The continued decline of DSL

So long, copper!

For a brief moment in the past decade, Verizon and AT&T gave cable broadband a good run for its money. Not anymore. As two of the largest phone companies have shifted focus to their more lucrative wireless business, cable broadband has been running away with the wired broadband market. The proof — admittedly in bits and pieces — comes from the recently reported earnings of AT&T, Verizon and Time Warner Cable. Both major phone companies reported astonishing revenue growth, most of it from the sale of smartphones and lucrative (and increasingly expensive) data plans for the customers.

During the fourth quarter of 2011 (which ended on Dec. 31, 2011), Verizon lost 103,000 DSL lines. In comparison, it lost 118,000 DSL lines during the third quarter of 2011 (which ended on Sept. 30, 2011) and 127,000 in the quarter ending June 39, 2011. The numbers at AT&T are worse. During the fourth quarter of 2011, Ma Bell lost 636,000 DSL lines, up from 501,000 during the third quarter of 2011 and 451,000 during the three months ending on June 30, 2011.

Now compare this with Time Warner Cable, which added a whopping 130,000 broadband connections, way ahead of the 96,000 lines that Wall Street analysts were predicting for the fourth quarter. And that is one of the worst cable broadband providers in the U.S. It would be interesting to see how well Comcast does when it reports its earnings on Feb. 15.

So why is DSL continuing to nose-dive? First of all, the phone companies themselves are not interested in pushing the envelope on DSL and instead are focusing on their higher-end offerings: FiOS Internet for Verizon and U-verse for AT&T. Verizon added 201,000 subscribers for its FiOS (fiber) Internet service during the three months ending on Dec. 31, 2011. In comparison, AT&T added 587,000 new U-verse broadband subscribers. U-verse uses fiber-to-the-node technology in combination with VDSL2, a variant of DSL. AT&T lost 49,000 net broadband subscriber — mostly DSL.

The question is, Can this newer technology make up for the subscriber losses and help Verizon and AT&T grow their overall share of the U.S. broadband market? From the looks of it, I don’t think so. I expect Comcast, which currently is the fastest broadband provider, according to Ookla’s Net Index, to see market share gains. However, this loss of traction by the phone companies in wired broadband makes the recent spectrum deal between Verizon (buyer) and cable companies (sellers) a problematic deal for those hoping to keep broadband competitive. These numbers show how wireless is going to AT&T and Verizon while wireline will go to the cable companies. And apparently the executives at each company are okay with that.

loading

Comments have been disabled for this post