Cable kicking butt, analyst notes

As DSL numbers keep trending down, telephone companies are fighting back but may not be doing enough, according to one industry analyst.

Teresa Mastrangelo, principal analyst with Broadbandtrends.com, was one of the first analysts to sound the alarm when Verizon’s strong focus on its FiOS fiber-to-the-home initiative left its DSL products in the dust, and has chronicled the steady decline of DSL versus cable modems in the broadband world.

In her November 2008 newsletter, Mastrangelo notes that DSL port shipments hit their lowest level in two years in the third quarter of 2008. DSL net adds have been trending down each quarter since the beginning of 2007. Cable now is outpacing the telcos by two-to-one in broadband additions and three-to-one in cable modems versus DSL, Mastrangelo reports. Cable now has 52% of broadband subscribers compared to 46%.

“Cable is definitely kicking butt,” Mastrangelo said. “Their bundle is still better and, what’s just as important, it is available to everyone in their footprint. The telcos just don’t have that ubiquitous service.”

There have been some new DSL promotions, the first seen in a while, Mastrangelo said. “We started in September to see promotional activity – which had been pretty light for the better part of a year,” she said. “But it’s not like when they first came out with $14.95, and the type of PR we saw then. If you don’t actively market your DSL service, no one is going to know what is happening. We used to get Verizon DSL things almost weekly, but we have not gotten anything from Verizon for more than a year.”

As consumers get more price-conscious, the telephone companies need to make sure their markets are still aware of the lower-cost offerings, Mastrangelo said.

Cable continues to promote, and the promotions are more varied. For example, she said, Cox Communications is using modem upgrades as the entry point for selling more digital voice service.