Cable Holding Its Own Amid DSL Onslaught

The Street.com ^ | 10/01/03 | George Mannes

[UB355]

As the third quarter draws to a close, at least one cable TV analyst is optimistic about a key element of the business.

Major cable TV operators will add 6% more subscribers to high-speed Internet service in the third quarter than they added in the third quarter of last year, estimates Smith Barney analyst Niraj Gupta.

And though telephone company price cuts have pushed adoption of the DSL service that competes with cable modems, the increasing popularity of DSL doesn't appear to have come at the expense of cable operators, including Comcast (CMCSA:Nasdaq - commentary - research), Cox (COX:NYSE - commentary - research) and Cablevision (CVC:NYSE - commentary - research).

As they have over the past few quarters, cable investors will be keeping a close eye on news about high-speed data services during the forthcoming earnings season. Cable operators have spent billions of dollars over the past few years to upgrade their networks to offer high-margin advanced services such as fast Internet connections.

Despite these upgrades, operators face competition on different fronts from telcos and satellite service providers, such as Verizon (VZ:NYSE - commentary - research) and SBC (SBC:NYSE - commentary - research), having cut prices earlier this year in an effort to gain share.

Indeed, DSL's share of new high-speed Internet subscribers will grow to 37% in the third quarter from 32% in the second, estimates Gupta. But that number doesn't mean bad news for cable operators, says Gupta: "The pickup in DSL activity has not come at the expense of cable modem adds, as cable [operators] have not seen any slowdown in the business."

Among other operators, Comcast -- which has spent the past year turning around the fixer-upper systems it acquired from AT&T (T:NYSE - commentary - research) -- could add as many as 440,000 subscribers in this quarter, speculates Gupta. That's up about 30% from year-ago quarter additions of 339,000, and ahead of Gupta's already-published forecast of 416,000 additions, which is above other estimates on Wall Street.

[UB355]

...........estimates Smith Barney analyst Niraj Gupta. ....

Meaning the losses are actually worse then thought. I'm one who switched from Time Warner Cable to ADSL/Satellite saves me $30.00 a month. My picture quality from Dishnetwork blows local cable away. My ADSL speed is 1.2 mbps,more then I'll ever need.

[egarvue]

DSL is great...if you can get it. Three time's I've been solicited with advertisements in the mail by my phone company wanting me to sign up for DSL, saying that my house is now in a covered area. When I call, I get the "We're sorry sir, you are not in a covered area" routine. Screw DSL, until they can get their act together, cable is working just fine for me. (Don't get me wrong, I want DSL in my area, force the cable company to compete with their pricing.)

[TexasCajun]

My AOLTimeWarner Road-Runner is service is up and down more than Monica's bobbing head in the Clinton White House!

[DJtex]

My DSL from SBC is excellent. I had RoadRunner Cable and it was fine too.

My latest, best toy is a ($19.95) cable from my Sprint PCS phone to my laptop when I'm on the road. It's not DSL speed, but it's five times faster than a 56k modem. Good enough from the car or a client's office.

[Graybeard58]

"I want DSL in my area, force the cable company to compete with their pricing"


...I have had both and the prices are the same in my area. Quite a coincidence huh!