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What’s Wrong With DSL?
28 Jul, 2008
Recent quarterly reports from the likes of AT&T and Verizon paint an ugly picture for DSL. AT&T’s DSL growth rate slowed significantly last quarter, adding only 47K net new subscribers. Verizon fared much worse, losing 133K DSL subs. It’s true that Verizon’s marketing attention is FiOS right now, which certainly contributes to their DSL losses, but are those losses a reason for concern? Maybe. In their last quarterly report (1Q08), Comcast reported that 66% of their new cable modem customers defected from DSL. On the surface, one could argue that DSL is losing the broadband war. Perhaps this issue is apropos to Verizon and AT&T alone. Both of them are somewhat distracted. As mentioned earlier, FiOS has all the attention at Verizon and AT&T is in the midst of iPhone mania. It might not be fair to generalize DSL’s woes based on those two alone. As other telcos release their quarterly numbers, we may see a more general trend that either supports or detracts from this potential DSL growth hypothesis.
We all know that broadband growth is slowing. And the U.S. economy and the uncertainty it creates doesn’t foster great conditions for growth in any sector. These factors may be impacting DSL’s apparent slowing momentum. But what’s troublesome for DSL carriers per the economy, is that DSL has historically been the broadband “value play” (across a national average – this “value” price advantage is not present in every market). Logically speaking, in this economy, DSL should be holding up well relative to other more expensive broadband options. To get a true picture of DSL’s potential trouble, we’ll have to closely examine upcoming cable modem numbers. If cable modem additions are not slowing at relatively the same pace, DSL may indeed have a problem. It may signal telecom carriers will have to increase their efforts to make their bundle more attractive and their value proposition more relevant with subscribers. As their quarterly numbers reveal, AT&T and Verizon have less to worry about on this issue, because wireless revenue comes in to save the day for them. DSL carriers who don’t have that luxury may indeed need to ask what’s wrong with DSL. What is your DSL experience revealing for you?
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googleDSL buildout halted
The reason for the slowdown in DSL subscribers can largely be found on the supply versus demand side. Telcos have all but halted DSL infrastructure buildout and have opted not to deploy and/or light up remote DSLAMs to extend DSL to more residential subscribers.
DSL slowdown
Part of the slow down for AT&T & Verizon may be that they have reached the peak of easy installs. Their primary focus was to light up the towns. Install a dslam in a CO and call the exchange DSL capable. We all know that won't cut it.
Rural ILECs are continuing to invest in fiber fed DLCs. They are continuing to install DSL in remote parts of the US. They continue to be committed to put it where Verizon and AT&T are slow to get it there. Besides, both are concentrating on their wireless operations. They are using the wireline as a bait and switch for their wireless modem. Problem is that eventually they will have to either divest their wireline exchanges or pump money into them to quench the undieing desire for more bandwidth. Wireless can only deliver so much bandwidth.
Or can it be that DSL is so
Or can it be that DSL is so slow?
Copper-Fed DSLAM's A Partial Culprit In Our View
We think the "DSL customer" has become the most strategically important customer for ILEC's, and this is where MSO "much higher speed data service" messages are being aimed. If the MSO wins the DSL customer, then chances are good the MSO also wins the voice customer..........and then the ILEC may never see that customer again because of stickiness/inertia.
A high percentage of ILEC DSLAM's are connected back to the network over the proverbial "sipping straw"......a scant 4 or 8 T1 HDSL links usually. That sipping straw inhibits the ability to provide services much beyond 3Mbps and often less if the DSLAM is already chockerblock with DSL customers.
Thank you very much for this
Thank you very much for this useful article and the comments. I love this site as it contains good materials.
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Telecompetitor is a leading industry blog covering the telecom competitive landscape. We provide insight, analysis, and commentary on the issues and implications of the evolving telecom competitive landscape.
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Featured Article
Should Telephone Service be Free?
12 Oct, 2008
Comcast announced a new promotion last week that offers 12 months of free basic cable service for new customers who also sign up for an additional service. Customers who don’t want an additional service can get Comcast’s basic service of about 20 -30 channels for $10/month. The promotion is tied to the digital TV transition of February 2009 and entices potential customers to avoid the transition “hassle” by getting “free” cable service. “The simple fact is that basic cable is the easiest path through the digital transition and now consumers can get it for free,” said Derek Harrar, General Manager and Senior Vice President, Video Services for Comcast in a company statement. This move is similar to strategies pursued by other video service providers, who are hoping to leverage the digital TV transition for new subscriber additions.
But is this strategy a leading indicator for the future? Should basic core services like basic cable and basic telephone service be offered for free, used as a “carrot” to entice customers to buy “more important” services like broadband? Maybe a very basic phone service, with no LD, access to landline 911, and maybe outgoing service only (to avoid telemarketers) should be a free component of a bundled offering. Such a wireline service may appeal to a customer who previously cut the cord for wireless only, but also needs broadband. There is a growing portion of the population who find the value of traditional wireline phone service elsewhere – either through wireless or broadband/IP services. But, if they could get the security of landline 911, and an extra dial tone in their home as a free value add for subscribing to broadband (or video from a telco’s perspective), maybe a telco’s bundled offering may look more attractive than a comparable cable offering. I realize this idea is not appealing to the hundreds of ILECs who are a part of the current access/settlement system (in fact, it couldn’t work in the context of today’s regulatory structure), but I wonder whether it’s inevitable. In this possible future scenario, the current settlement system adapts to broadband as the underlying service, as opposed to voice.
This scenario cuts both ways. From a cable company’s perspective, a growing portion of the population is turning to the Internet as a source for their video content, and no longer see value in paying for a broad package of video as a part of a traditional subscription pay-TV service. But, if they could receive basic TV (which includes local broadcast affiliates) as a free value add for buying broadband, maybe the cable bundle is more attractive. In a true IP/broadband world, very basic phone and video service is relatively easy to deliver, and has little impact on bandwidth and network performance. Maybe the digital transition is opening the door to a future where free basic services are a regular component of a bundled offering. Thoughts?
Nothing
nothing's wrong on our end. We had our best quarter ever for DSL adds. But, we have no cable competition.