In the News

Published January 1, 2007

Telco Broadband Catching Up

In 2007, telephone companies may surpass cable providers for the first time in high-speed Internet subscriptions, an analyst at Fitch Ratings told Bloomberg News Service in December.

Carriers such as AT&T and Verizon Communications also will lose more residential phone customers next year to wireless providers and cable companies that package phone service with television and broadband access, Michael Weaver, head of Fitch’s telecommunications and cable team, told Bloomberg reporter Molly Peterson.

Phone companies collectively may boost their digital subscriber line (DSL) customer base to 31.6 million in 2007, while cable providers such as Comcast may have a combined total of 28 million broadband subscriptions, Weaver said.

DSL subscriptions are increasing at a faster rate than those for cable broadband partly because phone companies offer lower prices for the slowest connections, Weaver said. Internet users who buy DSL service at initial prices of $15 or $20 often upgrade to faster connections in the $40 range, which is comparable to cable Internet prices.

Cable Companies Launch Wireless

Comcast has become the first U.S. cable operator to enter the cell phone market, launching service in Boston, Massachusetts and Portland, Oregon in November, according to a Reuters report.

Comcast, the largest U.S. cable television operator, launched the services after a year-long trial. Meanwhile, Time Warner’s cable unit, the No. 2 U.S. cable operator, said it has made wireless services available to customers who request it in Raleigh, North Carolina and Austin, Texas and would start introducing branded wireless in all of its other markets throughout 2007, the report said.

Cox Communications, the No. 3 U.S. cable operator, also expects to introduce wireless services early in 2007.

The three cable companies plan to use the Sprint Nextel wireless network as part of an agreement reached last year.

Comcast is offering wireless as an add-on for subscribers of its “triple play” package of cable TV, telephone, and Internet services. The price is $33 a month for 200 minutes and provides such services as voice mail, navigation, and call forwarding, the report said.

DSL Now at Wal-Mart

AT&T started promoting its high-speed Internet service in mid-December in 570 Wal-Mart stores across the phone company’s 13-state region.

The number of stores will expand as AT&T launches DSL service in new markets, Rick Welday, chief marketing officer, told USA Today in November. AT&T will offer its full suite of DSL services, including a low-end service package priced at $14.99 a month.

The Wal-Mart deal is the latest partnership for the carrier, which markets its communications products, including voice, wireless, high-speed data, and video, through 4,000 retail outlets.

AT&T, for the moment, won’t be bundling DSL with other services as part of its Wal-Mart push. But Welday said that could change after AT&T’s pending acquisition of BellSouth closes.

DSL sales will be handled in Wal-Mart’s “Connection Centers,” in-store boutiques that sell a range of communications and entertainment products. In some Wal-Mart stores in Verizon’s territory, they include DSL services from that company. Verizon signed its Wal-Mart deal in June.

Foreign Broadband Not So Fast

A new report from the respected firm Analysys Consulting debunks claims that broadband speeds are much higher in Europe and Asia than in the U.S. The report measured the actual speeds consumers in those countries get, which are actually much lower than service providers advertise and critics of U.S. policy often cite.

What the AT&T-funded study found is that the actual average download speeds for incumbents is 19 Mb/s in Japan and South Korea and 10 Mb/s in Sweden. This compares to 8 Mb/s available via cable modems in the U.S.

“This disparity holds true of the non-incumbent providers as well,” the report said. “In France and Italy, the alternate xDSL providers advertise similar speeds to the incumbents and actually deliver roughly the same percentage of this speed as the incumbents. In Sweden and Japan, the alternate fiber carriers advertise speeds that are roughly two to four times as fast as the incumbents (100 Mb/s in each country), but deliver only 60 percent of that speed in Sweden and 35 percent in Japan.”

Analysys is the largest independent provider of telecommunications consulting services in the world. Its services include strategy and business planning; investment appraisal, profitability analysis, corporate finance, and venturing; public-sector policy definition, market sizing, and forecasting; and litigation support.

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News.

For more information …

Analysys Consulting’s “Survey of International Broadband Offerings” is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to and search for document #20303.