CABLE MAINTAINS DATA LEAD BUT BELLS ARE MAKING STRONG GAINS
Despite growing competition from Baby Bells, cable operators continue to dominate market for high-speed data as demand keeps growing for broadband service. Although several leading MSOs haven’t reported their official numbers yet, industry analysts said they expect cable to wind up 2000 with 3.9-4.2 million high- speed data subscribers, almost twice as many as phone companies. But DSL growth rate continues to be faster than that for cable modems, thanks to big push by SBC Communications, Verizon Communications, BellSouth. Analysts said DSL players ended last year with up to 2.3 million subscribers, with 4 Bells accounting for more than 1.7 million.
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“There was definitely a lot of advancements made [by the Bells],” said Cynthia Brumfield, pres., Broadband Intelligence. “Cable still has maintained its lead but DSL is closing in because it’s growing at a much more rapid clip The incumbent telephone operators are pretty much where cable operators were one year to one and a half years ago.” Analysts said Bells were making particularly strong inroads in small business market, where cable operators were weakest.
But DLECs, plagued by financial problems, have largely dropped out of high-speed data race. Among leading DLECs, only Covad made significant strides in 4th quarter, adding 69,000 DSL subscribers. As group, Kinetic Strategies calculated, DLECs added only 131,700 DSL customers in 4th quarter, compared with 534,000 for Bells and estimated one million or so for cable operators. “Now only the Regional Bell Operating Companies remain as formidable forces in the residential DSL market,” said Kinetic Strategies Pres. Michael Harris.
AT&T remains biggest player in high-speed data market, closing 2000 with 1.1 million cable modem customers after picking up 259,000 in 4th quarter. AOL Time Warner is close 2nd with 946,000 after adding 227,000 in 4th quarter. Among Bells, SBC expanded its lead by adding 251,000 DSL customers in 4th quarter, ending year with 767,000. Verizon came in strong 2nd among phone companies by signing up 190,000 DSL subscribers to close year with 540,000.
Despite DSL’s higher growth rate, analysts said they expected cable modems to maintain their lead in 2001 and beyond as DLECs continue to falter and as capital crunch hit both phone and cable companies. Harris and Brumfield, for example, see SBC cutting back its DSL installment rate in first half of this year to reduce drain on its stock dividends. But they see continued strong growth for rival technologies over next few years as residential and small-business demand for broadband services accelerates. “The demand for high-speed services is very, very high,” Brumfield said. “Even wireless is starting to make its mark.”