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Cable Leaves Telcos in Broadband Dust

Alan Breznick

Despite the headline-grabbing moves by Google Fiber and AT&T to deploy 1-Gig speeds, cable operators are still running away with the US broadband market.

The top 10 US MSOs netted about 970,000 high-speed Internet subscribers in the first quarter, according to the latest tally by Leichtman Research Group Inc. (LRG) . That total represents a 21% increase over the 800,000 net added in the same period last year and, even more notably, amounts to a whopping 83% of the nearly 1.2 million broadband customers added by the cable and telecom industries in the quarter. (See Cable Pads US Broadband Lead.)

As a result, cable operators now command 59% of the cable-telco broadband market in the US, which consists of more than 85.5 million homes. That's cable's largest market share ever. The top 10 MSOs closed out March with an estimated 50.3 million broadband subscribers while the top seven telcos, still coping with DSL conversions and losses, finished the quarter with 35.2 million broadband subs.

Befitting its status as the largest broadband provider in the land, Comcast Corp. (Nasdaq: CMCSA, CMCSK) once again led the way in Q1, picking up 383,000 high-speed data subscribers, down from 433,000 a year ago. With this latest gain, Comcast now has almost 21.1 million high-speed data customers, giving it close to 25% of the total broadband market.

Re-asserting itself in the first quarter after a sluggish 2013, number two US MSO Time Warner Cable Inc. (NYSE: TWC) captured the second-highest total in the quarter. The reinvigorated TWC, which aims to merge with Comcast by the end of the year, signed up a healthy 283,000 broadband subs, nearly twice the number it signed up a year earlier, to reach almost 11.9 million. Under new Chairman and CEO Rob Marcus, TWC is now aggressively targeting DSL subscribers in its markets with special offers.

Charter Communications Inc. , the fourth-largest US MSO, enjoyed another stellar quarter, adding the third-biggest haul in Q1. Charter -- which stands to grow significantly in size if the Comcast-Time Warner Cable deal goes through because of some side deals with Comcast -- added 148,000 broadband subscribers, up substantially from 109,000 subs in the year-ago period. With almost 4.1 million high-speed data customers, Charter, like TWC, now boasts more broadband subs than video subs.

For their part, the seven biggest US telcos performed much worse in the first quarter than they did a year ago, adding about 200,000 broadband subscribers, down markedly from a collective total of 315,000 in 2013. Weighed down by continued DSL losses, none of the phone companies even came close to netting 100,000 high-speed data customers in the quarter.

AT&T Inc. (NYSE: T), the second-largest broadband provider in the nation, led the way among the telcos in the first quarter. AT&T added 78,000 high-speed data subscribers, down markedly from 124,000 subs in the year-ago period, as it struggled to convert its rapidly dwindling DSL base to its fiber-fed U-verse network. The company closed out March with 16.5 million broadband subs, with U-verse accounting for the lion's share.

Verizon Communications Inc. (NYSE: VZ), the second-biggest US telco and fourth-biggest broadband provider, added an anemic 16,000 high-speed data customers in the quarter, way down from 99,000 a year ago. Verizon, which is apparently reaching the limit of the FiOS buildout in its footprint, ended March with slightly over 9 million broadband subs.

Overall, the 17 MSOs and telcos added almost 1.2 million broadband subs in Q1, up 5% from 1.1 million a year ago and their best quarterly performance in two years. But Bruce Leichtman, president and principal analyst for LRC, warned that the gains will likely be much lower in the next two quarters, based on past performance.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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User Rank: Light Beer
5/28/2014 | 11:45:40 AM
Re: Two thing...
That's not entirely true, AT&T is not entirely abandening their DSL customers in fact they are handeling the situation in an intresting way and actively managing traffic somewhat economically without making major hits to the budget.  One of the many things they are doing is migrating high bandwidth customers to the IP DSLAM network providing for them while their removal from the older DSL network increases available bandwidth for the customers left behind.
sam masud
sam masud,
User Rank: Light Sabre
5/21/2014 | 3:54:17 PM
Stop sign needed for "fast lane."
OK, this tells me that pretty much all these companies are doing well in the Internet access business, thank you, and so there is absolutely no need to shed croc tears about there needing to be a fast lane for a "superior" video experience.
User Rank: Light Sabre
5/21/2014 | 2:36:40 PM
I'm sorry -- how is Comcast completely different from ... Comcast?
User Rank: Light Sabre
5/21/2014 | 2:00:32 PM
"Earlier this week we have a story about how cable service still sucks. Now we have a story that shows how many people are moving to cable service, despite the suckiness."

Different markets, different technologies. People are leaving cable TV in markets where telco TV exists because the phone companies are actually innovating with product (FiOS TV, Quantum DVR, etc.).

In markets where the telcos haven't upgraded from aging DSL lines and don't offer TV, users are migrating to cable because broadband speeds are faster. Verizon and AT&T are helping this along because they don't want to upgrade them. 

"I'm not sure what to make of this, other than the fact that consumers like to BMW (bitch, moan, and whine) but will continue to support the services they complain about."

It's indisputable that customer service is awful in this sector because it's usually a duopoly at best. They stay because they see TV and broadband as utilities and think all services are essentially the same. They're also lazy by nature. I certainly do wish more people would vote with their wallet and cut the cord instead of dishing out $120 a month for five hundred channels they don't watch. It would finally force some adaptation. 

User Rank: Light Sabre
5/21/2014 | 1:50:14 PM
Re: Two thing...
No surprise those numbers will continue to go lower. People have options, and I think the main attraction these days is wireless. More people are adjusting to just using data on mobile devices, and the carriers are happy to oblige. That's my two cents. 
User Rank: Light Sabre
5/21/2014 | 1:15:24 PM
Earlier this week we have a story about how cable service still sucks. Now we have a story that shows how many people are moving to cable service, despite the suckiness. I'm not sure what to make of this, other than the fact that consumers like to BMW (bitch, moan, and whine) but will continue to support the services they complain about. The parallel here is our obvious contempt for politicians, and our just as obvious track record for keeping incumbents securely in office.
User Rank: Light Sabre
5/21/2014 | 12:41:40 PM
Two thing...
Two thoughts.

One, AT&T and Verizon WANT To lose many of these customers, as they're backing away from DSL in markets they don't want to upgrade. They can't hang up on them outright because of regulations, so neglecting them and raising rates is the order of the day until they flee to faster cable.

Two, AT&T's 1 Gbps offer gets brought up a lot but it's worth noting that not a single person can get 1 Gbps speed yet, and the "100 cities" they trot out is more a PR bluff than a real deployment. They're going to cherry pick a few high end developments and then claim they're doing the same thing as Google Fiber (which is also extremely limited, but at least it's a "real" build in a few cities).
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