of channels, tons of HD channels, and a home phone to boot for lots less than all three form cable. Cable is out, broadband is in...See if your area is "green", otherwise "it won't be long". Visit the AT&T website and follow the links to advanced TV.

caadam2@sbcglobal.net
caadam2@sbcglobal.net - Monday August 04, 2008 10:19AM EDT

This should prove extremely beneficial for telco's as the cable networks become oversubscribed- the capacity in cable networks, just like cellular or even traditional landline, was never designed to support the potentail maximum number of subscribers. This is one of the stronger forces pushing the telco buildout- succesful lawsuits against at+t and others drove home the point that lack of core network bandwidth was not supporting transfer rates at advertised levels, Soon enough, cable subscribers on shared networks will experience similar issues, which is why cable companies are already clipping available bandwidth on various peer-to-peer protocols; they want to hide oversubscription as long as possible. When it becomes unavoidably obvious, the telcos will have new, faster networks up in many areas- and cable will be frantically introducing DOCSIS 3.0 sytems to try to retain their customers. Can't wait- either way, it's gonna get much. much faster.

caadam2@sbcglobal.net
caadam2@sbcglobal.net - Monday August 04, 2008 10:20AM EDT

This should prove extremely beneficial for telco's as the cable networks become oversubscribed- the capacity in cable networks, just like cellular or even traditional landline, was never designed to support the potentail maximum number of subscribers. This is one of the stronger forces pushing the telco buildout- succesful lawsuits against at+t and others drove home the point that lack of core network bandwidth was not supporting transfer rates at advertised levels, Soon enough, cable subscribers on shared networks will experience similar issues, which is why cable companies are already clipping available bandwidth on various peer-to-peer protocols; they want to hide oversubscription as long as possible. When it becomes unavoidably obvious, the telcos will have new, faster networks up in many areas- and cable will be frantically introducing DOCSIS 3.0 sytems to try to retain their customers. Can't wait- either way, it's gonna get much. much faster.

caadam2@sbcglobal.net
caadam2@sbcglobal.net - Monday August 04, 2008 10:24AM EDT

This should prove extremely beneficial for telco's as the cable networks become oversubscribed- the capacity in cable networks, just like cellular or even traditional landline, was never designed to support the potentail maximum number of subscribers. This is one of the stronger forces pushing the telco buildout- succesful lawsuits against at+t and others drove home the point that lack of core network bandwidth was not supporting transfer rates at advertised levels, Soon enough, cable subscribers on shared networks will experience similar issues, which is why cable companies are already clipping available bandwidth on various peer-to-peer protocols; they want to hide oversubscription as long as possible. When it becomes unavoidably obvious, the telcos will have new, faster networks up in many areas- and cable will be frantically introducing DOCSIS 3.0 sytems to try to retain their customers. Can't wait- either way, it's gonna get much. much faster.

caadam2@sbcglobal.net
caadam2@sbcglobal.net - Monday August 04, 2008 10:25AM EDT

This should prove extremely beneficial for telco's as the cable networks become oversubscribed- the capacity in cable networks, just like cellular or even traditional landline, was never designed to support the potentail maximum number of subscribers. This is one of the stronger forces pushing the telco buildout- succesful lawsuits against at+t and others drove home the point that lack of core network bandwidth was not supporting transfer rates at advertised levels, Soon enough, cable subscribers on shared networks will experience similar issues, which is why cable companies are already clipping available bandwidth on various peer-to-peer protocols; they want to hide oversubscription as long as possible. When it becomes unavoidably obvious, the telcos will have new, faster networks up in many areas- and cable will be frantically introducing DOCSIS 3.0 sytems to try to retain their customers. Can't wait- either way, it's gonna get much. much faster.

you
hyrdr - Monday August 04, 2008 10:50AM EDT

Misleading title says people are dropping DSL. Story says NEW subscribers so which is it? Now i have my questions about the percentages used. 62% What are these numbers from? This writher is full of poop.

you
r.valerio@att.net - Monday August 04, 2008 11:42AM EDT

I had AT&T U-verse installed. Cut telephone back to 1000 minutes at $30./mon and was being charged 7 cents a minute for local calls. Switched back to regular telephone, internet and TV still on U-Verse. Still have some "Quirk" problems with TV like Parental control Lock still "pops up" at random. They don't know why but it cuts off what we are watching. In the event of a power outage with U-verse you will not have a telephone. With regular (copper wired) telephone service you will still be able to use your telephone. I understand Comcast customers also lose their phones. But my son, who has Cox Cable, does not lose his phone service. It's good to know about before making a commitment.

Busted
Busted - Monday August 04, 2008 12:45PM EDT

The telco's are doomed....fancy Verizon commercials cant take the place of great customer service offered by the lil cable companies as well as "straight up" billing. They will never learn...(the telco's)

you
RJ - Monday August 04, 2008 01:18PM EDT

busted, you're thinking is busted. There will always be multiple players. "Doomed" yeah, right, they only been in the game for 100+ years.

you
John H - Monday August 04, 2008 01:33PM EDT

AT&T will be happy providing the fiber optic network that IS the internet. Without AT&Ts extensive network there would be no world wide web.

BIGZGUS1
BIGZGUS1 - Monday August 04, 2008 01:51PM EDT

In my opinion I think the long-term shift is toward wireless capabilities. If that means opening up greater bandwidth; as busting down the traditional brick walls of mom and pop businesses everywhere. I am much more interested in growing potential rather than trying to maintain an ailing system. I am certain that users everywhere can agree. We have seen a rapid progression in technology over the past few years; and I expect it to continue. I know some would rather we go back say 20 years; but I must inform them that is not only impossible; but it is completely absurd. I think we can all take lessons from the telecom industries trial and error; but we must move on. Fuel, transportation is not getting cheaper. Commodities are not getting cheaper. Tech is getting cheaper. This is the future of our workforce; or we can no longer compete on a broad scale. So we need to stop touting this tech or that tech as the next wave of the future. WE HAVE ONLY JUST BEGUN...

BIGZGUS1
BIGZGUS1 - Monday August 04, 2008 01:52PM EDT

In my opinion I think the long-term shift is toward wireless capabilities. If that means opening up greater bandwidth; as busting down the traditional brick walls of mom and pop businesses everywhere. I am much more interested in growing potential rather than trying to maintain an ailing system. I am certain that users everywhere can agree. We have seen a rapid progression in technology over the past few years; and I expect it to continue. I know some would rather we go back say 20 years; but I must inform them that is not only impossible; but it is completely absurd. I think we can all take lessons from the telecom industries trial and error; but we must move on. Fuel, transportation is not getting cheaper. Commodities are not getting cheaper. Tech is getting cheaper. This is the future of our workforce; or we can no longer compete on a broad scale. So we need to stop touting this tech or that tech as the next wave of the future. WE HAVE ONLY JUST BEGUN...

BIGZGUS1
BIGZGUS1 - Monday August 04, 2008 01:54PM EDT

MAYBE SOMEONE SHOULD FIX THE POST MESSAGE SYSTEM TO ALERT USERS THEIR MESSAGE HAS BEEN POSTED. IT IS POSTING; BUT NOT SAYING IT...

you
wassduck - Monday August 04, 2008 04:19PM EDT

While they may be attracting a lot of first time DSL users the users will soon find that the more of their neighbors who sign up the slower the service will become. The Telcos will win in the end. It seems cheaper now but in a few months the tide will turn. Telecom is not investing billions to lose in the end. Cable companies are offering lower rates to sign up right now. Telcos may better that tomorrow and then they will have more of the new customers. The word in a year will be churn.

you
Yahoo! Finance User - Monday August 04, 2008 05:30PM EDT

Are these people going with cable asking what the cost will be in six months when the "bait" introductory price expires? I did and the Charter Service in our area would more than tripple! I'll stick with reliable and slow (????) AT&T, and probably add to my stock position anticipating a switching back boom in six months.

ROBT K
ROBT K - Monday August 04, 2008 07:04PM EDT

LONG TERM. STICK WITH AT+T A PROVEN WINNER

caadam2@sbcglobal.net
caadam2@sbcglobal.net - Monday August 04, 2008 08:13PM EDT

Apologies to all- did not intentionally post four times- system very slow and thought it was dropping the post (D'oh!). BTW- my crystal ball clearly shows the economic recovery will not even begin until the late second half of 2010. And I think that BIGZGUS has a point- mesh networks, wi-max and other true 4th gen wireless approaches will play a big part in pie-snatching broadband- and with backhaul protocols like Dragonwave, fiber will be useful but not essential. AT+T is clearly backing LTE (Long Term Evolution or Lamebrained Texas Economization, time will tell), but Sprint is betting the house on Wi-Max. While I'd love to see all that dark fiber get fired up, it may be a dead issue in another five years. Regardless- kicking and screaming, telcos and cable companies must soon provision much higher speeds or lose customers. We all win- can't wait.

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