Wireless and Fibre Post Strong Gains in Latest FCC Broadband Report

In the latest figures released by the U.S. Federal Communications Commission (FCC), the number of high-speed lines (those that exceed 200 Kbps in one direction) recorded as of 30 June 2006 grew by 26% in the first half of the year or 52% for the full-year period to total 64.6 million lines in service. Of these lines, 50.3 million served primarily residential end users, up 28% from 39.3 million six months previously to give a penetration rate of 45%.

Of the total 64.6 million lines in service, cable and ADSL have been significant losers by percentage with "other" technologies growing from 7.6% to 18.4% over six months.

Outlook and Implications

• Wireless technologies have an impact: The range of technologies classed as "other" include satellite, broadband over power line, terrestrial fixed, and mobile wireless (although these data should include only connections for homes and businesses rather than individual mobile subscribers) has made significant strides at the start to take a significant component of market share in both the residential and business users. Improvements to satellite and wireless services taking speeds available over the 200 Kbps threshold will have helped, but WiLAN and WiMAX services in particular have started to be deployed and are gaining significant traction which will build over the next year (seeUnited States: 9 August 2006: Sprint Outlines Plans for Nationwide WiMAX Network). Fixed wireless jumped 40% to 360,976 users over the same period, likely driven by fixed WiMAX services driving residential fixed wireless up 48% to 301,153 subscribers.
  However, the main increase is from mobile wireless, which jumped from 3.1 million subscribers to 11.0 million over the six-month period—a 250% growth as 3G and 3.5G networks (UMTS/HSDPA, CDMA/EV-DO) are deployed that break the 200 Kbps barrier and take up increases. Whether this represents data plan subscribers, data cards, or enabled handsets in the field (with or without data modem throughput) is not clarified. Residential high speed mobile connections grew even faster, from 10,143 residential subscribers to 1.16 million, although again there are issues of definition with this. All mobile wireless statistics could include WLAN and mobile WiMAX services that are emerging in various forms such as Municipal WiFi.
  Satellite services have also seen a significant increase jumping by 16% over the six-month period to 495,365 users, with residential subscribers growing by 19% to 382,047. This is likely boosted by mainstream telcos such as AT&T marketing satellite broadband (see United States: 9 May 2006: AT&T Announces New Broadband and Video Deployment). Power line continues to be insignificant, with the 11% increase still taking the total users to a minor 5,208.

• Fixed-line growth: For the first half of 2006, ADSL grew by 3.1 million lines, building on the lead in growth over cable that it broached at the end of 2005—cable added 2.0 million lines. For the year ending 30 June 2006, ADSL grew by 6.3 million lines while cable modem subscriptions increased by 4.6 million. Although not notching up a significant percentage increase with respect to the whole market, fibre-to-the-premise (FTTP) has made a significant jump of 56% over the six months to 700,083 connections. Residential fibre connections now total 442,027—an even greater increase of 107% over the six-month period which can largely be attributed to the roll-out of Verizon's FiOS service (see United States: 28 September 2006: Verizon Lays Out FiOS Deployment Status, Expectations).

• Higher speeds: It should be noted that the speed used to determine high-speed access is extremely low compared with that considered broadband today and provides a limited look at the state of real broadband access. The FCC also counts lines that exceed 200 Kbps in both directions, which excludes more low-speed connections; overall, 50.4 million of the connections fell into this category, with 45.9 million lines primarily service residential users. Of the total number of these lines, 63.1% were faster than 2.5 Mbps in one direction. Of the total ultra-high-speed lines, 36.9% ran at between 200 Kbps and 2.5 Mbps, 58.5% ran at between 2.5 Mbps and 10 Mbps, and 4.6% were faster than 10 Mbps.

• Telcos regain ground: The improving prospects of the telecom companies' fight back against cable are illuminated by the growth in ADSL, likely the result of the increasing range of bundled service packages they have developed that can compete on a level playing field with the multi-service offerings of the cable operators in addition to greater speed availability. Indeed, incumbents reported 49.5% of all high-speed connections—a significant increase on the previous period ending 31 December 2005 when only 45.1% of all connections were provided by incumbents, although this is boosted by some consolidation over the period. This may increase the sense of injustice at recent moves by the FCC which appear to help the incumbent telcos that cable companies have been reported as feeling, and may have recently led to some relaxation of cable price controls as partial recompense (see United States: 26 January 2007: Local Competition from FiOS and Satellite Removes FCC Cable TV Price Controls).