Technology

DSL Numbers Drop in 2Q

7/27/2004 6:18 AM Eastern

Verizon Communications reported 280,000 digital-subscriber-line additions in the second quarter -- a drop over last year's 304,000 additions, as well as over the first quarter's 345,000.

SBC Communications Inc. and BellSouth Corp. have also reported sequential drops in DSL additions -- SBC from 446,000 to 315,000 and BellSouth from 156,000 to 120,000.

Overall, the largest three telcos added 615,000 subscribers in the quarter, compared with 847,000 in the first quarter of 2004. In last year's second quarter, those three regional Bell operating companies added 508,000 DSL subscribers.

Fulcrum Global Partners LLC analyst Rich Greenfield attributed the DSL drop to lower promotional activity in the quarter. SBC also cited a strike that slowed sales.

Greenfield said telco customer-service centers were overwhelmed with calls in the first quarter due to promotional and pricing activity. Telcos are rolling out ADSL2 technology, which allows for better remote diagnostic control over DSL service and lowers operating expenses, he added, and that was another reason for the telcos to slow promotional activity.

Oppenheimer & Co. Inc. analyst Thomas Eagan now predicts that cable will receive a 51% market share of high-speed additions in the second quarter. Prior to the RBOC earnings calls, he had estimated that DSL would have the upper hand with 55% market share.

The first quarter of 2004 was the first time DSL additions outpaced cable.

September