DSL Subscriber Numbers Analysis:
2nd Quarter 2001 Worldwide

The latest figures show that the total number of DSL access lines worldwide is up from 7,810,000 to 10,244,000 between 31 March 2001 and 30 June 2001. The total number of DSL lines in the world has doubled in less than 9 months.

by John Bosnell of point-topic.com [August 30, 2001]

Point Topic continues to track the latest operator reports for DSL subscriber numbers. But how do the numbers break down around the world? A closer look at the figures gives some clues as to the state of DSL markets in different regions.

North America
In North America, most of the ILECs reported DSL subscriber numbers below expectations. SBC achieved 88,000 new DSL subscribers, and is cutting back on DSL customers served through wholesale deals with ISPs.

Verizon added 120,000 subscribers this quarter (versus 180,000 in the three months to March), to reach a total of 840,000. Verizon has set a target of 1.25 million subscribers by year end, meaning that an average of 205,000 customers will have to be connected per quarter if this total is to be reached. Both SBC and Verizon's numbers seem to be feeling the impact of price increases from $40 to $50 per month.

Bell South slowed slightly, adding 78,000 subscribers to reach a total of 381,000. It will have to increase this rate of additions by almost 40 percent to reach a target of 600,000 DSL subscribers by year end. Qwest's DSL business grew steadily to 360,000 customers. But it will also have to increase the rate of additions by nearly 30 percent to meet its year end target of 500,000 DSL users.

Against this background, CLEC Rhythms announced on August 10th that it would issue service termination notices to its customers. Some will migrate to Covad and DSL ISPs, but others may have had enough with DSL.

Bell Canada, the largest Canadian DSL provider also showed a slowdown in DSL, adding 63,000 to reach a total of 529,000 (compared with 170,000 additions in the first quarter of 2001). Canada continues to outperform the USA in terms of broadband penetration, with Bell Canada offering a competitively priced product.

Europe
Germany's Deutsche Telekom continues to be the largest DSL provider in Europe. In its preliminary earnings statement, DT said that it had sold 1 million T-DSL contracts, with over 335,000 customers using a T-DSL flat-rate package. However, it is not clear how many of these contracts have been connected and are in use (at the end of March 2001, around 53 percent of sales had been connected, although this proportion had risen since December 2000).

France Telecom and Telefonica both showed steady growth. One point to note is the relative lack of DSL competition compared to the German market. According to the European Commission, no unbundled lines were being used to deliver DSL in France or Spain at the beginning of June 2001. Although wholesale services are available for resale by ISPs, this lack of effective competition in DSL in particular, and broadband generally, is typical of European markets at the moment.

This is one factor that explains the steady, rather than explosive, growth in the European DSL market. Over the last 4 quarters since June 2000, the number of DSL lines has grown steadily, with an average of 415,000 lines being added per quarter.

An exception is the Belgian case, where Belgacom's long-standing DSL offering faces strong competition with a well developed cable product. Belgium has a high penetration of broadband compared to the European average, and approximately one quarter of all Internet access lines are broadband.

Asia Pacific
The Asia Pacific region continues to show the strongest growth for DSL. Korea Telecom continues as the undisputed leader in DSL worldwide, adding around 150,000 subscribers per month, which equates to about 6,000 installations per day, 6 days per week.

Although figures are not available for all operators, Korea Telecom probably installed more DSL lines in the second quarter of 2001 than all of Europe combined. As previously reported by Point Topic, Korea Telecom has an impressive installation process to maintain this rate of progress. And it is also successful at selling its DSL service to a wide range of customers, targeting different groups with a tailored marketing message. This combination of technical reliability and marketing skill in a competitive marketplace explains the company's success. But it must be noted that the company has still not reached the breakeven point on its DSL investments.

Another broadband market with strong growth is Japan. DSL numbers have risen here from around 10,000 at the beginning of the year to around 300,000 now. New entrants to the market like Softbank-backed Yahoo Japan are promising big investments, and hoping for millions of subscribers within 2 years. NTT West has already overtaken France Telecom, even though the French incumbent had around 10 times NTT West's DSL subscribers at the beginning of 2001. Japan, like Taiwan and Korea, is investing heavily and marketing very low-priced broadband connections to residential users, against strong competition from cable modems.

In Australia, Telstra recently announced that it had signed up 40,000 subscribers to its ADSL service, 10 months since the service launch. Telstra's experience is typical of many DSL launches, especially in Europe. Teething problems with line provisioning, installation, and order processing have meant that Telstra has had to admit to difficulties with its DSL service. This sort of experience shows that there are many obstacles to launching a successful DSL service, even if customer demand is there.

The overall picture
Overall, the DSL business is growing well, despite the problems telecoms companies face on the capital markets. The quarterly growth table shows that the Asia Pacific region is driving this growth, with a steadily accelerating number of DSL subscribers, and over 1.3 million added in the second quarter of 2001 alone. This contrasts with flatter growth in the other two main regions of North America and Europe. The large investments promised in the Asia Pacific region are good news for DSL equipment vendors. But to maintain growth and meet targets, incumbents in North America and Europe must be aware of the threat posed by cable modem operators, and the price sensitivity of the residential market.

Number of DSL lines for selected operators, 000s	30 June 2001	31 March 2001	30 June 2000
Worldwide totals	10244	7813
Bell Canada	529	466	120
Bell South	381	303	74
Covad	333	319	138
Qwest	360	306	175
SBC	1042	954	399
Verizon	840	720	221
Other North America	579	344	213
Total North America	4064	3412	1340
Belgacom	94	72
BT	70	45
Deutsche Telekom	600 (1000 sold)	370 (850 sold)
France Telecom	177	96
Telefonica	112	88.4
Telia	68	50*
Other Europe	319	345
Total Europe	1440	1066
Hanaro (Korea)	745	700
Hong Kong	270*	240*
Korea Telecom	2418	1967	545
NTT East	104	30
NTT West	186	70
Chunghwa (Taiwan)	320	140
Other Asia Pacific	523	188
Total Asia Pacific	4566	3335
Worldwide totals	10244	7813

Source www.point-topic.com
*Italic numbers are estimates

About Point-Topic Point Topic provides detailed up-to-date profiles of broadband DSL or ADSL services worldwide from their website at www.point-topic.com. Information includes DSL coverage, subscriber numbers, service data rates, tariffs, technology suppliers and regulation. For further information about Point-Topic, contact Leila Hackett.

— End

Online resource:
	Point-Topic

Related articles:
	[April 23, 2002]	DSL Subscriber Numbers Analysis: DSL Subscribers by Nation
	[Feb. 5, 2002]	DSL Prime: Provisional Q4 Subscriber Numbers
	[Aug. 17, 2001]	Top U.S. ISPs by Subscriber: Q2 2001