AT&T, Verizon, other top telcos lose 185K broadband subs in 2015 as cable surges ahead

AT&T (NYSE: T), Verizon (NYSE: VZ), CenturyLink (NYSE: CTL) and other top telcos lost about 185,000 subscribers in 2015 -- the first year where telcos saw net broadband subscriber losses – while cable took a comfortable lead with 3.3 million new broadband customers.

At the end of 2015, the top seven telcos collectively had over 35.1 million broadband subscribers.  

In 2015, AT&T and Verizon collectively added over 1.48 million broadband subscribers via their U-verse and FiOS platforms during the year, while losing a total of 1,708,000 DSL subscribers, reported Leichtman Research Group (LRG).

The top cable operators added about 1 million subscribers in the fourth quarter of 2015, while telcos lost about 50,000 subscribers. LRG noted cable broadband adds in 4Q 2015 were similar to the first quarter of 2015, with the previous high being in the first quarter of 2008.

LRG broadband Internet adds 2015

AT&T continued to see broadband as a growth driver in its consumer wireline business, adding 192,000 total IP broadband U-verse subscribers during the fourth quarter of 2015.

U-verse continues to make up a larger portion of AT&T's broadband subscriber base. Over 90 percent of the telco's broadband subscribers who are IP-eligible have a U-verse high-speed Internet connection.

Total broadband subscribers declined by 54,000 in the fourth quarter due in part to what AT&T said were fewer U-verse sales promotions. Meanwhile, AT&T's DSL subscriber base declined to 1.9 million from 3.1 million the year before.

Likewise, Verizon reported that it continued to see more customers signing up for its FiOS FTTH service. However, Verizon added just 99,000 new FiOS Internet subscribers in the fourth quarter, much lower than the 145,000 subscribers it added in the same period a year ago.

Perhaps the drop in new FiOS subscribers illustrates the fact that Verizon is reaching near saturation in its current markets. Besides selling off its wireline assets in California, Florida and Texas -- three states where its FiOS penetration and subscriber counts were well established -- the service provider has maintained that it won't build out the service into new areas.

Interestingly, a greater number of FiOS customers were subscribing to 50 Mbps symmetrical FiOS Internet tiers or a higher tier like 75 Mbps.

Verizon ended 2015 with a total of 9.23 million broadband subscribers. On the other hand, the telco lost 94,000 DSL subscribers.

CenturyLink was a bit of a different story as service provider is going through near-term growing pains.

As a result of a new credit policy it implemented in mid-year 2015 -- one that targets users who sign up for service and don't pay their bills -- the telco lost 22,000 broadband subscribers during the fourth quarter.

At the same time, CenturyLink is growing the amount of homes and businesses it can address with its fiber-to-the-premises (FTTP) services as well as higher speed copper-based services. CenturyLink passed over 940,000 homes and 490,000 businesses with its 1 Gbps-capable GPON FTTP network, while providing over 30 percent of its market area with speeds of 40 Mbps or higher.

The broadband loss pain was also felt at Windstream.

In the fourth quarter, Windstream lost 14,500 subscribers, ending the period with a total of 1.095 million customers, down from the 1.13 million subscribers it had in the same period a year ago.

Despite these losses, the service provider maintains that its efforts to offer higher speed services via VDSL2 and GPON-based 1 Gbps services in select markets could reverse the trend and put it on a growth path. 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. Additionally, the service provider will offer a 1 Gbps capable FTTH service in five markets, beginning with Lexington, Ky., a market where it currently offers its Kinetic IPTV service.  

Windstream also expects to gain more subscribers as it starts its CAF-II investments, which will support and expand broadband services to another 470,000 rural locations.

Frontier fared a bit better in the broadband subscriber race.

The service provider recorded its twelfth consecutive quarter of net broadband additions, adding 28,500 new subscribers in the fourth quarter and bringing its net adds for 2015 to 102,000. Frontier also recorded 18,000 FiOS data connections in the fourth quarter, compared to 17,000 in the third quarter of 2015.

Frontier plans to connect 100,000 additional rural properties to broadband under the CAF-II program this year.

The service provider will also benefit from gaining additional CAF-II funds in the wireline properties it is purchasing from Verizon. Frontier recently told investors that it would look for opportunities to not only enhance the existing FiOS infrastructure in the new markets, but also enhance existing copper networks to win back share from cable in both the residential and business segments.

Regardless of all of these telcos' future and current plans, the near-term reality is that cable has gained a clear upper hand in the broadband race. The broadband subscriber divide between cable and the telcos could widen even further as cable operators move to upgrade their existing HFC plant to support up to 1 Gbps speeds via DOCSIS 3.1 and their own targeted FTTH deployments.  

For more:
- see the LRG release

Related articles:
Verizon makes 50 Mbps its default FiOS speed, but overall growth dips to 99K
Frontier revenue dips to $1.41B, but hopes are high for acquired Verizon territories
Windstream's Project Excel enables higher broadband speeds, but it still lost 15K subs in Q4
CenturyLink to conduct metered broadband trial later this year, Ewing says

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