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Cable Technology Feature Article

August 15, 2012

Phone Companies Are Quickly Losing Broadband Subscribers

By Shankar Pandiath, TMCnet Contributor

The telephone companies are fast losing out on the Internet front. It wasn't too long ago, we were first accessing the internet using the dial-up and later using the digital subscriber lines (DSL) via the phone. This process changed with the coming of the cable. Now, The Associated Press (News - Alert) (AP) is reporting that during the second quarter of 2012, the phone industry lost a substantial amount of broadband subscribers while cable companies piled on new customers mainly because of the high speeds they provided.

Unlike the heavily protected cables that carry TV signals, the phone lines are mostly decades old and are poorly suited to transmit Internet signals. Obviously, cable companies find it much cheaper albeit convenient to provide high-speed internet service in comparison to either the dial-up or DSL. With the coming of the fiber-optic system, cable companies are now offering speeds over 100Mbps in most urban areas. This is over 20 to 25 times faster than the old DSL.

That said, and as per data collected by the Leichtman Research Group (LRG), a market research company, it shows that the U.S., broadband market is growing rapidly, but slowly. In other words, during the second quarter of 2012, there were 260,000 new broadband subscribers which was far lower than the 350,000 broadband subscribers that had signed up during the second quarter of 2011. LRG further added that the net broadband additions during the second quarter of 2012 were the lowest in the 11 years that LRG has been tracking the industry. About two years ago, the phone companies had also lost subscribers during the second quarter but the then loss was limited to about 1,600 subscribers.

Interestingly, the figures also show that the telephone companies lost close to 70,500 broadband subscribers while the four leading cable companies gained exactly 290,000 broadband subscribers. Although AT&T (News - Alert) accounted for the bulk of the loss, they claimed that most of their loss came from subscribers converting from DSL to cable (Uverse).

Susan Crawford, a former assistant to President Obama on telecommunications states that this problem could be solved if cable providers allowed other companies to provide Internet service using their cable infrastructure. This would then create a competition among the ISP’s thereby providing more options to the consumer.

A freedom from regulation is a must as it invites companies to invest in their system thereby upgrading speed. This applies only for the home broadband, as the mobile broadband is a different ballgame  altogether.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2012, taking place Oct. 2-5, in Austin, TX.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Amanda Ciccatelli

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