Ouch! "We are starting to see DSL become the new dial up," say analysts at Strategy Analytics. "The telcos' core DSL offerings are unable to compete effectively with cable; they must step up their already frenetic fiber roll out to stay in the game, says Ben Piper, Strategy Analytics director.
That might be overstating the case, but there is no doubt that a dismal second quarter broadband access performance is very troubling for the major DSL providers in the U.S. market. It was not an easy quarter, by any means, but new broadband accounts have been decelerating for at least a year, as the market starts to saturate.
Broadband access providers collectibvely added only one million net additional subscriptions in the second quarter, compared to over two million in the first quarter, says Piper.
"The dramatic downturn in the quarter is largely attributable to a slowdown of `new connects,' as well as consumer migration from DSL to cable," says John Lee, Strategy Analytics analyst. "As users become more accustomed to high speeds at the office or elsewhere, they are less willing to tolerate slow performance in the home."
If it turns out that is the case, it would be very bad news for the major telcos indeed. But I doubt that is the case. One doesn't typically see a major shift in demand (an order of magnitude shift) in a single quarter. That suggests to me something other than a demand shift has occurred. Marketing inattention, or inadquate attention to the value proposition seem more likely culprits. I could very well be quite wrong about this, of course.
Maybe something I've never seen before has happened. Maybe a radical, sudden shift in end user demand has occurred. It just doesn't seem like the most-likely explanation, and I'll stick with Occam's Razor: "All other things being equal, the simplest solution is the best."
And the simplest solution is that marketing staffs took their eye off the ball.
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