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!