USA - slowing growth of broadband

Broadband growth plummets in 2Q, cable stronger

The number of new high-speed Internet subscribers in the United States fell in the second quarter to the lowest level since a research company began tracking the broadband market seven years ago.

The 20 largest cable and telephone companies added a net 887,000 residential and small-business subscribers in the three months ending June 30, Leichtman Research Group Inc. said Monday. Its tally is based on public reports and estimates.

The number of new customers is half that of the second quarter of 2007.

Bruce Leichtman, president of the firm, said the slowdown mainly results from a drop in new customers at the phone companies, which added just 23 percent of the customers they added in last year's second quarter.

The largest phone companies, AT&T Inc. and Verizon Communications Inc., have begun to emphasize faster, more expensive services over entry-level DSL.

"They don't have those bargain-basement offers that they used to have two to three years ago," Leichtman said. Now, they want "the right subscribers," the ones who won't cancel when their one-year promotional rates expire.

Cable companies did much better than phone companies, adding 85 percent as many subscribers as they did a year ago. While the two industries have usually divided new broadband customers evenly between them, 76 percent of the new business went to cable companies in the quarter.

Cable companies now have 35.3 million broadband customers, compared with 29.7 million at the phone companies. AT&T remains the country's largest Internet service provider, with 14.7 million customers, just ahead of cable company Comcast Corp. with 14.4 million.

Saturation of the market also plays a role in slowing adoption, Leichtman said, but "there's a lot of growth potential out there" among people who use dial-up or don't have Internet access at all.

The companies included in Leichtman's tally account for 94 percent of the U.S. broadband market.