DSL providers trail cable, FTTH in delivering advertised broadband speeds

While cable operators and FTTH providers are delivering the speeds they advertise, DSL providers like AT&T (NYSE: T), CenturyLink (NYSE: CTL) and Frontier Communications aren't delivering on their advertised speeds, says the FCC in its fifth "Measuring Broadband America" report.

According to the FCC, there's a growing gap in advertised download speeds between many DSL-based broadband services and most cable- and fiber-based broadband services.

"All ISPs using cable, fiber or satellite technologies advertise speeds for services that on average are close to or below the actual speeds experienced by their subscribers," the FCC said in its report. "However, some DSL providers continue to advertise speeds that on average exceed actual speeds."

What's notable is the contrast between cable providers and DSL providers' speed profiles.

Leveraging new technologies like DOCSIS 3.0, cable operators like Cablevision (NYSE: CVC), Charter Communications (NASDAQ: CHTR), Comcast (NASDAQ: CMCSA), Cox and Time Warner Cable (NYSE: TWC) saw overall maximum advertised download speeds rise from 12-20 Mbps in March 2011 to 50-105 Mbps in September 2014. As DOCSIS 3.1 equipment becomes available, cable operators will be able to deliver 1 Gbps speeds over their existing hybrid fiber coax (HFC) networks.

DSL speeds were a different story. Although service providers increased average DSL consumer speeds, the FCC noted that "popular maximum DSL speed offerings have stayed largely stagnant since 2011, with most DSL providers offering maximum download rates of 12 Mbps or less."

FCC broadband vs DSL advertised speeds

FCC broadband vs DSL actual speeds
At top, advertised speeds for broadband compared to, at bottom, actual speeds for DSL, cable, fiber and satellite, in Mbps. (Source: FCC)

Verizon (NYSE: VZ), which is selling off wireline properties in three states to Frontier, hasn't been making any large-scale moves to upgrade its existing DSL markets.

Fran Shammo, CFO of Verizon, told investors in 2014 that it will "continue to harvest that copper network and those customers and keep them as long as we can but we will not be building FiOS out to those areas," meaning these customers will likely seek alternative broadband sources from cable.

Some telcos like CenturyLink have been critical of the FCC's broadband speed collection efforts. In a FCC filing, CenturyLink said that it wants clarity on how Measurement Lab servers collect information on the quality of its DSL connections through its Measuring Broadband America (MBA) program.

That's not to say that some telcos aren't making moves to upgrade their copper plant to support higher speed DSL tiers. CenturyLink began a trial of a 100 Mbps speed tier in Salt Lake City while Frontier is offering a 100 Mbps tier in its Connecticut market. Likewise, Frontier now offers a 100 Mbps service tier in the Connecticut markets the company acquired from AT&T.

On the other hand, in areas where Verizon and Frontier offer FTTH service, the most popular tiers are 25 and 35 Mbps. While the maximum download speed measured by SamKnows for Frontier's fiber product has remained 25 Mbps throughout, the maximum popular download speed included in the FCC's survey for Verizon has more than doubled from 35 Mbps to 75 Mbps in 2012 and has remained at that speed during the past three years.

Perhaps not surprisingly, consumers who can get access to higher speed services continue to subscribe to higher speed tiers.

Customers who in September 2013 subscribed to a speed tier with advertised speeds between 15 to 30 Mbps via cable and FTTH service, switched to a higher tier within the following year. However, of consumers in the same period who had subscribed to service tiers with advertised download speeds of less than 15 Mbps -- the majority of which were offered by DSL services -- only a few percent migrated within the following year to a higher service tier.

For more:
- see the release
- see the report (PDF)

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