As Broadband Growth Slows, Telcos Lose Out

A new report from Pike & Fisher should strike fear in the hearts of telecommunications companies. First, it posits that broadband growth will decline by 12 percent in the U.S. (although subscriptions themselves will grow by 8 percent), and that of the 5.7 million new broadband subscribers anticipated in 2009, three fourths of them will choose cable. That’s certainly not good news for carriers hoping to stem landline loss (P&F estimates landlines will decline almost 16 percent next year to 86 million). It also puts a crimp in plans to offer converged services across televisions, mobile phones and computers — something both AT&T and the cable guys are itching to do.

Wireless subscriptions have helped carriers along, as the incredible growth of wireless data adoption has somewhat offset the loss of landlines and the slow growth of DSL. However, those new subscriptions may also wane. Pike & Fisher estimates that 60 percent of wireless subscribers will have a 3G handset, but the report didn’t make any guesses about wireless data subscription growth.

Fears of a wireless subscriber slowdown led yesterday to a downgrade of Verizon’s and AT&T’s shares from Craig Moffett, the communications analyst at Sanford Bernstein, who has also been less than impressed with Verizon’s investments in fiber. Anyhow, new subscribers on the wireless side don’t fill in the revenue gap incurred when landline and DSL subscribers leave. As for television services from the carriers, they’re growing rapidly, but still will likely have a mere 6 percent of the market, according to the Pike & Fisher report.

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