Over at Emerging Media Dynamics (my consulting firm), we’ve just completed an analysis of broadband growth trends and have confirmed what many folks have lately suspected. Broadband growth is, in fact, slowing down, at least in the U.S., a logical development that had to happen sooner or later. It makes sense that it would happen now given that penetration of high-speed Internet service has top the 50% household milestone.
But it is weird (and disconcerting to cable and telco executives) for growth in the broadband market to cool down after so many years of only upward momentum. Broadband service started to become available in 1997, really, and since then the number of net new customers signing up for cable modem or DSL service has only gone up each year.
Our analysis of the surprisingly soft gains posted by the top broadband providers in Q2 07 shows that even taking into account seasonal factors, the rate of net new broadband customers is dropping. (More after jump.)
The top four telco and top nine cable broadband service providers experienced combined net high-speed Internet customer additions of 1.56 million during Q2 07, a rate of growth that was 22% lower than the 1.994 million net additions the same group of companies gained during Q2 06.
Making projections is always an iffy proposition, but broadband service is a relatively predictable communications product that follows familiar adoption curves. Therefore, we fiddled with our models and came up with predictions for what the broadband growth curve will look like from here on out. (More after jump.)
And not surprisingly, growth is going to drop this year, next year and each year between now and 2017. I say not surprisingly because it’s a mathematical certainty that broadband growth would cool (after all, no service can keep expanding infinitely) and not surprisingly given what happened in Q2 07.
As our chart shows, the year 2006 may very well have been the high-water mark in residential broadband growth, with all providers adding an incremental 10.6 million units during the year. For 2007, however, the net growth in residential broadband subscriptions could slip to 8.8 million, declining each thereafter until hitting 1.5 million for the year 2017. The upshot of this cool-down could be greater price competition across the range of triple-play (and even quadruple-play) services in selected markets, plus intensified efforts by broadband providers to differentiate their services in terms of speeds, reliability and even content-related add-ons.
Cynthia Brumfield at 7:03 PM|Comments(0)
Blogs We Read
