DSL ADDS LAG OVER THE HOLIDAYS

The holidays weren't so good to DSL this year. With the sole exception of SBC Communications, all the Bell companies saw their net DSL additions fall in the fourth quarter. Qwest Communications continued its dismal performance, adding only 10,000 lines, compared with 17,000 in the third quarter. Verizon Communications saw its net adds drop from 155,000 to 148,000; BellSouth from 121,000 to 96,000.

SBC, however, managed to keep up the breakneck pace it established last summer in its partnership with Yahoo. SBC added 245,000 subscribers in the fourth quarter (19,000 more than it added in Q3) making it the first carrier to top the 2 million mark with 2.2 million subscribers. BellSouth reached the 1 million-subscriber milestone, and Verizon and Qwest ended the year with 1.8 million and 535,000 subscribers, respectively.

Overall, the U.S. ended the year with 6.45 million DSL lines, up 10.4% from 5.84 million lines in third quarter, according to the DSL Forum. Though the growth rate in the U.S. is gradually slowing as the market matures, 10% growth in a quarter is nothing to frown about, said Tom Starr, the DSL Forum's new president. North America overall saw a 48% increase in subscribers for the entire year, Starr said. “The numbers clearly show that DSL is one of the few bright spots in this gloomy telecom industry.”

Still, penetration in the U.S. is far from maturity, even when competition from cable is considered. According to Probe Research, 14.2% of all U.S. households have a broadband connection, while other markets — particularly in Asia — have much higher penetration rates yet still manage to exceed annual growth rates in the U.S.

Unlike other major telecom markets, dial-up has managed to remain competitive in the U.S. because ISPs tend to charge flat rates for the service. And as there are few compelling consumer broadband applications on the market, most consumers find that the main differentiator is price, Probe said.