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Report: DSL growth best ever

DSL providers added the greatest number of new residential customers in history last quarter but only marginally gained market share against cable rivals, says a new study.

DSL providers added the greatest number of new residential customers in history last quarter but only marginally gained market share against their cable rivals, according to a study released Tuesday.

During the period ending March 31, 2004, providers of Net access via digital subscriber lines added 1.17 million net new subscribers, beating their previous record by 300,000, according to a study by Leichtman Research Group. Total broadband additions, including cable, reached 2.34 million, bringing the U.S. broadband population to 26.9 million.

This is encouraging news for the Baby Bell phone companies--Verizon Communications, SBC Communications, BellSouth and Qwest Communications--who are the main purveyors of DSL. Over the past year, the Bells have discounted their DSL services in hopes of tapping consumer demand for faster Internet access. These discounts have helped the Bells keep pace with cable companies while helping to stem losses from their core phone services.

But despite solid gains this quarter, DSL remains far behind cable for overall broadband customers. Cable companies, such as Comcast, Time Warner Cable and Cox Communications, own 62 percent of the market, down merely two percentage points from last year.

Cable companies have responded to DSL price cuts by boosting their base download speeds by nearly twofold. Some studies have shown that price matters more than speed, presumably giving DSL an edge. But cable continues to be the market leader.

"Thus far, it appears that DSL's newfound success has expanded the overall broadband market, rather than solely coming at the expense of cable's growth," said Bruce Leichtman, principal analyst for the study.