Technology | Media | Telecommunications

Monday, August 18, 2008

Broadband SPs Witness a Dramatic Decline

North American broadband service providers (SPs) witnessed a dramatic decline in the number of net new subscriptions in the second quarter of 2008, according to a market study by Strategy Analytics.

While seasonality and market maturity explain some of the phenomenon, the broadband operator's recently reported second quarter results point to other factors.

According to John Lee, Analyst in the Strategy Analytics, "There is a fair amount of seasonality in broadband, so a dip in the second quarter is not altogether unexpected. However, the magnitude of this decline suggests that the current economic environment is hampering the ability of service providers to garner new customers."

Each of the top four U.S. service providers, Comcast, AT&T, Verizon and Time Warner Cable, saw its number of net new subscriptions fall precipitously in the second quarter, with the cable companies faring slightly better than the telcos.

"This is not a situation where existing consumers are dropping broadband en masse," said Ben Piper, Director of the Strategy Analytics. "Rather, the number of new subscribers is dwindling. In lean economic times, people are less inclined to assume an additional recurring monthly expense."

Expect U.S broadband service providers to lower prices, as they have done thus far every time when the market shows signs of reaching prolonged saturation.