Propelled by demand for high-speed Internet in China, worldwide broadband subscriptions should show a healthy jump for the third quarter, says research firm iSuppli.
The number of new broadband subscribers in the quarter is expected to rise by 5.8 percent to reach 16.5 million, according to figures released yesterday by iSuppli. That's a rally from the second quarter when the number of new subscribers actually dropped by 6.6 percent to 15.6 million. It also means the third-quarter numbers are catching up with the 16.7 million new subscribers captured in the first quarter of the year.
The latest increase in new broadband subscriptions should pave the way for even better results in the fourth quarter when iSuppli is projecting a 7.3 percent gain, to 17.7 million.
"Broadband subscriber additions declined in the second quarter because of normal seasonality as well as a poor performance in the North American market," Lee Ratliff, senior analyst for broadband and digital home at iSuppli, said in a statement. "However, Chinese consumers' insatiable demand for high-speed Internet is so high that it will cause subscriber numbers to rise again in the second half of the year."
China experienced record growth in the first quarter with around 6 million new subscribers, followed by only a slight drop in the second quarter with the addition of 5.4 million people. The forecast for China is calling for an additional 5.7 million in the third quarter and around the same number again in the fourth quarter.
Which industries are benefiting from this surge in growth? In the U.S, the race has been on between telephone companies and cable operators to grab an increasingly larger slice of the broadband pie. Telecommunications companies led the market in 2008 and into 2009 by winning over customers with fast fiber connections, notably AT&T's U-verse and Verizon's Fios.
But by mid-2009, AT&T and Verizon had both started reducing their fiber deployments, allowing cable providers to take the lead. Cable companies enjoy a cost advantage, according to iSuppli. They can roll out broadband access to customers without spending a lot of money, offering speeds of 20 to 50 megabits per second (Mbps) for as little as $20 spent on deployment per household. Telecommunications companies, however, typically need to invest anywhere from $600 to $1,500 per household to set up fiber access.
As consumers access more bandwidth-intensive activities such as online gaming, video streaming, and Internet TV, the telecommunications companies and cable providers are also striving to provide higher speeds. Rates of 1Mbps to 5Mbps were OK in the old Web surfing days, but iSuppli believes speeds of 30Mbps to 50Mbps will soon become the norm. And unless telecommunications companies can make more of a case for fiber, cable operators will likely retain their lead in the battle to push out broadband.