In the US, DSL has been falling behind cable and fiber Internet links for some time and now lopes along slowly at the back of the speed pack. But two of the country's biggest DSL providers, Verizon and AT&T, have found that their efforts to move beyond simple DSL offerings are now generating excellent growth, even in the midst of a recession.
Verizon today announced its financial numbers for the first quarter of 2009, and the results were excellent for its fiber-optic FiOS system. The company's expensive fiber-to-the-home network added 298,000 new Internet customers, excellent growth considering that FiOS has only 2.8 million Internet customers in total. FiOS now has 55.5 percent more subscribers than it did a year ago, and it currently passes more than 9 million US homes.
AT&T's U-verse system added nearly the same number of customers (284,000), which brings the fiber-to-the-node system up to 1.3 million subscribers. That means AT&T is adding customers twice as fast as it did in the first quarter of 2008.
Each service offers higher speeds than traditional DSL. Even though AT&T uses DSL tech for its last-mile U-verse connections, only U-verse subscribers can sign up for the "up to" 18Mbps data tier. FiOS offers 50Mbps connections, with the possibility of going far higher in future.
But what really makes the services competitive with cable "triple play" offerings (phone, TV, Internet) is the fact that both telcos now offer TV service of their own. Subscribers to cable, FiOS, and U-verse no longer have any need for a second data link to the outside world.
Traditional DSL, already targeting the "value" segment of the Internet access market, continues to lose ground. Verizon lost 46,000 DSL customers in the first quarter. AT&T gained 471,000 net broadband subscribers, but these numbers include both the 284,000 U-verse additions and the company's wireless 3G laptop cards.
While DSL and cable are still roughly tied for subscribers in the US, cable has been growing much faster. In the middle of 2008, cable was adding three new subscribers for every one DSL picked up, and big players like AT&T and Verizon are pinning their wireline hopes on services like U-verse and FiOS. This last week's growth news suggests that the strategy has potential.
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