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Why U.S. DSL has Become the New Dial-up

The second quarter proved to be one of the most challenging on record for U.S. broadband service providers, according to the most current market study by Strategy Analytics.

Broadband service providers added only one million net additional subscriptions in Q208, compared to over two million in the previous quarter.

Particularly hard-hit were the telcos, some of which experienced a 90 percent sequential quarterly drop in net subscriber additions. Cable companies fared slightly better, which provided the only positive news in an otherwise lackluster market.

"The dramatic downturn in the quarter is largely attributable to a slowdown of new subscriber connects, as well as consumer migration from DSL to cable," noted John Lee, Analyst in the Strategy Analytics Multiplay Market Dynamics service.

"As home users become more accustomed to high speeds at the office or elsewhere (like visits abroad), they are less willing to tolerate slow performance in their home."

U.S. telco customers apparently quickly discover the limitations of DSL, and they wonder what they might experience if they had "real" broadband. However, even the U.S. cable company broadband speeds really can't compare to the European and Asia-Pacific benchmark for real broadband.

Ben Piper, Director of the Strategy Analytics Multiplay Market Dynamics service added, "The telco's core DSL offerings are unable to compete effectively with cable; they must step up their already frenetic fiber roll out just to stay in the game. Indeed, we are starting to see DSL become the new dial-up."

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