U.S. 3Q Cable Subs Double DSL

The combined 1.68 million new cable and DSL subscribers represents the highest growth rate this year, exceeding net additions for 3Q 2001 by 400,000 subscriptions, and bringing the total to over 15.6 million.

by Robyn Greenspan of CyberAtlas [November 15, 2002]

Cable broadband continues its double dominance over DSL in the U.S., adding another 1.1 million subscriptions—compared to DSL's 539,000—for the third quarter of 2002, according to Leichtman Research Group, Inc. The combined 1.68 million new cable and DSL subscribers represents the highest growth rate this year, exceeding net additions for 3Q 2001 by 400,000 subscriptions, and bringing the total to over 15.6 million.

"The third quarter results demonstrate strong continued adoption of broadband Internet in the United States," said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. "While cable operators lost over 250,000 video subscribers in the third quarter, the industry-wide focus on high-value customers clearly paid off in cable's growth of high-speed Internet subscribers."

Leichtman attributes the high level of 3Q growth to more aggressive marketing strategie—particularly on the cable side—coupled with value-added service bundling. He notes that broadband prices haven't necessarily dropped but packaging other services with the new subscriptions creates an overall price break for cable and telephony. "In the case of both cable and DSL, their core businesses have seen a plateau, so they need to continue to expand into new areas both to increase revenue and appease Wall Street," he notes.

While DSL seems to be lagging considerably behind cable, Point-Topic finds that the U.S. is actually second in global DSL subscriptions, with South Korea as the world's leading DSL country. Point-Topic expects the U.S. and probably Japan to overtake the top spot within the next 12 months, but the growth won't be enough to surpass cable any time soon.

Point-Topic theorizes that cable's dominance comes largely from the fact that cable modem technology was developed in the U.S. and standardized to suit the parameters of U.S. cable networks, while DSL has been left mostly in the hands of the remaining four regional Bell operating companies (RBOCs). Better execution, combined with an earlier start and good technical support are largely responsible for cable's continued penetration.

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