Thursday, July 05, 2007

U.S. wireline broadband expansion hitting the wall

USA Today and many other media outlets are carrying an Associated Press story reporting a study by the Pew Internet and American Life Project shows the rate of broadband growth among American households is slowing sharply. Broadband adoption grew just 12 percent from March 2006 to March of this year compared to the 40 percent rate of the previous 12 months.

John Horrigan, Pew's associate director for research, says providers have picked the low hanging fruit. They now have to make substantial investments in their infrastructure to bring in more broadband customers since many households who don't use wireline broadband can't get it because it's not available.

Their prospects of getting it in the near term don't look good, which could produce even lower broadband adoption numbers when Pew and other think tanks report on broadband growth in 2008.

The results of the Pew study aren't surprising considering that AT&T appears to have all but halted deploying additional equipment necessary to expand its Digital Subscriber Line (DSL) service beyond three miles from the telco's central offices. Those who can't get DSL get pitched to sign up for inferior satellite Internet service via AT&T's reseller deal with WildBlue announced a year ago.

The other big player in the telco/cable duopoly, cable provider Comcast, also doesn't appear to be expanding its footprint in existing neighborhoods, concentrating instead on new home developments seen as good prospects for the company's bundled video, Internet and voice services.

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