US Broadband Growth Slows

Broadband subscriber additions in the United States could be reaching a plateau, according to a report from one financial analyst.

It might appear that the U.S., with barely more than 50 percent of homes linked to broadband, has a lot further to go. But in a report issued today, UBS AG analyst John Hodulik notes that only 77 percent of all U.S. homes have a computer, meaning much of the available market is already eaten up.

"This suggests the days of wireline broadband connectivity as a major growth driver of U.S. telecom are largely over," he concludes.

Third-quarter numbers seem to back him up.

Hodulik writes that broadband subscriber growth in the U.S. was 18 percent for the third quarter of 2007. That's a drop from 19.8 percent growth in the previous quarter and 30.1 percent growth in the third quarter a year ago.

The sputtering U.S. economy hasn't helped either. Pressure on the U.S. consumer has led to higher wireless churn rates, and those effects are spreading to wireline services as well, Hodulik claims.

Analysts have also pointed out lately that the tanking housing market has begun to hurt telecom, because wireline services are, after all, connected to homes.

Some carriers agree that broadband growth has flattened. "It's not surprising to us," says a Verizon Communications Inc. (NYSE: VZ) spokesman. "Broadband is becoming a more mature product, and people are looking for more speed and capacity. We think a lot of the people who are going to migrate to broadband from dialup have migrated."

Verizon's stance certainly reflects the trend in its numbers. While subscriber adds to its newer and faster FiOS service are rapidly increasing, its overall broadband growth sank in the third quarter.

The same can be said for AT&T Inc. (NYSE: T), which saw its faster-than-DSL U-verse service growth heading in the opposite direction of overall broadband growth in the third quarter.

The end result is that telcos will have to rely on market-share gains to protect broadband growth, Hodulik writes. He expects U.S. broadband growth to continue to fall in the coming years, from 16 percent in 2007 to 12 percent in 2008 and 10 percent in 2009.

— Raymond McConville, Reporter, Light Reading

Honestly 12/5/2012 | 2:58:52 PM
re: US Broadband Growth Slows No shock that new broadband user numbers are slowing, but there is still growth. I am an ATT customer and live 18,000ft from the CO nearest my home office. ATT cannot deliver DSL that works to the 2700 hopes in my area and they will not invest the money to push fiber out to us. So I say carriers can take blame for slowing broadband numbers.

Service Creation, However is another story and the story line may be who will get the service revenue from us consumers.? IPTV can be important here, but there is great opportunity to offer unique content and personalization with a web 2.0 experience and the carriers do not get it. They are to blame for stalling market places. Do they wonder why Google and other are gaining fast
tsat 12/5/2012 | 2:58:51 PM
re: US Broadband Growth Slows
Exactly, it is all about the services. Why can't I get high-def streams from a modest collection of video content? Service providers only have themselves to blame. Who would of thought that NetFlix would still be in business after all these years? I thought the 'net would kill them off in no time.

Raymond McConville 12/5/2012 | 2:58:48 PM
re: US Broadband Growth Slows Honestly,

Good point about service creation, but from what it sounds like, you don't have any broadband options in your neighborhood. How would these services be delivered?
trzwuip 12/5/2012 | 2:58:48 PM
re: US Broadband Growth Slows Should have know?

DarkWriting 12/5/2012 | 2:58:48 PM
re: US Broadband Growth Slows I would've thought that someone smart enough to use these boards should have know there is no such phrase as "would of".

paolo.franzoi 12/5/2012 | 2:58:47 PM
re: US Broadband Growth Slows
18 Kft is the limit of Annex A DSL - it is possible to deliver it to that distance. In fact with some modes of DSL, distances of 22 - 24 Kft is possible. These modes are not currently used by SBC.

Ibeenframed 12/5/2012 | 2:58:47 PM
re: US Broadband Growth Slows Broadband is slowing because the perceived value of
Pete Baldwin 12/5/2012 | 2:58:46 PM
re: US Broadband Growth Slows Oooh. IBeenFramed was about to reveal who the killer was, and got mysteriously cut off. Looks like (s)he's onto something.
twill009 12/5/2012 | 2:58:42 PM
re: US Broadband Growth Slows Here is the key point from the report (page 3):
"2007 will be the first year that the number of new broadband Internet subscribers added during the year falls. We expect 2007 DSL/fiber net adds to total 4.6M in 2007 compared to 5.6M in 2006, a decline of 18%. We expect cable net adds to decline 9% annually 3.9M."
If you have a business dependent upon sub adds (CPE or chipsets, for example), you are in trouble. If you sell content, you're happy because penetration is high and you have a large potential audience.
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