Comcast and Time Warner Cable Garnered 71% of Net New Internet Access Accounts Over the Last Year

Just two U.S. Internet service providers--Comcast and Time Warner Cable--got 71 percent of the three million net new high speed Internet access subscribers added in the U.S. market over the last year, according to Strategy Analytics.

In the third quarter of 2015, Comcast and Time Warner Cable led the growth in U.S. high speed Internet access subscriptions, adding 552,000 net new subscribers.  

In the third quarter, AT&T lost a net 106,000 subscribers and Verizon added only 2,000. The problems for those carriers is two-fold. Gains powered by fiber access services (FiOS and U-verse) grew, but both service providers lost digital subscriber line accounts.

In the third quarter average revenue per account grew between two percent and seven percent.

High Speed Internet Access ARPU, 3Q14 to 3Q15
	3Q14	4Q14	1Q14	2Q15	3Q15	Y-o-Y %
AT&T	$44.04	$44.13	$44.69	$45.42	$46.48	5.5%
CenturyLink	$33.87	n/a	n/a	n/a	$36.13	6.7%
Charter	$46.62	$46.86	$48.87	$49.92	$49.88	7.0%
Comcast	$43.86	$44.20	$45.36	$45.84	$45.61	4.0%
Time Warner Cable	$47.24	$47.30	$47.82	$48.04	$48.17	2.0%
source: Strategy Analytics

Separately, Leichtman Research Group reports that U.S. cable TV companies accounted for all the net growth in high speed Internet access connections in the third quarter, adding about 788,000 net accounts. U.S. telcos lost a net 143,000 accounts in the third quarter.

AT&T had a negative net rate of growth for its Internet access services in the third quarter of 2015, adding U-verse connections but losing copper connections, as has been the case for some years. Verizon added about 2,000 net connections, according to Leichtman Research Group.

CenturyLink and Windstream also lost customers, on a net basis, in the third quarter.

Collectively, the top U.S. cable TV companies have 61 percent of the installed base of customers, while the top telcos have about 39 percent of the installed base. Cable TV companies have steadily gained share in the high speed access market over the past several years.

The 17 largest cable TV and telephone providers in the United States, representing about 94 percent of the market, acquired about 645,000 net additional high speed Internet access  subscribers in the third quarter of 2015.

One More Reason We Cannot Tell What Impact Common Carrier Regulation Has on Investment

There remains significant debate about the imposition of common carrier regulation on Internet access services, in particular the effect on capital investment in new facilities. Determining any such impact is not an easy, for any number of reasons.

The Phoenix Center for Advanced Legal & Economic Public Policy Studies provides yet one more reason why it is nearly impossible to gauge such impact.

As a mandatory condition of the AT&T deal to buy DirecTV, the Federal Communications Commission  required AT&T to build out fiber to home connections  to 12.5 million customer locations within four years after the deal closed.  

The FCC would rationally fear that its reclassification of broadband Internet access as a Title II telecommunications services will reduce investment incentives, counter to the mandate of Section 706 to promote availability and adoption via infrastructure investment.  

By mandating that AT&T engage in aggressive wireline investment as a condition of its acquisition of a DBS satellite provider (a ridiculous proposition on its face), the Commission virtually ensures that investment will grow by whatever amount it takes to install 12.5 million new fiber-to-home connections by AT&T.

That’s one way to ensure investment. But the investment tells us nothing about the direct impact of common carrier regulation on supplier incentives.

Sprint Spins Off Device Financing to New Mobile Leasing Solutions Company

Sprint spends $10 billion every year on devices. Hence the value of its shifting of device funding to a newly-formed Mobile Leasing Solutions.

Sprint will sell to, and then lease back, devices from Mobile Leasing Solutions. That will result in $1.1 billion in cash proceeds at closing.

The cash proceeds are part of approximately $1.2 billion in total consideration that are expected to be exchanged for approximately $1.3 billion of leased device assets, Sprint says.  

The transaction, which is expected to close in the first week of December, will immediately improve the company’s liquidity position and the funding comes at an attractive cost of capital, which is well below Sprint’s alternatives in the high-yield debt market, the company says.

“Providing mobile devices to customers is the biggest use of cash in the carrier model and with this new structure we have more closely aligned Sprint’s cash flows with those associated with leasing devices to our customers,” said Sprint CFO Tarek Robbiati.

Mobile Leasing Solutions, LLC was formed by a group of equity investors including SoftBank and has secured debt financing from several lenders including international banks and leasing companies.

Brightstar Corp. through its Financial Services Business provided support in structuring the transaction, including assisting in the formation of Mobile Leasing Solutions, LLC which is utilizing Brightstar's Lease Management and Tracking System.

Brightstar has also been contracted to provide reverse logistics and device remarketing services, which will include a forward purchase agreement that is being finalized with Foxconn, thus minimizing the downside risk of future changes in device residual values.

Who Will Defect to Sprint Because of New "Half Off" Offer?

This chart tells you why some analysts are queasy about Sprint's new half off offer for current subscribers of T-Mobile US, Verizon or AT&T mobile services. 

Some might note that the half-off offer had initially be restricted to consumers on AT&T and Verizon networks. 

The latest offer adds T-Mobile US. 

So some might argue that the likely impact will potentially be felt most by T-Mobile US, the reason being that customers of AT&T and Verizon who found the half-off offer compelling already would have taken advantage of the offer. 

Mobile Represents 94% of Internet Accounts in India

In India, fixed networks support about six percent of Indian Internet access connections, while mobile supports about 93.5 percent of such connections. Since growth rates for mobile Internet are vastly higher than for fixed networks, it is self evident that mobile is the primary platform for Internet access in India.

There were in October 2015 some 375 million Internet users in India, according to the

Internet and Mobile Association of India.

According to the Telecom Regulatory Authority of India, there were in March 2015 about 15.5 million broadband fixed line Internet access accounts and some 3.6 million narrowband accounts, for a total fixed network Internet access base of about 18.9 million.

In March 2015 there were about 83.2 million mobile broadband customers (3G, mostly) and some 199.6 million narrowband mobile consumers (2G), representing some 282.8 million mobile Internet customers.

So fixed Internet access represents about two percent of the narrowband Internet access accounts. Mobile represents 98 percent of narrowband Internet access accounts.

Fixed broadband accounts represent about 16 percent of total Indian broadband Internet accounts. Mobile represents about 84 percent of broadband Internet access accounts.

source: TRAI

source: eMarketer

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Moore's Law Not Broken, Intel Says

Moore's Law is not exhausted, Intel says. That matters for all matters related to computing power and storage and the cost of computing and storage.

Moore’s Law, formulated in the 1960s by Intel chairman emeritus Gordon Moore, predicts that the number of transistors on a chip will double roughly every 18 months to 24 months.

That trend has enabled better, faster, smaller and cheaper tech products, and it has allowed miniaturization to proceed so that the gap between circuits is now only 14 nanometers, or 14 billionths of a meter. That has been an issue, though.

Production yields for 14-nanometer chips have been difficult and are behind where Intel wanted to be. But yields are improving. "14-nm is harder than we thought, but we do not see a long-term difference in what we were able to see in the past and what we can achieve in the future,” said Bill Holt, Intel EVP.

So Intel is comfortable the linear trend associated with Moore's Law can continue.