Cable Speeds Up to Deal a Blow to Telcos

Posted by: Olga Kharif on October 23, 2008

Yesterday, cable service provider Comcast announced it will offer super-fast broadband speeds to Internet access subscribers in Boston and Philadelphia. To become available in 10 major markets in the next few months, the service will offer speeds of up to 50 Megabits per second. Essentially, Comcast will double most subscribers’ speeds at no extra cost.

The announcement deals a blow to telcos, already struggling to keep subscribers using DSL. In the second quarter of 2008, for the first time ever, the Big Three telcos reported cumulative negative net DSL subscriber additions. As Bernstein Research analyst Craig Moffett wrote in a recent note, this could be just the beginning. “The fear for TelCo investors is that DSL is ‘over,’” he wrote. Part of the reason is, because of how their networks are constructed, telcos can’t keep up with cable in connection speed.

One solution that Moffett puts forth is for telcos to make available in more areas so-called “naked DSL,” which is Web access that doesn’t require a subscriber to also buy a phone line. As Moffett notes, such a bundle is increasingly becoming irrelevant as more consumers drop home phone lines altogether and become all-wireless. Today, some 25% of Americans only use wireless phones.

Of course, “naked DSL” offerings could erode telcos’ financials further. It’s a Catch 22, for sure.

Reader Comments

Rolf Bork

October 24, 2008 3:33 AM

If telcos still consider REALTIME TELECOMMUNICATION their core business DSL should be considered a temporary life extension of the old copper wires installed for REALTIME VOICE COMMUNICATION for the environment BEFORE CELL PHONES.
DSL will not only suffer from the cable service providers but also from WiMax and all emerging wireless communication.
However the need for REALTIME TELECOMMUNICATION has not disappeared...it is just in the process of shifting to REALTIME VIDECON (and more). Sounds like a big swing back for fixed wires to homes (this time fiber-optics, not copper) and communication protocols and service that the telcos owned and mastered all the time. REALTIME capabilities will be the USP for the broadband future and here the telcos have much better starting positions than the cable service providers.
Rolf Bork, BOD mediaf.com & sensitivetech.com

JohnJ

October 25, 2008 9:48 AM

I live in a highly populated suburban area, but can't even get the lowest-speed version of DSL. I apparently live too far away from the Qwest Central Office to get DSL. Qwest advertises fiber-optic internet service, but that's not available here either. In any event, Comcast currently has a monopoly on high-speed internet service in my area.

TomG

October 27, 2008 10:45 AM

I had Comcast triple-play. It all fell apart when there was a major cable outage. We lost everything. I switched to lower speed DSL (compared to cable), an ATT phone line and DirectTv. I don't plan on putting all my eggs in one basket anytime soon.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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