We’ve been talking about the slowdown in broadband for a couple weeks. We now have somewhat of a confirmation, thanks to Leichtman Research Group (LRG). “Net broadband additions in the quarter were the fewest of any quarter in the seven years LRG has been tracking the industry,” said Bruce Leichtman, president and principal analyst for LRG. According to Leichtman, among the large broadband service providers, broadband additions in 2Q 2008 amounted to 51% of those in 2Q 2007 – with cable having 85% as many additions as a year ago, and telcos 23%.
The slowdown should be of particular interest to wireline telcos. If this finding becomes a trend, and broadband’s best growth days are behind us, than wireline telcos have their work cut out for them. Because the best days for access line loss are definitely ahead of us. Broadband is seen as a potential replacement for traditional access lines, both in line counts and revenue. The thought being, if I continue to lose access lines, I can replace that revenue with broadband and all the applications that broadband delivers. But if growing my broadband base becomes more and more difficult, particularly because my cable and wireless competitors are stumping my growth, my challenges will only intensify. I’m the first to admit that there is a lot of generalization going on with this analysis. There certainly are telcos who are not experiencing a slowdown. It’s very market specific. But national trends like this are worth noting. It helps to keep us honest and grounded.