There has been much speculation regarding the demand for super fast broadband speeds, which for the sake of this post, I define as 30 Mbps and above. Many industry observers say broadband carriers must upgrade their networks and offer these and faster speeds to remain competitive. After some quick analysis, I’m not so sure, at least for the time being.
These same observers point to an advantage that DOCSIS 3.0 enabled cable companies have over telephone companies who offer DSL. All major cable MSOs offer faster broadband speeds than the DSL offers from their telco competitors, thanks to their use of DOCSIS 3.0. AT&T probably best represents this telco competitor, since almost all of their broadband service is DSL delivered. Even U-Verse is DSL, albeit a hybrid FTTN DSL offer. AT&T faces competition from all of the major cable MSOs, and by all accounts, offers a slower broadband offer, much slower in some cases.
Yet, if you take a look at broadband subscriber metrics over the past year, AT&T is outperforming all of the cable MSOs, by a long shot. AT&T is first to report 2Q13 numbers, during which they added 641K net broadband additions. If 2Q13 compares in any way to the previous three quarters, AT&T is crushing their faster cable competitors. For the past three quarters, AT&T has more broadband net adds than three of the top five cable MSOs of Comcast, Time Warner Cable, and Charter, combined (see table below).
Most, if not all, of those net adds are U-Verse broadband, considering AT&T (and Verizon) lose considerable legacy DSL subscribers every quarter. AT&T’s best U-Verse offer is 24 Mbps, for now anyway. That compares with DOCSIS 3.0 offers from their cable competitors that can range from 50 Mbps to 305 Mbps, on the high end. If higher speed broadband tiers are so important, how is it AT&T is adding more broadband subscribers than three of the top five cable MSOs combined?
This is not exhaustive research by any stretch. It’s simply a quick analysis of quarterly numbers. There are factors that certainly come into play here that have not been considered, like sales promotions, bundling, etc. It’s also a singular moment in time, of three to four quarters. Maybe it’s cyclical, considering Comcast was beating both AT&T and Verizon for a period.
But for this moment in time, one could draw the conclusion that super fast broadband is not as an important as we may think it is.
service beats speed everyday of the week.not saying att is known for good service, but our cable competitor offers speeds twice as fast as our dsl, and they've never been a real threat
At this point super fast broadband isn't that critical. We still see that price and even more importantly, bundled price is the key. But in my opinion speed will be a very big issue if/when we truly see video over the Internet replacing the traditional video model. Once that really happens people won't accept going from a nice HD signal to a sub standard pixelated option over the Internet. Speed will be key then.
I think its understandable. Just because companies offer high speed broadband, doesn't mean everyone will or can pay for it. But I think it will be a differentiator over time, as more people get familiar with the benefits and it becomes more affordable. I just went from 4/1 on UVerse to about 35/4 on CenturyLink and after 2 days I definitely "couldn't go back." 4/1 was generally fine unless I was uploading big files to Dropbox or YouTube, although there were ocassional glitches on VoIP calls etc. A number of our smaller Telco customers are running fiber to the home, and priced right, any user who can get super high speeds would quickly get addicted. Be interested in take-up stats in these smaller communities (versus just comparing the large MSOs to T). Any data? If lagging, would strongly recommend some marketing "puppy-dog" promos:)
I think it is important to note that the majority of these "new" high-speed broadband subscribers are upgrades – overall they lost broadband subscribers – so I am not sure I was consider then "crushing" the cable operators
Very valid point…though I would argue those folks who upgraded to U-Verse had an opportunity to churn to to a faster cable broadband and chose to stay with a potentially slower service…
Hmm, you are only looking at U-verse customer additions. Netting plain-old DSL losses against U-verse "gains" (this is a bit of a misnomer in that it is probably most of the same households which are just switching their service description from DSL to U-verse), AT&T lost 61,000 wireline broadband customers in the 2nd quarter of 2013. AT&T also lost 2,000 wireline broadband customers in 4Q12 and it lost 42,000 broadband customers in 3Q12. It did add a net 124,000 new wireline broadband customers in 1Q13, but Comcast added 3 1/2 times as many new broadband customers in the same 1st quarter of 2013. So your headline is grossly inaccurate.
I acknowledge and have written about the total net loss of broadband from AT&T and Verizon https://www.telecompetitor.com/does-comcast-smell-blood-in-the-water/. It's true, legacy DSL services are getting crushed. I think that has more to do with both Verizon and AT&T basically abandoning those markets, in favor of their U-Verse and FiOS efforts.
But in this case, I do think you have to acknowledge that a slower U-Verse product is performing quite well against faster cable offers (at least in the aggregate), whether those customer are upgrades from legacy DSL or new customers. Regardless, they had a choice to make, and they chose a slower broadband offer.
According to the report — , AT&T is only adding less than 1 million TV customers in a year — whoopie, they reached 5 million customers — but out of 76 million locations (as their services are both households and small businesses and this number is from their data)— what's that — 7% of their territories?
And on broadband. It's actually flat over a year —
14,660 14,517
If you look at Consumer Reports… http://bit.ly/18CwGDh … AT&T scores a 68 while Comcast and Charter are tied at 63. AT&T is above average in reliability, while Comcast and Charter are above average in speed. All three are below average in service quality. Dunno if that makes the difference here, but it's worth pointing out.
There are a few flaws in these assumptions. First you are assuming that all of the U-Verse markets are a duopoly with the cable providers. While this is the case in some areas, it is not always true so in markets where there is no other choice you cannot generalize that the consumer is chosing the slower rate programs over faster plans. You are also only looking at the net adds. One really needs to look at those net adds as compared to the homes passed. The cable operators are more regional and more mature in those markets. Comparing the numbers to total subscribers is also a critical point to examine. AT&T may also be launching a lot of U-Verse in markets where there is no other broadband service offered other than their legacy DSL, so making the generalization that the consumer is choosing the slower speed and crushing the cable industry is still not a fully baked hypothesis. To make an apples to apples comparison you need to know the homes passed for each carrier and look at the percentage of market share gain. Even that will not allow you to draw a conclusion of what the customer has chosen for a speed package. Carriers keep their actual subscriber data and plan information private. It could be possible that AT&T is offering a very low price 3 meg plan that accounts for a good deal of the subscriber adds so one would not be able to tell from the quarterly reports if they chose AT&T due to speed or price. I collect the carrier broadband data for the state of Illinois, you can look at carrier maps here http://www.broadbandillinois.org/maps/Carrier-Map… as well as a pricing study we recently published here http://www.broadbandillinois.org/news/292. There is just not enough data here to support the theory that AT&T is crushing anyone. In Illinois AT&T closest competitor based on service area size and location is Comcast, AT&T covers the suburbs of St. Louis where Comcast does not, that is going to make a huge difference in the number of homes passed and thus it may be they have a lower market percentage gain than Comcast does. Raw numbers do not tell the whole story.
That's is a lot of smoke, Brian. In general, cable passes more homes that DSL does, and it's a safe bet that VDSL (U-verse is VDSL and Century Link has their own VDSL product) is mainly deployed in neighborhoods where cable is present. What's probably happening is mainly churn, where telco ADSL customers are going to cable and cable customers are going to VDSL. There's also a secondary phenomenon where ADSL users are upgrading to VDSL. The point of the article is perfectly valid: telcos are adding VDSL customers faster than cable is adding new customers, so the idea that the fastest package always wins is bunk.
Most cable customers are on the 20 – 30 Mbps tier anyway, so VDSL is not a speed downgrade, especially considering that it's not a shared last mile pipe like cable and fiber.
As a follow up to my previous post, in Illinois DSL technologies pass 88.6% of the total homes in the state while cable internet services pass 75.9% of the homes (total 4.836 million homes statewide). This is for all carriers combined for either technology so some of the DSL service homes passed would not necessarily be in AT&T territory (there are quite a few rural Telco operators as well as Frontier), likewise for the cable number, there are some smaller operators that are not Comcast, Charter or Time Warner.
Those numbers are not typical for the entire nation. Cable passes 96% of homes and DSL passes around 90%.
In an adoption study we published for the state (http://www.broadbandillinois.org/uploads/cms/documents/broadband_adoption_in_illinois.11.09-edsb.pdf) the most common reason for non-adoption of broadband was cost. It is quite possible that AT&T had a broadband offering that seems to break the price concern barrier. This would likely be a slower speed offering and would not support the assumption that the consumer is adopting based on speed, in that scenario it is price related.
FCC, NTIA and Pew have done nationwide adoption studies that show the primary reason for non-adoption is lack of interest, not price.
I think you were thrown off by the wording of AT&T's Q2 earnings release <a href="http://(http://j.mp/15QMxvT)” target=”_blank”>(http://j.mp/15QMxvT). A study of their financial report <a href="http://(http://j.mp/13hROJw)” target=”_blank”>(http://j.mp/13hROJw) and a Comcast disclosure <a href="http://(http://j.mp/13iKRZU)” target=”_blank”>(http://j.mp/13iKRZU) led me to a different conclusion.
The earnings release does say, "U-verse high speed Internet had a net gain of 641,000 subscribers to reach a total of 9.1 million." But the very next sentence says, "Overall, the company had a net loss of 61,000 wireline broadband subscribers, an improvement over last year's loss but still reflecting typical seasonal pressures." Their 'overall' numbers include all wireline broadband, not just U-verse bundles.
The following table compares AT&T's and Comcast's overall wireline broadband subscriber numbers (x1000):
Quarter AT&T Comcast
2011 Q3 16,476 17,800
2012 Q1 16,530 18,582
2012 Q3 16,392 19,025
2013 Q1 16,514 19,799
Comcast's totals grew more than 6% per annum. AT&T's started lower and remained flat. AT&T's just-reported 2013 Q2 figure (16,453) extended the basically flat trend.
U-verse video subscriber growth is impressive–almost a million connections per year. But the data does not support the contention that AT&T is crushing cable in the high-speed Internet realm.
I have used, in order: Time Warner, ATT Uverse, Time Warner and VZ FIOS in last 24 months. Ranking (best to worst): FIOS, then Time Warner, then 2 tin cans and a string, then ATT.
Really? Cable providers have limited service areas due their Federal licenses – AT&T doesn't! You'd have to lump all the Cable providers together to get an accurate picture. And, just from the numbers used in this article, you can see massive growth for cable internet providers and sluggish growth for AT&T – the reason AT&T is dumping all internet in states like Connecticut.