AT&T posted its second-quarter report this morning, and boy, was it a doozy.
The company added a modest 46,000 broadband subscribers during the quarter, a screaming decline from 491,000 additions in the first-quarter 2008; and down sharply from the 400,000 subscribers added in the second quarter 2007.
We're not sure what the problem is, but there are two possible explanations: Either people are less willing to pay more than $30 per month for broadband service; or people are less willing to pay AT&T for broadband service.
Either way, the numbers don't bode well for other broadband carriers.
"Forty-six thousand [new subscribers] is just ridiculously low compared to the kind of growth [AT&T] had been seeing," says Jupiter Research analyst Doug Williams. "I don't know if we can draw a conclusion about the broadband market just based on AT&T's numbers . . . but it has certainly run its course. We wouldn't anticipate the same level of dramatic [broadband] customer additions over the next five years as we've seen over the past five years. A lot of the customers who want broadband have it. And pricing and service availability are still issues for a lot of people."
One obvious reason growth has stalled is the fact that there are only a limited number of people who will pay premium fees for broadband access, and that market may be tapped.
Still, AT&T remains oddly optimistic that things could turn around. It attributed the stall to "areas where housing is more stressed, where there are more foreclosures, less new construction, less new home sales."
"But as we go forward I think the good news for us is in some of those areas the economy comes back and as the real estate market comes back I think we'll see a nice bounce there," said CFO Rick Linder, in a conference call this morning.
Could be wishful thinking, though -- a real estate recovery may not even be within sight site yet.
We can't help but wonder, too, how a broadband slowdown will affect the big media companies who are banking on millions of Americans moving from traditional TV to web-based TV services.
"The broadband market is quite mature at this point . . . and traditional TV broadcasters' efforts are still valid -- they have a substantial base of broadband subscribers against which they can sell or offer those services," says Williams.
Photo: Flickr/Chris Wigginton
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