Broadband Growth Falls Sharply in the U.S.

q22009broadbandstats.gifAfter years of breakneck growth, U.S. broadband is in slowdown mode. During the second quarter of 2009, U.S. service providers added less than 650,000 new accounts, down more than 50 percent from 1.6 million additions in the first quarter. (Stats below the fold.)

To be fair, the second quarter is seasonally the slowest for the U.S. broadband industry, but overall subscriber gains are down 28 percent from last year’s 887,000 net new additions as well. So far, the U.S. has added about 2.25 million new subscribers in 2009, down about 27 percent from 3.1 million additions during the first two quarters. At this rate, the U.S. will add significantly fewer subscribers during 2009 vs. 5.4 million in 2008.

The slowdown is fueled by two major trends: First, nearly two-thirds of U.S. homes have broadband. Secondly, the overall economic slowdown and bursting of the housing bubble have chilled demand for Internet connections.

During the second quarter of 2009, phone companies added 385,000, or 61 percent, of the total new subscribers, with Verizon (s VZ) leading the way: 186,000 followed by AT&T (s t), which signed up 112,000 net new broadband customers.

So what does it all really mean?

We’re going to see a renewed focus by carriers on offering higher-priced tiers. Comcast (s CMCSA), which added a minuscule 64,000 net new subscribers in the second quarter of 2009, has already indicated its intentions to roll out higher-speed offerings across its entire footprint. I think this speed growth — both upstream and downstream — is going to be accompanied by more “metering.”

The phone companies are going to respond as well. Qwest (s Q) is already offering 40Mbps-type speeds. AT&T is a bit mysterious — it hasn’t quite boosted its DSL speeds and has been slow in growing its U-Verse business. Verizon clearly is in the driver’s seat, especially when it comes to lumbering Time Warner Cable (s TWC). (Related post: Verizon FiOS Media Manager: Easy Set-up, So-So Delivery.)

I would say Verizon, Cablevision (s CVC), Comcast and Cox are the companies that will lead the super-speed (or as I like to call it, ultraband) charge. Some of the independent phone companies are busy merging with each other, and that is going to keep them distracted. ;-)