Singularity in half the U.S.? Cable is now 50/5 or higher for nearly everyone. The numbers from Leichtman are inescapable; Cable is clobbering DSL in the U.S. The question mark after "singularity" is only because this is a single quarter; another quarter or two and the death march will be almost irreversible. Telco broadband dying across much of the United States wasn't inevitable. DSL is still beating cable in Canada, England, and France. 

For several years, nearly everyone except a few top analysts and the companies involved thought cable was decisively knocking out telcos. I frequently pointed out that telcos were doing fine in about ~50M homes with faster DSL (AT&T U-Verse, millions at Century) or fiber (Verizon FiOS.) The losses were coming in the about ~25M homes AT&T and Verizon hadn't upgraded in a decade or more. They intend to shut down landlines for most of them, expecting to be more profitable because many would switch to their wireless.

Except for Harold Feld, Washington isn't willing to face that reality. Telco landlines are about to disappear across as much as half the area of the country. As Blair Levin confirmed a while back, D.C. has no idea what to do when competition isn't working. They continue to bury their head in the sand.

What explains the (apparent) strong trend? Factors include:

  • AT&T has ~15M homes that have not been upgraded to U-Verse. They've been hemorrhaging customers for years in those areas. The 123K lost Q2 suggests even in the 30-33M U-Verse homes, customers are switching. AT&T has been assuring Wall Street that peak U-Verse speeds of 45-75 megabits down would be enough. Most customers are on 16 megabits or less, and AT&T needs to bond lines many places to get to the higher speeds. The 50-60 megabit standard cable offering is a natural way to upgrade and costs something similar to AT&T's 16 meg. It will take three years for T to upgrade 1/3rd of U-Verse to and fiber home. Starting in 2017, T will vector some of the remaining U-Verse lines. That will allow speeds of 150-250 megabits ~300 meters out but falls below 100 megabits at around a kilometer. AT&T's cabinet network wwas built to about a two-kilometer design. 
  • Verizon FiOS has some of the highest prices in the world, starting at $70. They try to disguise that with bundles and short term offers. Verizon for years was better on both wired and wireless. Their whole business model is based on being able to charge more. They have 10-15M homes with 10 year old DSL as the only offering. They lost 83K, as cable download speeds catch up and sometimes beat FiOS. AT&T and T-Mobile have pretty much caught up on the wireless side in most of the country, as Verizon has cut capital spending. U.S. wireless sucks in international comparison. Every week I get an announcement from another country that is upgrading LTE to 100-300 megabits down. Verizon is mostly at 5-25 megabits. Adjusted for population, the U.S. giants have a third as many cell sites as China Mobile and Korea. Spain has twice as many, as well as more fiber home. CEO Lowell McAdam still thinks his wireless network among the best in the world. That's dangerous.
  • Century/Qwest (-66K,) Frontier (-77K), and Windstream (-16K) have upgraded a fraction of their lines to VDSL and fiber and have plans to expand the upgrades. It may be too little, too late. They've done some remarkable marketing to hold their own against cable the last few years despite inferior networks. For a long time, they have been mortgaging their future by underinvesting. The bill may be coming due, although they each are telling investors the losses will soon stop. They have been paying out far more in dividends than they have earned and have few resources for the upgrades to stay in the game.

Susan Crawford, one of the best, has been saying for several years the U.S. is headed towards a cable monopoly. That's clearly true for 1/3rd of the country. I've been contending the data didn't support her fears in more than half of the U.S. These figures suggest this has now changed, although a single quarter is not proof. A while back, I pointed to financial issues at the telcos, in terms that would be a "sell" rating if I picked stocks. Remember that I look at longer term issues than the markets, which is why I leave the investment advice to friends.

Comcast is "going coast-to-coast" with gigabit DOCSIS 3.1 in the next 12 months.  

From Leichtman

Broadband Internet Subscribers at end of 2Q 2016 Net Adds in 2Q 2016
Cable Companies    
Comcast 23,987,000 220,000
Charter* 21,815,000 277,000
Altice** 4,105,000 24,000
Mediacom 1,128,000 14,000
WOW (WideOpenWest) 725,700 3,400
Cable ONE            508,317 (107)
Other major private company*** 4,745,000 15,000
Total Top Cable 57,014,017 553,293
Phone Companies    
AT&T 15,641,000 (123,000)
Verizon 7,014,000 (83,000)
CenturyLink 5,990,000 (66,000)
Frontier^ 4,552,000 (77,000)
Windstream 1,075,800 (16,200)
FairPoint 311,440 117
Cincinnati Bell 296,700 4,300
Total Top Phone Companies 34,880,940 (360,783)
Total Broadband 91,894,957 192,510

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Nov 6 News: Deutsche Wants a Gigabit, Finally Realizes 50 Meg Isn't Enough,1.6 Gig in Sckipio-Calix Test, Reverse Power 4 Port DSLAM for Australia, Australia Makes it Official: to Million Plus, 2 Bonded 212 Lines = 3 Gigabits

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Angelina Jolie, Ashley Judd and dozens of others have exposed Harvey Weinstein. Every industry, including ours, has monsters like that, rarely stopped.
    I choose instead to highlight some women who are driving us forward. Nicola Palmer and Sanyogita Sangupta lead Verizon’s 5G effort, the most successful in the world. They will spend $billions and have already put hundreds of cells in the field  
     Verizon jumped ahead when almost all others held back. Charla Rath persuaded the FCC to offer gigahertz of mmWave spectrum three years before the official WRC plan. They supported the NYU work to make a more accurate channel model.
     With allies, VZ created their own 5G standard in 2015 because they didn’t want to wait for 3GPP.  The system commercial in 2018 and will do mobile in 2019 if the handsets are ready.  
     “The race is on” between Verizon and AT&T to be first in each market.10%-20% of people almost everywhere hate their broadband provider and likely to switch to mmWave. The U.S. build is going fast because the two giants expect to find a large market replacing landlines outside of their existing region.
     If they are first in a land grab.

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