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U-verse Hits 10 Million Mark

Reaching another milestone, AT&T has now signed up more than 10 million U-verse Internet subscribers as it and Verizon Communications continue to make strong headway in the broadband market with their fiber-enabled platforms.

AT&T Inc. (NYSE: T) announced Friday that it cleared the 10 million-subscriber mark for U-verse Internet, just three weeks after reporting a whopping net increase of 655,000 broadband subscribers in the third quarter. The large US telecom has been furiously trying to convert as many of its DSL customers as possible over to the new hybrid fiber-copper platform before they go elsewhere. (See U-verse Overtakes FiOS .)

AT&T, which now has about 60 percent of its wireline broadband customers on the U-verse platform, credited part of the strong growth in U-verse subscribers to Project Velocity IP, the company's multi-billion-dollar three-year program to expand U-verse's reach and develop its new LTE wireless network. The company boasts that it has added about 2.5 million "broadband customer locations" since launching the program about a year ago.

Plans call for AT&T to extend its IP broadband reach to about 57 million customer locations by the close of 2015. Playing catch-up with other major US broadband providers, the company is also scrambling to boost data transmission speeds for U-verse Internet, raising its maximum downstream rate to 45 Mbit/s in 79 markets. It then intends to hike the maximum speeds further to 75 Mbit/s and 100 Mbit/s shortly in the future.

The latest U-verse gains by AT&T come as US cable operators are beginning to experience a slowdown in their long-heady broadband growth. In a report issued by MoffettNathanson Research last week, senior analyst Craig Moffett found that cable operators are signing up substantially fewer high-speed data subscribers this year and taking less market share than they did before.

Moffett noted that cable operators accounted for 78 percent of the new broadband subscribers in the third quarter, down from an amazing 99 percent the year before. So, although cable is still taking the lion's share of new broadband customers, he wrote, "it is doing so at a much more modest pace." He also noted that two of the five largest MSOs, Time Warner Cable Inc. (NYSE: TWC) and Cablevision Systems Corp. (NYSE: CVC), reported unexpected broadband customer losses in the summer quarter while most major telecoms registered strong sub gains. (See TW Cable Hemorrhages Subs and Cablevision Hits the Wall.)

In his report, Moffett also found that overall US broadband growth is slowing markedly. The market appears to be approaching a saturation point of 80 percent penetration in the next three years, up from 73 percent of US households today. He expressed skepticism that cable operators and telecoms could do much to boost that penetration rate.

"It must be noted that broadband is now nearly saturated among middle and higher income cohorts," he wrote. "Growth from here will require adoption among lower income households, many of whom don't even own computers."

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

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albreznick 11/19/2013 | 9:47:57 PM
Re: What happens at saturation point? So then the question becomes: What is the actual saturation point for broadband? 85% of US HHs? 90%? Higher? I'm not really sure where it might top out if people can use cheaper Web-connected devices and get really cheap BB plans. 
albreznick 11/19/2013 | 9:45:33 PM
Re: What happens at saturation point? It should also mean price wars, which cable operators have desperately tried to avoid. that should be fun to watch.
brookseven 11/19/2013 | 11:55:19 AM
Re: What happens at saturation point? So, my question was similar to where this part of the thread is going...How do we up broadband if 100% of computer owners have broadband?  This is the point of the analyst at the bottom of the article.

So, those who don't own computers might own a smartphone and a low cost smartphone & plan (ad supported?) would get a few more percentage points.  But essentially, this makes many other comments about US BB availability painted with a different light.  Now folks can complain about cost or speed, but it says that anyone who wants broadband can get it.  Can they get multiple different flavors - no. Is it as good or cheap as desired - no.

seven

 
KBode 11/19/2013 | 9:37:31 AM
Re: What happens at saturation point? Yeah I'd agree the interest in any of those customers are minimal, and if you're tracking regulatory efforts to gut remaining regulations on copper, Verizon and AT&T keep making it clear they want to either sell or abandon a significant number of those users. They don't see a meaningful ROI on them. U-Verse's well touted VIP expansion, meanwhile, is essentially focused on finishing up deployments they meant to conclude years ago but couldn't due to various obstacles (like San Francisco blocking U-Verse cabinet placement). 
DOShea 11/18/2013 | 11:20:12 PM
Re: What happens at saturation point? I don't know how badly any of the service providers will want the customers that are left once the market gets beyond 80 percent. I think they'll want to try harder to take the premium customers from competitors, which hopefully means better service and richer offerings all around.
albreznick 11/18/2013 | 9:11:47 PM
What happens at saturation point? Another interesting question here is what will happen when the US broadband penetration rate hits the magic 80 percent point. Where will BB providers get their new subs? It looks like they'll either have to steal them from their competitors or somehow induce more lower-income folks (including those without computers) to go BB. So watch for a rash of cheap, prepaid broadband plans. That should prove very interesting.  
albreznick 11/18/2013 | 9:07:53 PM
Re: So that race to 1-Gig Service... Getting in here late. Sorry. One key point to make here again is that AT&T still actually lost broadband customers overall in the third quarter because it lost even more DSL subs than it gained U-verse subs. So they're not getting a bigger share of the overall BB pie overall; they're getting a bigger share of the faster broadband pie. that's how they're catching up with Verizon and the cable cos.
Carol Wilson 11/18/2013 | 7:00:20 PM
Re: So that race to 1-Gig Service... There was an interesting column in Forbes about this a couple of weeks back in which the writer ridiculed anyone complaining about not getting a landline phone back. 

It's here: http://www.forbes.com/sites/larrydownes/2013/10/30/the-end-of-the-wired-telephone-network-is-coming-but-not-soon-enough/

Defnitely siding with Verizon and AT&T. 
Phil_Britt 11/18/2013 | 6:13:15 PM
Re: So that race to 1-Gig Service... Verizon is also using broadband wireless in areas where old infrastructure is fallinbg apart or was destroyed, such as parts of New Jersey ripped apart by Sandy. Would expect other carriers to follow suit in similar circumstances.
Carol Wilson 11/18/2013 | 5:43:04 PM
Re: So that race to 1-Gig Service... Seven, I think both AT&T and Verizon are counting on using wireless broadband as part of their solution for reaching some customers - those whosse wireline networks are deemed to expensive to upgrade. 

And ping, I totally agree - more bandwidth is always nice but not when it comes at a higher price. 
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