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High-speed Broadband Growing Slow in the US
Oct 20, 2008

The US broadband industry recorded slow pace in the second quarter of 2008 in the backdrop of increasing penetration of bundled services and no room for expansion in big cities.

According to Leichtman Research Group, telephone and cable operators in the US added another 887,000 high-speed Internet users to their existing subscription base, expanding their total user base to 65.1 Million in the second quarter of 2008. The number of new Internet users, on the other hand, recorded at the slowest growth rate in more than seven years (since 2001) and fell almost 50% against the second quarter of 2007 (April-June 2007), as reported by
MultiChannel.

Cable operators had a major share in 887,000 new subscribers added during the second quarter of 2008 at 76% (over 670,000). On the other side, the number of new broadband users tumbled to half of the last year’s new subscribers added in the same period (April-June 2007).

The fall in the US broadband industry during April-June 2008 has been accredited to aggressive selling of high-speed FIOS and U-verse that includes TV service, Internet and telephone simultaneously services by Verizon and AT&T. This resulted in fall of DSL broadband connections in the country. Apart from this, rising cost of broadband connections, slow speed and higher competition from telco hampered the interest of consumers in broadband.

Another key factor for slow expansion of broadband services in the US is low broadband penetration in rural areas. Also, some locations in the country have not been provided with broadband connectivity. In contrast, tier one cities in the US have reached peak of broadband penetration and there is no scope for further expansion; as a result, the broadband growth has slowed in the country.

There is still a wide gap between people having Internet connection and those who do not have. This gap is not likely to bridge soon in future as cable and telecom companies are emphasizing to increase the penetration of high speed and premium broadband connection, making broadband services unaffordable for poor families.

According to a Research Analyst at
RNCOS, “Service providers (Internet) are facing huge losses due to weak performance of the broadband industry. So they need to provide services at affordable prices as it will attract those consumers also who are not able to pay high charges.”

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