Forecast: Cable Beats Telcos in Tough Broadband Year

A new report says nearly six million U.S. households will become new high-speed Internet customers this year. It sounds good, but that actually would mark a 12 percent decline in subscriber growth compared to 2008. (And you thought last year was bad.) This is all according to a new forecast by market research provider Pike & Fischer.

The total number of broadband-connected homes will reach nearly 74.5 million by the end of the year, representing about 63 percent of all U.S. households, P&F says in its new report, "Broadband Competition Outlook 2009."

The report says the cable industry will capture about 75 percent of new broadband subscribers. While top telephone companies such as Verizon and AT&T are providing new fiber-optic Internet services that can exceed the speeds offered by cable, most of their service areas are covered only by DSL (digital subscriber line) service, which consumers are increasingly spurning because its speeds are slower than cable.

P&F bases its forecast on the nation's economic crisis, which is increasing unemployment rates and slowing housing starts. Consumers will spend less on communications services as their job security becomes more tenuous and their discretionary income plummets.

However, broadband customer growth could exceed forecasts if the incoming Obama administration succeeds in its plan to expand broadband availability as part of a major economic stimulus package, notes Scott Sleek, director of P&F's Broadband Advisory Services.

"Government initiatives, such as tax incentives and loan guarantees to help expand broadband infrastructure into underserved areas, could enable service providers to bolster their customer counts," Sleek said. "In addition, policy-makers are likely to support training and education programs aimed at increasing customer adoption of broadband. These steps could offset what will be an inevitable slowdown in subscriber growth."

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