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 G.fast 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

Newsletter

Often interesting

Events

Mobile World Congress, Barcelona, Feb 27-March 2 100,000 mob Barcelona. Fares from New York are triple the usual price and hotels even higher - if you can find one less than a hour from the city. Everybody who is anybody goes so everybody who is anybody goes. Beyond the pomp and hot air are a slew of top technical people. Seek them out and make sure yo make appointments in advance with the people you want to see. Hint: You can still get rooms at the hostels in town. Next year, book way in advance to get one of the hotel rooms GSMA have negotiated with the city.

Digital Hollywood Media Summit, New York March 7-8. Victor Harwood always had an enormous number of top people in an almost overcrowded schedule. Senior folks from advertising, all media, marketing and more. VR and AR are heavily represented, from the talent to the salesmen. The price is about half what most shows charge and there are discounts for those with limited resources, including students.  A great way to learn what the most advanced in these fields are doing.

Brooklyn 5G Summit April 19-21st The most sophisticated people in wireless will be there, from the CTOs of NTT and Nokia to the most respected academics on the planet. Incredible S/N. If you can't come to Brooklyn, you must watch the stream. It takes two or three years for most people to catch up to what's learned here.

G.fast Summit, Paris May 9-11 Trevor Linney of BT is deploying 10M lines. John Cioffi promises something astonishing. Everyone in the industry will be there except Broadcom, being their usual antisocial self. On the 9th, Hubert Mariotte of the standards committee has a deep technical tutorial and I have a session for everyone else.

TNO Ultrabroadband Den Haag June 12-15 Always a strong group.

I'm moving from fastnetnews.com to fastnet.news everything since July 2014 is here.

 

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