This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Simple Lesson in Broadband Numbers: People Want Speed

NEW YORK (TheStreet) -- The latest figures on wired broadband are out from Leichtman Research covering the second quarter of the year, and most analysts are going to miss the story.

They're going to write that there are now more Internet subscribers than there are cable subscribers. 

Read More: 10 Stocks Carl Icahn Loves in 2014

That is not the story. The story is people want speed and cable has it. Cable is killing the phone companies because cable wires are thicker and deliver more bits for less capital investment. I first wrote about cable's plans to take over the broadband world for the National Cable Television Association back in 1997, and the plan has succeeded beautifully.

Comcast (CMCSA) is now America's dominant broadband supplier, and Time Warner Cable (TWC) is second. Should their merger be approved Comcast will have nearly 39% of the entire U.S. broadband market. That's more subscribers than all the old regional Bells -- AT&T (T) , Verizon (VZ)   and CenturyLink (CTL) -- combined.

Taken together the cable operators now have 59% of the market, according to Leichtman, and the disparity is growing. During the last quarter cable added 381,657 subscribers. Phone companies added just 2,083.

If you are looking for change in this status quo, the place to look is with fiber build-outs that deliver gigabit-per-second speeds. But don't hold your breath. A decade ago the major phone companies were saying they would spend over $53 billion to deliver fiber to 36.1 million homes. They haven't done it. Instead they have been lobbying, often successfully, to keep municipalities from making such investments. 

After four years Google (GOOGL) has yet to go beyond Kansas City with its Google Fiber, although it bought a municipal fiber system in Provo, Utah, and has said it will launch in Austin, Texas, later this year. 

Mostly companies are delivering what reporters call "fiber to the press release." Google put nine markets in competition with one another for fiber early this year, including Atlanta, where I live, demanding detailed concessions from local governments. Since then no firm decisions have been made. 

Read More: Google Fires Latest Laptop Missile Into Microsoft’s and Apple’s Hull

Meanwhile, other large Internet service providers have been claiming to deliver gigabit speeds real soon now. But, curiously, they're mainly building where such speeds already exist, or are coming. If this were a good business, wouldn't they build where there's no competition?

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,055.87 -116.81 -0.68%
S&P 500 1,982.77 -11.52 -0.58%
NASDAQ 4,508.6880 -19.0010 -0.42%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs