Broadband war gets bloodier
Comcast's second quarter results show that competition between cable and phone companies is heating up, which could lead to better pricing packages for consumers.
The broadband war between cable and phone companies could get bloodier as these companies aggressively try to steal customers from each other.
Comcast, the largest cable operator in the U.S., said Wednesday that it is still adding new subscribers for its high speed Internet and telephony services, but that growth is slowing as broadband penetration levels plateau and economic concerns ripple through its business.
Judging from the earnings announcements from Comcast, Verizon and AT&T, adding new broadband customers is getting more tough as many people already subscribe to either cable or DSL. As a result, cable operators and phone companies are battling each other head to head to steal customers from one another.
In the second quarter, Comcast may have edged out slightly ahead of its phone competitors. During the second quarter, Comcast added 278,000 high-speed Internet subscribers and 555,000 new phone customers. This is good news considering that Verizon only added 54,000 new DSL customers and AT&T added only 46,000 DSL subscribers.
Comcast officials said on the company's conference call that about two-thirds of its new broadband customers had switched from DSL. And about one-fifth of these customers are signing up for the triple play bundle.
But some of this good news is tainted by the fact that its adding fewer customers than it did a year ago. For example, in the second quarter Comcast added about 18 percent fewer broadband customers than it did a year ago. And it added 21 percent fewer telephony subscribers compared to year ago.
What's more, Verizon and AT&T are making headway with their TV services. Verizonin the second quarter and 176,000 Fios TV customers. AT&T added 170,000 U-Verse TV subscribers, but it didn't break out the number of U-Verse broadband additions.
Meanwhile, Comcast lost 138,000 basic video subscribers during the quarter. But it added 320,000 digital cable subscribers. So subtracting out the 138,000 basic video subscribers it lost, Comcast had a net video addition of 182,000 subscribers.
So it appears that Comcast is neck-in-neck with its telephone rivals when it comes to video. And Verizon appears to be making significant headway in the broadband market with its Fios service. But with the economy in trouble and 90 percent of active Internet users connecting via broadband, these companies are going to rely more heavily on promotional pricing to entice customers to switch.
As a consumer, this is great. We benefit from good deals offered by the different operators. But it's also frustrating. I recently asked representatives from Verizon to give me a sense of what I could expect if I signed up for the triple play Fios package in New York City after the $95 a month promotion ends in a year. Currently, I pay about $150 a month for Time Warner Cable TV and Internet service and Vonage voice service. And if the Verizon package jumps to the same price, I'd likely consider switching back to Time Warner if I could get a better deal.
But when I asked the Verizon representative about this, he was evasive in answering my question. I'm hoping that living in awill mean that prices from both cable and phone providers will continue to come down.