AT&T, Verizon, CenturyLink and other telcos lost nearly 150K broadband subs in Q3, says LRG

Broadband photo
Top telcos continue to trail cable operators as subscribers migrate off lower speed DSL.

AT&T, Verizon, CenturyLink and other top telcos continued to trail the cable operators in the third quarter as subscribers migrate off lower speed DSL and move to either FTTH or a higher speed DOCSIS-based service.

The largest telcos lost nearly 150,000 broadband subscribers in the third quarter, widening the loss of about 145,000 they saw in the same period a year ago.

Telcos have had net broadband losses in five of the past six quarters.

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During the first three quarters of 2016, cable MSOs added about 2.44 million broadband subscribers, while telcos lost about 475,000 subscribers.

Tightening credit, integration issues

An ongoing effort to attract higher ARPU customers, tightened credit policies, and asset integration contributed to a number of telcos’ broadband subscriber declines in the third quarter.

While AT&T improved its broadband subscriber additions during the third quarter, the service provider’s efforts continue to be challenged by legacy DSL losses.

AT&T’s IP broadband revenues rose 12 percent year-over-year, while total broadband was up 5 percent. Specifically, AT&T added 156,000 net IP broadband customers. This was a big improvement over the second quarter, during which AT&T added only 74,000 IP broadband subscribers, a figure that included 20,000 new business broadband additions. 

Despite the gains with its IP-based broadband services, AT&T continued to see legacy DSL subscriber declines. The telco reported that it lost 5,000 total broadband subscribers, lower than Wells Fargo’s estimate of 15,000. In all, AT&T’s IP broadband subscriber additions were offset by 161,000 DSL customer losses.

At Verizon, the main story was FiOS subscriber recovery. After rebounding from a second-quarter decline in new net connections due to the wireline labor strike, Verizon added a total net of 90,000 FiOS internet connections. Net broadband subscribers rose by 24,000 in the quarter.

Meanwhile, CenturyLink reported that it lost 40,000 subscribers in the quarter, ending the quarter with a total of 5.95 million, down sequentially from 5.99 million subscribers in the second quarter. The service provider attributed the losses to its ongoing efforts to tighten its credit policies for broadband subscribers.

One telco that clearly saw the largest broadband subscriber declines in the third quarter was Frontier. Similar to CenturyLink, Frontier’s own efforts to shore up its credit policies and establish a call and support center in the United States resulted in the telco losing over 99,000 customers during the quarter.

Frontier ended the third quarter with a total of 4.4 million broadband subscribers, down from 4.5 million in the second quarter. The service provider said that the broadband results during the third quarter reflected the initiation of customer acquisition activities within the quarter from the California, Texas and Florida (CTF) markets it acquired from Verizon, but anticipates improved customer additions in the fourth quarter.

Broadband Internet

Subscribers at End 
of Q3 2016

Net Adds in 
Q3 2016

Cable Companies

   

Comcast

24,316,000

329,000

Charter

22,202,000

387,000

Altice

4,122,000

17,000

Mediacom

1,145,000

17,000

WOW (WideOpenWest)*

728,400

2,700

Cable ONE

510,573

2,256

Other Major Private Company**

4,765,000

20,000

Total Top Cable

57,788,973

774,956

     

Phone Companies

   

AT&T

15,618,000

(23,000)

Verizon

7,038,000

24,000

CenturyLink

5,950,000

(40,000)

Frontier^

4,404,000

(99,000)

Windstream

1,063,000

(12,800)

FairPoint

309,547

(1,893)

Cincinnati Bell

299,800

3,100

Total Top Phone Companies

34,682,347

(149,593)

     

Total Broadband

92,471,320

625,563

Sources: The companies and Leichtman Research Group Inc. 

* WOW does not include a minor system acquisition in September 2016.
** Includes LRG estimate for Cox.
^ Frontier total is revised from prior reporting.
Company subscriber counts may not represent solely residential households, and reporting adjustments.
Top cable and telephone companies represent approximately 95% of all subscribers.
Net additions reflect pro forma results from system sales and acquisitions, and reporting adjustments; therefore, comparing totals in this release to prior releases may not produce accurate findings.

Cable maintains upper hand

From an overall industry perspective, cable providers and telcos’ broadband additions during the quarter were 99 percent of those in the third quarter of 2015.

LRG says the top broadband providers now make up 92.5 million subscribers. However, it’s clear that cable companies have the upper hand with 57.8 million broadband subscribers, while the top telcos have 34.7 million subscribers.

By contrast, cable operators offering speeds of up to 1 Gbps over their existing HFC plant in select areas added about 775,000 broadband subscribers in the quarter.

"Over the past year, cable companies added more than 3.5 million broadband subscribers, accounting for 118% of the 2.995 million net broadband additions," said Bruce Leichtman, president and principal analyst for Leichtman Research Group, in a release about the findings.

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