AT&T Inc., the largest phone company in the U.S., has taken a more conservative approach to optical fiber, building it out to neighborhoods but not all the way to homes. The Internet signal is still carried the last stretch, into the home, on a phone line. This build-out is less costly than Verizon's, but doesn't let AT&T compete with the fastest cable connections.
The Associated Press's tally of reports from the eight largest phone companies in the U.S. shows they collectively lost 70,000 broadband subscribers in the April-to-June period. Meanwhile, the top four public cable companies reported a gain of 290,000 subscribers.
AT&T accounted for the bulk of the loss â¿¿ 96,000 subscribers â¿¿ while other companies on average added a few thousand subscribers.
The second quarter is a traditionally weak one for all broadband providers, since college students cancel their subscriptions before heading home for the summer.The phone companies have lost subscribers once before, two years ago. That also was during the second quarter, and the loss then was 1,600 subscribers. The picture for phone companies is less dire when considering the last 12 months, a period during which they added nearly 600,000 subscribers. However, cable companies added more than three times as many. Phone companies were closing the gap with cable around 2005 to 2007 by adding more subscribers, but have been lagging since then, according to Leichtman Research Group. Now, the major phone companies have 34.7 million subscribers to cable's 45.7 million, the research firm says. Analyst Craig Moffett at Sanford Bernstein called the decline in broadband a "body blow" to phone companies, which have been using broadband to offset a long-running loss of subscribers to regular phone service. Now, both are declining, he noted. Susan Crawford, a professor at Cardozo Law School in New York and a former assistant to President Obama on telecommunications, has argued that a looming cable monopoly in three-quarters of the country is "the central crisis of our communications era." She suggests that the U.S. follow the example of countries that have forced cable providers to allow other companies provide Internet service over their cables. The service-providers would compete with each other and provide some choice to the consumer, she says.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV