U.S. 3Q Cable Subs Double DSL

Cable broadband continues its double dominance over DSL in the U.S., adding another 1.1 million subscriptions — compared to DSL’s 539,000 — for the third quarter of 2002, according to Leichtman Research Group, Inc. The combined 1.68 million new cable and DSL subscribers represents the highest growth rate this year, exceeding net additions for 3Q 2001 by 400,000 subscriptions, and bringing the total to over 15.6 million.

“The third quarter results demonstrate strong continued adoption of broadband Internet in the United States,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “While cable operators lost over 250,000 video subscribers in the third quarter, the industry-wide focus on high-value customers clearly paid off in cable’s growth of high-speed Internet subscribers.”

Leichtman attributes the high level of 3Q growth to more aggressive marketing strategies — particularly on the cable side — coupled with value-added service bundling. He notes that broadband prices haven’t necessarily dropped but packaging other services with the new subscriptions creates an overall price break for cable and telephony. “In the case of both cable and DSL, their core businesses have seen a plateau, so they need to continue to expand into new areas both to increase revenue and appease Wall Street,” he notes.

Cable vs. DSL, Third Quarter 2002
Third Quarter 2002 Broadband Internet Subscribers Net 3Q Adds
Cable Modem
Time Warner 2,313,000 257,000
AT&T 1,934,000 172,000
Comcast 1,338,700 169,800
Cox 1,272,299 157,299
Charter 1,055,400 149,900
Cablevision 680,025 69,520
Adelphia 550,348 62,377
Advance/Newhouse* 445,000 35,000
Mediacom 167,000 22,000
RCN 163,393 13,791
Insight 124,600 21,200
Cable One 65,900 9,900
Total Top Cable 10,109,665 1,139,787
SBC 1,945,000 226,000
Verizon 1,640,000 155,000
Bell South 924,400 121,000
Qwest 525,000 17,000
Covad 359,000 2,000
DIRECTV DSL 151,000 18,000
Total Top DSL 5,544,000 539,000
Total Broadband 15,653,665 1,678,787
Source: The Companies and Leichtman Research Group, Inc.

Company subscriber counts may not represent solely residential households

* Advance/Newhouse subscriber count is an estimate.

While DSL seems to be lagging considerably behind cable,
Point-Topic finds that the U.S. is actually second in global DSL subscriptions, with South Korea as the world’s leading DSL country. Point-Topic expects the U.S. and probably Japan to overtake the top spot within the next 12 months, but the growth won’t be enough to surpass cable any time soon.

Point-Topic theorizes that cable’s dominance comes largely from the fact that cable modem technology was developed in the U.S. and standardized to suit the parameters of U.S. cable networks, while DSL has been left mostly in the hands of the remaining four regional Bell operating companies (RBOCs). Better execution, combined with an earlier start and good technical support are largely responsible for cable’s continued penetration.

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