If you read analysis from Leichtman Research Group, you may come to the conclusion that large tier one telcos, namely Verizon and AT&T, have all but given up on the residential broadband business – at least in non-FiOS and U-verse markets. According to LRG’s latest broadband analysis, both AT&T and Verizon lost 161K broadband subscribers in 2Q 2015. Compare that with just Comcast, who added 179K. LRG’s telco broadband numbers look pretty bleak.
Telco Broadband Losses
LRG reports that telcos lost more broadband subscribers in 2Q 2015 than in any other previous quarter. Ever. In fact, they’ve lost broadband subscribers in four of the past six quarters. The comparison to their cable broadband competitors is somewhat laughable.
“While Telcos lost more broadband subscribers in 2Q 2015 than in any previous quarter, cable companies added over 500,000 subscribers for the fourth consecutive quarter,” said Bruce Leichtman, president and principal analyst for LRG in a press release. “Over the past year, cable has accounted for 95% of the approximately 3,000,000 broadband additions.”
Both AT&T and Verizon did add U-verse and FiOS broadband customers, totaling 313K together. But they lost 474K DSL subscribers collectively. By these numbers, one could draw the conclusion that outside of U-verse and FiOS markets, both AT&T and Verizon have given up on broadband. Maybe just ceding those markets to cable, who collectively added 511K new broadband subscribers in the same quarter.
Considering there are still millions of AT&T and Verizon subscribers left, cable appears to have more room for robust broadband growth — although these first-generation DSL markets also tend to be areas where municipal broadband efforts are taking root.
Verizon’s been a little more active with regards to shedding these DSL markets through sales to Frontier. One would expect these sales to continue. AT&T has had no appetite so far for shedding unwanted DSL markets.
AT&T has committed to expand broadband deployments as a condition of the DirecTV acquisition, but that expansion is focused on FTTP. I presume those expansion plans to not include markets where they are losing DSL customers.
Given this posture by AT&T and Verizon, one could also assume they won’t have much interest in accepting CAF funding to upgrade their rural markets to more acceptable broadband. That could open up more opportunity to providers who are interested in serving rural markets, since those CAF funds will be made available through a reverse auction.