Broadband Gets Top Billing at Comcast, Cox

Shapiro argues that RBOC competition is already built into Wall Street's expectations. While cable operators are now reaping nearly 70% of new high-speed subscribers, with DSL getting the rest, that split will drift to 50-50 within about three years, he says.

Shapiro estimates 114,000 net additional broadband customers for Cox in the second quarter, down from the 157,000 the operator added in the second quarter of 2002 and the 154,000 it added in the first quarter of the year. Other analysts, including UBS and SG Cowen, expect only 101,000 additions this quarter from Cox.

Comcast, expects Shapiro, will net 350,000 additional broadband subscribers in the quarter -- slightly up from the 342,000 it gained last year, but down from the 417,000 it added in the first quarter, in the wake of its acquisition of AT&T Broadband.

Mixed Bag

Meanwhile, the RBOCs have been showing mixed results. As foreshadowed on Yahoo!'s (YHOO Quote - Cramer on YHOO - Stock Picks) conference call in early July, SBC reported last week that it added 304,000 DSL subscribers in the second quarter, up from 260,000 in the first quarter. BellSouth (BLS Quote - Cramer on BLS - Stock Picks) added 103,000 subscribers in the second quarter, up from 101,000 in the first.

Verizon, however, came in weaker than expected -- 101,000 additions in the second quarter, down from 160,000 in the first quarter. As discussed in a Tuesday note from SoundView Technology analyst John Hill, the shortfall resulted from factors that include a temporary wartime advertising halt and the shutdown of outbound telemarketing. Verizon's strategy isn't to target cable modem customers, says Hill, but to go after dial-up customers and customers who have moved into new households.

Certainly, analysts and industry participants will continue to debate the implications of the numbers for some time to come. Though Time Warner Cable's quarterly numbers looked disappointing, for example, AOL Time Warner executive Don Logan suggested on his company's second-quarter call that they weren't conclusive. Pointing out that the company's cable broadband additions for the first half of 2003 matched those of first-half 2002, and that 2003 was affected by the war, Logan said, "It's too early for us to know whether there's a trend developing."

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