Something is happening in consumer broadband or the ways companies report consumer broadband revenues. Comcast added 278,000 net broadband subscribers during the second quarter, down 18 percent from 339,000 in the second quarter of 2007.

 

Verizon and AT&T (News - Alert) reported low net additions of broadband access customers (54,000 for Verizon and 46,000 for AT&T) compared to Comcast, except to note that Verizon separately says it added 187,000 FiOS (News - Alert) broadband customers. Verizon might have cannibalized itself to an extent.

 

But the size of the growth slowdown was pronounced. Verizon (News - Alert) added 288,000 new broadband access customers in the second quarter of 2007, while AT&T signed up 400,000 net broadband access customers in the second quarter of 2007. An order of magnitude change in a year is significant.

 

At the moment it is hard to tell which, or whether both, are happening at the same time.

 

Looked at one way, one could argue Comcast took broadband Internet subscriber market share from telcos in the second quarter. The problem is that neither AT&T nor Verizon any longer appear so interested in breaking out specific broadband access revenue and customer units in that fashion. AT&T seems to prefer to put broadband access into an “IP Data” revenue bucket while Verizon prefers “broadband and video.”

 

It isn’t so clear what might explain the shift. Perhaps customers simply have decided that cable modem service is the better choice than DSL. Perhaps cable’s heavy advertising is working. Maybe it is introductory triple play offers.

 

Maybe telco marketers have decided to concentrate on TV services instead. Perhaps FiOS marketing is overshadowing DSL marketing, with the perhaps expected but unwanted consequence of lower buyer awareness of DSL where FiOS isn’t available.

 

Since there is little doubt the basic broadband access market is slowing, it is reasonable to guess that some significant portion of the Comcast growth came from defecting DSL customers.

 

Broadband penetration is reaching a saturation point, so broadband growth rates are going down. U.S. broadband penetration grew an average 22 percent annually from 2004 through 2007, Goldman Sachs estimates. But growth will average just about five percent annually through 2011. The weak housing market isn’t helping, but that would not explain the disparity between Comcast, AT&T and Verizon growth rates.

 

Goldman analysts, at any rate, think cable might have picked up quite a lot of former DSL customers during the second quarter. As much as 70 percent of cable’s gains might have been from telco churn, Goldman researchers estimate.

 

There are some other notable differences in executive commentary on the quarterly results as well. Comcast Chief Executive Officer Brian Roberts refers to as the “challenging economic environment.” That would make sense for a service provider heavily concentrated in the consumer market.

 

But there was no similar gloomy economic talk from Verizon Chief Operating Officer Denny Strigl, who said the company does not expect “significant economic impact” on its financial results in the second half. That partly is because wireless growth does not seem affected, nor does global enterprise, though small business results were not as robust as wireless and enterprise.