Global telco broadband growth slows considerably

Posted by Wolfgang Gruener

El Segundo (CA) – Broadband subscriber growth entered a downturn in 2008, according to market estimates released by iSuppli today. Global subscriber growth was 9.1%, following five years of strong double-digit growth. Additions in the U.S. slowed to a crawl and were down 56%.

Despite the fact that iSuppli’s numbers are sobering for broadband providers, there are, of course, always two sides to the story. On the one hand, 2008 subscriber additions in North America were only 3.1 million (down from 6.5 million in 2007), which should be a concern by any measure. However, iSuppli also noted that 2008 was a year of market saturation for the world’s developed regions, while developing regions continued to grow.

The United States is a very specific market in this trend, as it is expensive for telcos to bring DSL or cable broadband services to rural areas at this time – a scenario that may only change once wireless broadband services such as cellular 3G will become more affordable and “4G” services such as WiMax will be more available. However, it is clear that the U.S. broadband service market is following cellphones into a trap of market saturation and providers will have to come up with strategies to up-sell their customers and offer new services, such as VoIP and IPTV or more advanced broadband technologies such as Fiber-To-The-Home (FTTH) or VDSL.
    
And consumers appear to be interested in faster broadband: iSuppli said that new FTTH connections grew by 90% and new VDSL connections grew by 54% compared to 2007. In the cable world, many European and American operators introduced DOCSIS 3.0, significantly increasing broadband access data rates. Telco TV was a major driver of high-speed access upgrades during 2008. Virtually every telephone company and competitive access supplier deployed or made plans to deploy television services during 2008, iSuppli said. Overall telco TV subscribers grew by 8.8 million to end 2008 at a total of 18.5 million.

iSuppli estimates that there were 320.36 million broadband subscribers at the end of 2008, up from 264.16 million in 2007. The company believes that the 500 million mark will be crossed sometime in 2012, which is projected to end with 549.74 million global broadband subscribers.


Our take

Globally, the U.S. is already far behind in this race - especially when we know that 16 Mb connections are standard (DSL) in many regions in Europe and Asia – and we hear that 1 Gb connections are already discussed in Korea. Meanwhile, U.S. providers are pushing the topic of bandwidth caps, potentially limiting broadband services innovation. In a time where innovation is so important, where we see IPTV and streaming video rental services emerge and capture the interest of people, talking about extra dollars for bandwidth is a bad idea. Talking about faster speeds that enable more people to take advantage of these services may be much more lucrative for broadband providers in the long run.