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Cable Providers Now Have More Internet Customers

Stocks in this article: CMCSA TWC CHTR CVC T VZ CTL FTR

NEW YORK (TheStreet) -- For the first time, Internet service subscribers now outnumber TV service subscribers at the country's top cable companies, according to a newly published survey.

Leichtman Research Group reports the country's largest cable and telephone providers, which represent more than 90% of the total market, added nearly 385,000 net additional high-speed Internet subscribers in the second quarter of 2014. When combined, (50.7 million subscribers from cable companies and 35.2 from telephone companies), nearly 86 million people connect to the Internet though these top 17 providers.

Bruce Leichtman, the research company's president and principal analyst, notes that cable companies are expanding their services to better compete in this market. "With the addition of more than 30 million broadband subscribers over the past decade, cable providers have clearly expanded well beyond their roots in cable TV service," Leichtman said in a release. "As of the end of 2Q 2014, the top cable providers now have more broadband subscribers than cable TV subscribers."

Read More: 8 Stocks George Soros Is Buying in 2014

At the top of the list of cable companies is Comcast (CMCSA) which added more than 200,000 new Internet customers in the second quarter followed by Time Warner (TWC) (86,000 additional customers) and Charter Communications (CHTR) adding 62,000. Placing fourth, Cablevision (CVC) actually registered a net loss of 9,000 customers in the quarter.

In February of this year, Comcast announced a deal to buy Time Warner in a stock swap worth an estimated (at the time) $45.2 billion. The proposed merger of the number one and number two cable and Internet companies is currently under review by both the FCC and the U.S. Justice Department.

AT&T (T) topped the list of providers although suffering a loss of 55,000 customers in the second quarter. At the same time Verizon (VZ) scored a net gain of 46,000, CenturyLink (CTL) lost only 2,000 while Frontier Communications (FTR) added 27,500 subscribers.

The survey found:

    • Overall, broadband additions in 2Q 2014 amounted to 130% of those in 2Q 2013
    • The top cable companies accounted for 99% of the net broadband additions for the quarter versus the top telephone companies
    • The top cable companies added about 380,000 subscribers, representing 128% of the net additions for the top cable companies in 2Q 2013
    • For the top cable providers (not including overbuilder WOW), the number of broadband subscribers exceeded the number of cable TV subscribers for the first time ever -- with about 49,915,000 broadband subscribers at the end of 2Q 2014, compared to about 49,910,000 cable TV subscribers
    • The top telephone companies added about 2,000 broadband subscribers in 2Q 2014 -- compared to a loss of about 2,000 in 2Q 2013
    • AT&T and Verizon added 627,000 subscribers via U-verse and FiOS in 2Q 2014, while having a net loss of 636,000 DSL subscribers
    • The top cable broadband providers have a 59% share of the market versus the top Telcos

But, Leichtman warns providers not to abandon one service for the other. In a phone interview he said, "Broadband Internet penetration must be balanced." He thinks companies offering only broadband or television will find their future options limited. "It's still all about the bundle."

Read More: 4 Stocks Warrenn Buffett Is Selling in 2014

-- Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's Senior Technology Correspondent.

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