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Phone Cos. Lose Broadband 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.

The industry has resisted this type of arrangement in the past, insisting that freedom from regulation provides them with an incentive to invest in their systems and upgrade speeds.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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