Slowing Economy Slowing Broadband Growth

Om Malik

The demand for broadband skidded sharply during the fourth quarter of 2008. We went through the latest quarterly financials of all the major broadband service providers and collated the net new subscriber additions –- and so far, things aren’t looking good. Of the 12 majors, five companies, including Cablevision, aren’t due to report their quarterly results until later this month or early March.

Nevertheless, the sharp decline in net new additions is pretty clear (see the chart below). The downturn has been particularly hard on cable companies, especially Time Warner Cable, which saw a 44 percent decline in new additions.

Verizon has posted the best performance so far, while AT&T is seeing some benefit from the rollout of its Internet TV service, U-verse, which commands higher bandwidth. AT&T lost about 1,600 DSL subscribers in the most recent 3-month period.

Qwest, Embarq and Windstream all saw declines in their subscriber additions – mostly because they cover territories where the housing downturn has taken its toll. Now even if the remaining companies report the same number of new subscriber additions for the fourth quarter of 2008, the overall broadband additions for the last three months of 2008 will still be down sharply.

	Q3	Q4
Comcast	382,000	331,000
Cablevision	32,000	TBA 2/26/2009
Cox	60,000	TBA 03/04/2009
TimeWarner	222,000	124,000
Insight	20,500	TBA
Verizon	225,000	282,000
ATT	148,000	236,000
Qwest	61,000	54,000
Embarq	24,000	24,000
Windstream	28,400	16,000
CenturyTel	21,000	TBA 2/19/09
Total	1.371M	1.06M

Source: Company Filings

Broadband Stimulus Package Nears Finish Line

from GigaOM by Stacey Higginbotham

The House and Senate held a pre-Valentine’s Day love fest last night and produced a compromise stimulus package; the two houses must now approve the conference bill, after which it would be sent to the president. For details on the full $789 billion plan, you can check out the legislation. We’ve outlined what the $7.2 million devoted to broadband funding will buy (if you’re looking for the tax credits, they’re no longer there):

• The grants will be split among two agencies — something most broadband proponents were against. The National Telecommunications and Information Administration will administer $4.7 billion, and the Department of Agriculture’s Rural Utilities Service will administer $2.5 billion, which may cause problems for the rural ISPs.
• There are no longer any speed requirements, which means the federal government, which currently defines broadband at 768 kbps, will determine appropriate speeds for the underserved areas getting grants. Hopefully they will think ahead, and opt to push fiber where it’s reasonable to do so, and fast wireless where it’s not.
• The grants must all be dispersed by Sept. 30, 2010, and those receiving them have two years to build out infrastructure. Additionally, the FCC has one year to come up with a comprehensive national broadband plan to provide universal coverage and encourage citizens to use the network.
• Grant recipients must adhere to “non-discrimination and network interconnection obligations.” At a minimum, this means the principles contained in the FCC’s broadband policy statement.
• The Commerce Committee must gather much-needed data on broadband penetration within the next two years and create a publicly, available searchable database on the NTIA web site. Maybe it will resemble this map of France. The bill allocates $350 million for the project.

Nearly 31 Million Business IP Phones Will Ship in 2012, While the Consumer IP Phone Market Diverges Towards Media Phones

The IP phone market is actually a tale of two drastically different markets-business and consumer-with the former thriving and the latter diverging in a drastically different direction, reports In-Stat (http://www.in-stat.com). By 2012, 31 million voice-centric business IP phones will ship. However, the consumer side of the market is radically different. Among voice-centric IP phones, businesses will outpace consumers more than 10 to 1.

The nascent consumer market for voice-centric IP phones is being subjugated by the introduction of IP media phones, such as the Verizon Hub and AT&T HomeManager that support both IP communications, as well as delivery of Internet information and multimedia content. A free copy of In-Stat's media phone research report, The Media Phone Has Arrived!, #IN0904563RC, can be downloaded at http://email.in-stat.com/cgi-bin4/DM/y/hBPDJ0NpQCa0K560HBg60EV.

IP-based communication is replacing TDM networks at a steady pace in the workplace, but adoption is slow among consumers. Even where VoIP is being used in the home, many consumers don't realize it because IP-based cable voice services are marketed as traditional PSTN voice offerings, supported by traditional analog telephones.

Within the business market, corded IP phones remain the standard, and will continue to dominate the enterprise IP phone market through 2012. However, WLAN and IP DECT phones continue to grow, especially within some specific vertical and geographical markets.

Recent research by In-Stat found the following:

• Cisco, Avaya, and Nortel are leading the market for enterprise IP phones.
  
• Wi-Fi integration in cellular phones is growing rapidly; however, the majority of Wi-Fi/cellular phones are not designed for VoIP. 
  
• Uniden holds top market share for consumer IP corded phones
  

The research, "IP Phones Worldwide-On the Desk and Beyond" (#IN0803999CT), covers the worldwide market for voice-centric IP phones. It includes:

• IP phone vendor market shares for 2007 and 1H2008, segmented by phone type and consumer versus business
  
• A 5-year forecast by IP phone type (Corded, WLAN, Cordless DECT, Dual-mode Cellular/WLAN, Consumer, Business)
  
• Analysis of trends in business and consumer markets
  
• Profiles of more than two dozen vendors

Femtocells May Be Tough Sell To Consumers; SIP and UMA Alternatives Linger

Femtocells can provide wireless users with better coverage and free calling within the house, reports In-Stat (http://www.in-stat.com). But that might not be enough to convince consumers to adopt them, the high-tech market research firm says. The growing number of Wi-Fi cellular phones means the cost of the femtocell alternative, calling on a SIP phone or via UMA, is getting cheaper.

Femtocells may have a bright future, but convincing the public they are needed may take some work, especially when customers realize that they are paying for the broadband to power the femtocell.

Recent research by In-Stat found the following:

• Worldwide shipments of cellular femtocells will grow to more than 30 million in 2012.
  
• The US will represent about 40% of total femtocell shipments.
  
• According to In-Stat's end-user survey, 44% of likely femtocell subscribers would drop their landline phone service.