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Summary:

That Americans want broadband is without question. Everyone of the mainline broadband providers – Comcast, SBC, Time Warner, BellSouth and Verizon have reported healthy growth rates for new subscribers. However, there is dark lining on the silver cloud. I saw it in Earthlink’s latest quarter earnings. […]

That Americans want broadband is without question. Everyone of the mainline broadband providers – Comcast, SBC, Time Warner, BellSouth and Verizon have reported healthy growth rates for new subscribers. However, there is dark lining on the silver cloud. I saw it in Earthlink’s latest quarter earnings. Thanks to David Jackson, who popped me an email to point out the bomb dropped on Earthlink’s earnings conference call. Earthlink CEO Gary Betty said:

Our ADSL ARPUs are declining, they were a little over $50 at the beginning of last year and probably will be in the mid-40s, maybe 43-44 by the end of next year… Bell South was pretty aggressive in Q3 and Q4 with a $9.95 option for a 256K product. SBC continues to be the most aggressive of the ILECs and pursuing promotional pricing to do that…

This could potentially be a big problem for not only the bells, but also for companies like Covad. I am also hearing that folks at big bell operators are all set to crank up the speeds on their DSL pipes, and probably dropping the prices on low-end/lower-speed offerings.

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  1. The content guys are just waiting for this sum-zero distribution/access war of attrition to bring some big time bandwidth to market.

    The sooner 10mbps+ hits the streets the sooner content players can start selling content subscriptions directly to consumers.

    Bye-bye middle man, er MSO.

  2. I have Road Runner residential. RR is like an appliance at the house, prolly gets as much use as the refrigerator. :-)

    I can see why Earthlink’s earning are down. RR is fast (recent download speed upgrade) and reliable. Also, I was recently tipped to an un-advertised Road Runner-lite offering for those who want cable Internet access but do not want to pay $45 per month. I guess RR-lite is $30 per month instead. Not bad considering the major upgrade it would be from dial-up to RR-lite.

    For Earthlink’s sake I got to think their high end MVNO offering with Korea’s SK is the way for them to go – cellular + voip.

  3. I have had Earthlink dial-up for several years. I had not gone to their DSL due to cost. (like cable TV, I can’t justify the $$ for the amount of use.) I had hoped they would eventually reduce their price – especially with the cheaper competition. It never happened and I finally went with Verizon at a cost way less than earthlink DSL and only slightly more than Earthlink dial-up. I sent Earthlink an e-mail last month giving my reasons and am dropping earthlink. (I tried to be loyal!)
    I also would like to see companies drop the add on’s like home pages, MSM (I’m a Mac user.) etc and just provide a fast portal at reduced cost!

  4. As per Charlie, I wonder if Bells and MSOs will ever offer < < $100 10Mbps as that would seem to open the door to alternate providers of VOD and TV-like services. I’m thinking maybe they will only allow 10Mbps to certain approved/affiliated IP addresses.

  5. Om, this should really be retitled “RBOCs pummel their wholesale resellers”. I happen to work for an ISP that resells Verizon DSL and let me tell you, Verizon charges the smaller DSL resellers enough per DSL circuit that Verizon’s own cheap DSL promotions are often in the range of only $5 more over what we have to pay Verizon for the same circuit. There is no way a small DSL ISP can make money on DSL if they try to price match whomever their local RBOC is. The big guys like AOL and Earthlink have it easy by comparison. In the end us small guys have to compete on service and features….but usually service. Of course that means customers have to actually be descering when it comes to what they expect out of an ISP, something that I think is lost on many people who are more interested in the low price then anything else.

  6. Guys, I have to say this is pretty enlightening. I am considering turning off speakeasy since the comcast is giving me 85% of what they give at essentially 50% of the price. Jesse i know you hate the idea :-) but a man has to cut back his digital expenses.

  7. Actually, Om if it had been me I probably would have switched long ago. The truth is that Comcast’s service (which I still have after switching from too slow 768k Earthlink DSL years ago) is good enough for what it costs. I am all for saving money on the “connection” part of the digital lifestyle and spending those savings on the “content” part.

  8. I’m wondering what the outlook is for the next 5-6 years for access speed to the home. What is your estimate for average speed to the home in say 2010? 50Mbps? 100Mbps? 240Mbps?

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