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