Bottom Line:

In a new research note, Moody’s Investor Services stated that the overall U.S. telecom industry has not kept pace with cable companies (cablecos or MSOs) in terms of broadband deployments and speeds.

“Except for Verizon’s FiOS footprint, the US telecom industry has under-invested in broadband,” said Mark Stodden, VP and senior credit officer for Moody’s Investor Service. “Market share gains of cable operators (MSO’s) will persist given the capital required to catch up,” he added.

Stodden concluded that “wireline revenues will continue eroding as cable operators gain broadband share.”

Fierce Telecom  also reported Moody’s research on telcos under-investing in broadband.

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Telcos Lose While MSO’s Gain Broadband Subscribers:

In 3Q-2016, the top telcos collectively lost about 150,000 subscribers, widening the loss of about 145,000 they saw in the same period a year ago.

Leichtman Research Group (LRG) reported in a press release that the fourteen largest cable and telephone providers in the US — representing about 95% of the market — acquired about 625,000 net additional high-speed Internet subscribers in 3Q 2016. These top broadband providers now account for 92.5 million subscribers — with top cable companies having 57.8 million broadband subscribers, and top phone companies having 34.7 million subscribers.   Among the individual telcos tracked by LRG for the Q3 study, only Verizon (24,000) and Cincinnati Bell (3,100) came away with net sub additions in the period.

Other broadband findings for the quarter include:

• Overall, broadband additions in 3Q 2016 were 99% of those in 3Q 2015
• The top cable companies added about 775,000 subscribers in 3Q 2016 — 99% of the net additions for the top cable companies in 3Q 2015
• The top phone companies lost about 150,000 broadband subscribers in 3Q 2016 — similar to the loss of about 145,000 in 3Q 2015
  • Telco providers have had net broadband losses in five of the past six quarters
• In the first three quarters of 2016, cable companies (MSOs) added about 2,440,000 broadband subscribers, while Telcos lost about 475,000 subscribers

“While major providers now account for nearly 92.5 million broadband subscribers in the US, the broadband market continues to expand with top cable providers driving the growth,” said Bruce Leichtman, president and principal analyst for LRG, in a statement. “Over the past year, cable companies added more than 3.5 million broadband subscribers, accounting for 118% of the 2.995 million net broadband additions.”

Telco CAPEX Declined in 2015:

USTelecom, the champion of the traditional telcos, revealed in its annual broadband investment research report that broadband provider network capital expenditures (capex) declined nearly $1 billion in 2015 to $76 billion.

US Telecom wrote in its report that wireline broadband investment “remains critical to modernizing the nation’s network infrastructure and maintaining strong international leadership.”

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AT&T’s GigaPower:

AT&T maintains it’s continuing to invest in next-generation broadband networks under the company’s GigaPower brand. Earlier this week, AT&T announced that it has reached 46 markets with its 1 Gbps FTTH service.  AT&T plans to expand GigaPower in parts of 23 more areas – at least 67 metros in total.

Image Courtesy of AT&T

Deepening its FTTH footprint continues to be a priority for AT&T.  However, it’s unclear how broad the coverage is  in these markets and what the take rate for true high speed Internet and TV will be.

AT&T says on its GigaPower website:  “With internet speeds 20x faster than the average cable customer, you can download 25 songs in 1 second or your favorite 90-minute HD movie in less than 34 seconds.”

The latest AT&T GigaPower map is here.

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