It is way too early to determine an actual trend, but there have been some anomalies this quarter. Dish Network posted the first-ever decline in customer subscriptions for any satellite TV provider. DirecTV (News - Alert) did not have those problems, and added 894,000 gross U.S. subscribers and 129,000 net subscribers in the most recent quarter.

 

And though AT&T (News - Alert) and Verizon can claim meaningful progress on the video customer front, both telcos seem not to have kept pace with Comcast, CableVision systems and Time Warner Cable on the broadband access front.

 

Comcast (News - Alert) added 278,000 net broadband access customers. Cablevision added 52,000 broadband access customers. Verizon added 178,000 FiOS access lines but lost 171,000 DSL lines. AT&T did not even break out its broadband access figures, instead bundling them with U-verse TV subscriber adds. Verizon did the same.

 

Elsewhere, Cogent Communications experienced a first-time, two orders of magnitude shift in traffic growth for the months of April and May. Where Cogent traditionally has seen growth rates over the past five years of about 120 percent a quarter, it saw in the second quarter negative growth of one percent.

 

It's too early to conclude anything definitive, yet. Clearly there are some market share shifts, whether temporary or long term cannot be assessed yet. There probably are some shifts of marketing emphasis, some change in reporting methods and perhaps even some macroeconomic impact. There might be a shift in consumer demand (towards cable modem service and away from DSL). Without a doubt, the maturation of some former growth markets can be seen.

 

What might be more important to watch is the possibility of a shift of demand that could affect the capacity markets, not just shifts of market share in established markets. It's one thing to predict that Internet traffic will continue to grow. It is quite another to pinpoint the actual growth drivers or the actual consistency of growth.

 

Cogent CEO Dave Schaeffer says the industry might now be at a point where traffic no longer can be driven by either broadband access penetration growth or even faster access speeds.

 

"We’ve seen a proliferation of broadband connectivity where we now have almost 80 percent broadband penetration in the Western world," says Dave Schaeffer, Cogent CEO. Line rates on those mass mile connections have increased to close to five megabits of download speed which is sufficient for most applications particularly video"

 

"You’re not going to get an uplift from more broadband penetration or greater download speed," he says. "What you need are more applications that consumers want to use more and more."

 

"Many applications that people point to could migrate to the Internet or increase and not materially move the needle because the base is large," he says. So what about video? Sure, video is driving traffic, he says.

 

There are applications that will drive growth and we’ve been pretty clear that this is really video we see that with a number of customers and we see that trend continuing. "But we have not seen the massive migration of video consumption over the Internet, he says.

 

"Today video is consumed about 4.5 minutes a day on the Internet and television, which is traditionally delivered by a broadcast satellite, cable or DVD, is consumed 4.5 hours a day," Schaeffer says. Until that viewership pattern changes, "we will see slower growth," he adds.

 

"The Internet is not going to decelerate, it’s not going to go away but it is going to be a bit lumpy in the way in which it reaccelerates," he says.

 

At least some of Cogent's unusually light traffic growth might be due to video and social networking sites that exhibited much more modest traffic growth than they previously had been seeing, Schaeffer suggests. About 85 percent of Cogent's growth now comes from new customers rather than bandwidth increases from existing customers.

 

"I think those companies (are) taking less bandwidth because their underlying businesses are not growing at as fast of a pace," Schaeffer suggests.

 

"While many of our competitors comment on traffic anecdotally I think a number of them have demonstrated and some of them forthright and others maybe not quite so forthright in acknowledging this slow down in traffic growth and it is supported by unique impression views on the Internet over the past year," Schaeffer says. "The Internet will continue to grow but it is in a period of transition."

 

There were some anomalies in the data this quarter. It bears watching.