IP Capsule - November 16, 2007

Fri, 11/16/2007 - 6:00am
Brian Santo
 November 16, 2007 
IPso Facto...

A Change in Tactics
Wrapping up the third quarter, the top cable companies in the U.S. added almost precisely the same number of broadband subscribers as the top phone companies: a smidge over 1 million Brian Santoeach. That's the first time in three years cable has drawn as many new broadband customers as the phone companies. That keeps the gap of 5 million subs between the top cable companies (32.6 million total) and the top telcos (27.5 million total).

Most broadband suppliers rebounded from a Q2 that was particularly desultory. Comcast bounced from 330K in Q2 to 450K in Q3, Time Warner Cable from 188K to 224K, AT&T from 400K to 499K.

The chart of Charter's subscriber additions has always roller-coastered; this time it dropped from about 60K in Q2 to 53K in Q3. Verizon had been racking up well over 400K subscribers every quarter for more than two years. Then in Q2 it dropped to 288K subs, and in Q3 it didn't quite manage to match even that, adding 285K to its subscriber total.

In Q2, 202K of Verizon's 288K net new broadband customers were taking FiOS broadband, with the balance taking DSL; in Q3, 229,000 of 285K were FiOS.

Over the last few years, the phone companies – Verizon and AT&T in particular – chipped away at the enormous lead the cable industry had established in total subscribers by offering lower-speed DSL for a lot less money.

But Verizon reported data revenue is up 13 percent. With two quarters of substantially lower subscriber adds, but growing numbers of FiOS customers and concurrently growing revenue, it appears as though Verizon is de-emphasizing low-performance, bargain-priced DSL.

Verizon's behavior is an indicator that the key issue is becoming money, rather than market share, which means a major shift in the way telcos are going to be competing with the cable industry. AT&T isn't there yet, but should be soon.

Broadband Internet
Subscribers at end of 3Q 2007
Net Adds in 3Q 2007
Cable Companies
Comcast 12,888,000  450,000
Time Warner 7,412,000 224,000
Cox* 3,650,000 114,000
Charter 2,639,200 53,000
Cablevision  2,220,000 52,000
Insight 722,800 47,900
Mediacom 636,000 23,000
Cable One 329,815 13,458
RCN  279,000 9,000
Other major private cable companies** 1,850,000  70,000
Total Top Cable  32,626,815 1,056,358
Telephone Companies
AT&T 13,760,000 499,000
Verizon 7,971,000 285,000
Qwest 2,516,000 111,000
Embarq  1,216,000 60,000
Windstream***  830,200 48,100
CenturyTel 530,000 30,000
Citizens  497,241 17,924
Cincinnati Bell*  218,000 6,200
Total Top Telephone Companies  27,538,441 1,057,224
Total Broadband 60,165,256 2,113,852
Sources: The Companies and Leichtman Research Group, Inc.
* LRG estimate
** Includes LRG estimates for Bright House Networks and Suddenlink
*** Windstream includes acquisition of CT Communications, Inc.
Totals reflect pro forma results from system sales and acquisitions
Top cable and telephone companies represent approximately 94% of all subscribers
Company subscriber counts may not represent solely residential households

The Q3 numbers I'm quoting here are from Leichtman Research Group. LRG president Bruce Leichtman said, "Through the first three quarters of the year, net broadband additions are down 15 percent from last year's record setting pace. However, the top broadband providers are still on-track to add over nine million subscribers in 2007 – a total that is very respectable given the maturing state of the broadband market."

LRG found that the nineteen largest cable and telephone providers in the US acquired an aggregate of over 2.1 million net additional high-speed Internet subscribers in the third quarter of 2007, compared to 2.66 million in the third quarter of 2006. The aggregate total is now over 60 million subscribers.

Brian Santo, IP Capsule Editor & CED Magazine Editor
  Harmonic -   

Cablevision rings up caller ID on TV
Cablevision has joined the ranks of those offering a Caller ID on TV, available to all of its iO digital cable customers. The service, which is available at no additional charge, lets subscribers see incoming calls in a small box in the upper left corner of their TV screens.


Cox adding hosted/managed biz phone services
Cox Business has unveiled a new IP telephony service that integrates the desktop phone, PC and wireless devices. The service, called VoiceManager, can be scaled for small businesses to enterprise customers, Cox said. Cox launched the service this month in its New England systems (in Connecticut and Rhode Island). The company plans to roll it out in two more unspecified markets before the end of the year and then expand into more markets next year.

Avaya, Cisco, are 1-2 in enterprise IP telephony revenue
Through the third quarter, in a rapidly growing market, Avaya held on as the revenue leader in enterprise Internet Protocol (IP) telephony, with Cisco right on its tail, followed by Nortel and Alcatel-Lucent, according to Synergy Research Group. 

"This industry is now running on all cylinders," said Jeremy Duke, president and CEO of Synergy Research. "When measuring against the same time last year, our latest figures show an increase of 23 percent in overall industry IP revenues. Avaya grew its IP revenues by 27 percent, demonstrating that in a highly competitive market, Avaya has been successful in bringing leading IP telephony products to market."

  CED - 2008 Emerging Technologies Awards - Presented by SCTE and CED  

Sprint-Clearwire deal collapses
The proposed partnership between Clearwire and Sprint to present their separate WiMAX networks as a co-branded national network is off. Given how tepid Clearwire sounded when it first announced the proposal (see IP Capsule, July 20, 2007), that shouldn't have come as a big surprise.

XOHMBoth Clearwire and Sprint have plans to build WiMAX networks, and a partnership would have amplified each other's efforts, inasmuch as combining their footprints would have automatically increased total WiMAX network coverage that much faster.

Maybe Craig McCaw just hated the name Xohm...

The co-branding deal may have fallen through, but the two have agreed to keep talking, however, and may find some other avenue for collaboration on WiMAX network services.

Verizon uses Juniper routers to crank up backbone speeds
Verizon Business is using Juniper Networks' high-performance T-series core routers to accelerate backbone traffic. Verizon Business has set up a network configuration that connects backbone routers in 40 Gbps (OC-768) circuits, quadrupling the typical 10 Gbps backbone rates.

Comcast to offer SMBs net-based Microsoft business tools
Comcast has arranged to give its business-class customers free access to Microsoft Communication Services. Comcast said these services include corporate-class e-mail, calendaring and document sharing, based on Microsoft Exchange Server 2007, Microsoft Office Outlook 2007 and Microsoft Windows SharePoint Services 3.0. All applications are Internet-based, and as such will be accessible from any computer.

Company: Clearwire
Kirkland, Wash.
CEO: Benjamin G. Wolff

Claim to Fame: Clearwire is one of two companies (Sprint is the other) with a massive portfolio of licenses to spectrum appropriate for WiMAX services.

Recent News of Note: The company added 49K subs in Q3 for a running total of 348K; its service is now available in 48 domestic and international markets. The company has secured billions of dollars this year to help finance its rollout. It has also cut deals with both DirecTV and EchoStar to complement their video services with its wireless data services.


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