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Content Tagged with dsl + broadband

A new report from Pew Internet shows that broadband growth in the U.S. has slowed down to a crawl, a sign that U.S. broadband carriers would have to work hard to find ways to grow their overall businesses. Pew points out that 55 percent of adult Americans have home broadband connections.

According to some estimates there are over 64 million broadband connections in the U.S. Some additional interesting bits from Pew’s report:

The research group finds out that low income groups — households with annual incomes of less than $20,000 — have started to cut back on broadband spending. Their broadband adoption rate had dropped to 25 percent in 2008 from 28 percent in 2007. It isn’t much of a surprise, because the economic downturn is forcing people to control and cut back their spending.

Earlier this year, telecom operators like Qwest & AT&T, pointed out they were experiencing the impact of this penny pinching. Of course, what didn’t help was the fact that it was their geographic footprint that played host to the housing bubble. New home sales drove the demand for broadband connections and as foreclosures started, the broadband party also started to wind down. The net new additions for the second quarter 2008 will tell an interesting story.

My feeling is that this is hurting the DSL providers more than cable companies and they are scrambling to respond by offering higher speeds. The smaller providers like Embarq & Windstream could be impacted the worst by the slowdown.

There is some research that shows that speed bumps are not quite the panacea for these carriers, though they might provide some temporary relief.

Bruce Leichtman recently conducted a survey and found out that nearly 72 percent of cable broadband subscribers, and 62 percent of telco broadband subscribers are happy with their broadband connection’s quality and speed. Only 24 percent are interested in getting faster connection and a mere 11 percent of broadband subscribers would pay an “additional $10 per month to double their Internet speed.”

In comparison, Pew’s report shows that 35 percent of dial-up users want broadband prices to decline further — fat chance of that happening when most carriers are dreaming of tiered Internet plans. Overall 62 percent of dial-up users say they are happy to be Slowskys. (That should make AOL and United Online rather happy.)

Download Pew’s Home Broadband Report (pdf.)

So all the noise, anger and finger-pointing at Comcast’s cheap traffic tricks didn’t impact its broadband business. The company just reported a decent enough first quarter, but what got my attention: It now has 14.1 million high-speed subscribers, compared to 13.6 million at the end of 2007. That translates to about 500,000 new subscribers. Given how broadband sales have slowed down for DSL providers (but not for FTTH services), this is pretty significant. Karl on DSL Reports is taking a glass-half-full approach to the earnings but writes that things are slowing down. Seems like extra speeds are helping push the revenues as well, according to the company:

The strong subscriber and revenue growth in the first quarter of 2008 benefited from the introduction of additional promotional offers and speed tiers, including Comcast’s BLAST and Performance Plus services (8Mbps or higher service) and Comcast’s Economy Internet service (768Kbps service).

Another astonishing number: Comcast added 639,000 Comcast Digital Voice (CDV) customers during the first quarter — penetration reached 12 percent or 5.1 million customers with revenues of about $587 million in the first quarter of 2008. Time Warner Cable also posted a similar kind of growth, adding 280,000 phone customers and 304,000 high-speed customers in the first quarter. In comparison, the phone companies keep losing landline customers. No wonder phone companies are worried.

DSL-based broadband service providers may have started to catch up with cable companies in pure subscriber count terms, but when it comes to speeds, U.S. DSL companies are lagging behind not only the cable companies, but their peers around the world.

Between the second and third quarters of this year, the average DSL connection speed in the U.S. (and Canada) increased a mere 0.17 percent, according to research firm Point Topic, bringing the average download speed to just 2.971 megabits per second.

In comparison, the speeds in South & East Asia went up 132 percent to 3.582 Mbps, while Asia Pacific saw speeds increase 38.79 percent to 14.989 Mbps. Speeds in Western Europe gained by 6.22 percent to 5.552 Mbps, and in Eastern Europe, speeds are up 6.59 percent to 2.443 Mbps. In Latin America, speeds rose 29.06 percent to 1.652 Mbps, while the Middle East & Africa saw speeds dip 0.71 percent, to 1.404 Mbps. The carriers that gave DSL speeds a nudge include Korea Telecom, NTT, China Telecom, Fast Web, Telecom Argentina, and Telefonica and its affiliates.

Best Buy (BBY), the large North American electronics retail chain, that recently snapped up Speakeasy, a DSL provider, is now interested in gobbling up Covad (DVW), a large wholesale broadband provider, according to Broadband Reports.

The discussions have a on-again-off-again nature, Broadband Reports says, and points out that the deal might be for Covad’s VoIP business. Covad which trades on American Stock Exchange for about 65 cents a share is valued at $194 million compared with $97 million Best Buy paid for Speakeasy. I have contacted Covad and am waiting to hear what they have to say.

If Covad is indeed in plan, then it could get some interest from the likes of AT&T (T), Qwest (Q), and Embarq (EQ). It currently has a line sharing agreement with AT&T. They are also one of the first to provide ADSL2+ in the US.