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Summary:

The DSL ecosystem might be in for a rocky ride, at least in the near term. A few days ago we had pointed out the slowdown at AT&T and BellSouth when it came to net new adds. Embarq did not meet analyst expectations, and many are […]

The DSL ecosystem might be in for a rocky ride, at least in the near term. A few days ago we had pointed out the slowdown at AT&T and BellSouth when it came to net new adds. Embarq did not meet analyst expectations, and many are worried now. UBS Research says that all signs are pointing to a broadband growth slowdown. They predict that net DSL adds for the third quarter 2006 will be 1.4 million, down 2% from the same quarter in 2005.

They also say that telecom and cable operators together will add 2.6 million new users during the quarter. That’s no growth when compared to 3Q 2005. Verizon, of course might buck the trend because of its FiOS offering, and is expected to add 510,000 new subscribers.

What this shows is that DSL providers have to step up and compete on speed. They have to offer more in order to compete in the market place. The best data point for this was again BellSouth’s earnings. UBS Research shows that the company added 89,000 new subscribers (twice as many compared to 3Q 2005) who opted for 3-to-6 megabits per second tier, and thus helped increase average revenue per user. Speed sells…Its something we have been saying for a while!

  1. the Triple Play sells…speed is just extra Horsepower
    Comcast Voip Phone adds PROVE the triple play Cable wins, RBOC’s lose theory
    skibare

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  2. Om,
    Excellent point. Speed (and Iā€™d include reliability) is the difference. Highlighted your post at Verizon’s Poliblog:
    http://poliblog.verizon.com/PoliBlog/Blogs/PoliBlog/CZBlogger1/121/-quot-Speed-Sells-quot-.aspx
    CZ

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  3. There still is a fairly good size of dialup customers to cannibalize. (Remember that the US is top 5 in overall connectivity, but only 12th in broadband, so that’s a lot of dialup customers.) I assume that many of the cheap DSL subscribers came from narrowband.

    However, the RBOC’s are reluctant to sell naked DSL, so they make it harder for people to switch from dialup (which requires their phone lines) than it would be.

    Speed is attractive, absolutely, as another way to convince dialup customers to move up. Cable triple plays also should have an effect. It’s rather baffling to me how many people seem okay with dialup.

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  4. I would like to see symmetrical broadband. The future is all about downloading AND uploading content. I would MUCH rather see 8down/8up than 16down/1up.

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  5. speed sells in US
    speed does not sell in France: basic offer start at 20Mega!

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  6. I’ve seen a lot of these articles and they all make the same mistake: confusing “change” with “change in the rate of change.” DSL subs are growing across the board and will continue to do so. However, the rate it which they are growing is declining. This inevitably happens in maturing markets.

    The statement “that’s no growth when compared to 3Q 2005″ is incorrect. 2.6 million new subs represents growth.

    This may sound like hair-splitting but often times these headlines get simplified by the uneducated to the point where they are inaccurate. Kind of like when the government says they are cutting spending when in fact they are cutting the amount be which spending is increasing,

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  7. Americo Fabian Tuesday, October 31, 2006

    Excelent.
    Afterall, the market will consider, in midle term, how realible the conections are. ///Is not rare become wondering about If we really receive 6 Mbits when buying 6 Mbits DSL. Each company has a particular (and exotic) explanation for its link performance.

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  8. I hope for FIOS service availability increase much faster, DSL already seems not fast and oversaturated.

    T1-T3-DSL

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  9. It is evident that DSL services are starting to become obsolete with the introduction of cable and t1 services. But, I agree that with affordable prices DSL services may still live to see another day.

    ISP Survey

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