AT&T (NYSE: T), CenturyLink (NYSE: CTL) and Verizon (NYSE: VZ) and other telcos collectively added just 65,893 broadband subscribers in the first quarter as customers churned to cable operators that can offer higher speeds, particularly in areas where slower speed DSL is the only available broadband service.
This is the second quarter where telcos lost ground to cable in the broadband race. By comparison, the wireline community overall lost 185,000 subscribers in the fourth quarter of 2015.
According to Leichtman Research Group, there were a total of 3.03 million net broadband adds in the 12 months to the end of March, up slightly on 3 million a year earlier.
"Broadband in the U.S. continues to grow, with cable providers accounting for 111 percent of the three million net broadband additions over the past year," said Bruce Leichtman, president and principal analyst for LRG, in a release.
LRG noted that the top telcos significantly trailed cable which signed up 1.7 million broadband subscribers during the quarter.
What's likely giving cable operators a lead over large telcos is their ability to offer higher speeds to a broader part of their footprints. Depending on the specific market, cable operators like Comcast (NASDAQ: CMCSA), Cox and Charter Communications (NASDAQ: CHTR) can offer a mix of speeds from 50 Mbps to 1 Gbps. With the advent of DOCSIS 3.1 technology, cable operators will be able to leverage their existing HFC plant to deliver gigabit level speeds and lure more unhappy DSL customers.
AT&T and Verizon added a combined total of 300,000 U-verse and FiOS IP-based broadband subscribers, but lost 324,000 DSL subscribers during the period. These losses left AT&T and Verizon with a total of 15.76 million and 9.22 million broadband subscribers, respectively.
While AT&T and Verizon lost subscribers, CenturyLink and Frontier both saw gains during the quarter, adding 8,000 and 24,600 subscribers respectively to end the quarter with a total of 6.06 million and 2.47 million users.
For CenturyLink, the telco's gain was an improvement over the fourth quarter where CenturyLink lost 22,000 broadband subscribers after implementing a new credit policy on users who don't pay their broadband bills.
Meanwhile, the next tier of telcos including Windstream, FairPoint Communications and Cincinnati Bell were a mixed bag. Windstream lost 3,100 to end the quarter with a total of 1.09 million, while FairPoint gained 193 customers to end the quarter with a total of 311,323 subscribers. Finally, Cincinnati Bell gained 5,000 broadband customers to end the quarter with 292,400 subscribers.
While Windstream was down again, the telco maintains that by offering higher speed choices over VDSL2 and GPON-based 1 Gbps services it has built a foundation for future subscriber growth. The service provider will offer a 1 Gbps capable FTTH service in five markets.
From a copper perspective, the service provider plans to roll out a series of speed tiers ranging from 50 to 100 Mbps to nearly 1 million locations this year. During the quarter, Windstream made a software upgrade to its VDSL2 equipment that enables the telco to provide speeds of 75 Mbps and greater to an additional 200,000 locations that Thomas said "were previously capped at 50 Mbps."
However compelling these moves are, Windstream has not reported how many customers have subscribed to the new speed tiers.
- see the release
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