2009 USA - Telecoms, Wireless, Broadband and Forecasts

BuddeComm’s annual publication, USA Telecoms, Wireless, Broadband and Forecasts, profiles the fixed-line, wireless (mobile) and broadband markets in the USA. The publication also examines the convergence of these technologies with each other and with digital media such as digital TV and the emergence of new telecommunication services such as VoIP and IPTV. 

The cable companies continued to be the beneficiaries of the telcos’ wireline losses, with cable VoIP subscriber numbers expected to continue growing strongly in 2009. In addition, cable companies retained the lead in broadband market share, as cable modem subscriber growth exceeded DSL subscriber growth in 2008, reversing the trend of recent years. This was partly explained by the fact that the telcos were concentrating on their FttH network deployments.  

In the wireless market, the WiMAX and LTE open access 4G platforms, to which Sprint-Clearwire and Verizon Wireless respectively have committed; both offer significant scope for increased convergence among services and devices. 

The country’s telecommunications industry had yet to feel the full effect of the economic downturn, with total industry revenues growing at approximately 10% during 2008. Now faced with a deepening recession, in January 2009 the new Obama administration put to Congress the American Recovery and Reinvestment Bill which designates $6 billion for wireless and broadband in underserved areas and a further $11 billion assistance for the development of smart grids.  

This report contains overviews, analyses and detailed statistics of the US fixed-line, wireless and broadband markets including their sub-markets such as DSL, cable, FttH, wireless broadband, utilities broadband, the Internet, VoIP and IPTV. 

Key highlights:

·         Total revenue for the telecommunications industry grew by around 10% in 2008 to reach over $1.1 trillion. Growth in 2009 will continue to be underpinned by broadband uptake and wireless data revenues.

·         During 2009 the number of traditional fixed-line customers will continue to fall, following a nearly 10% decline in 2008. Conversely, VoIP will continue to post strong gains.

·         The FttH network deployment will continue to gather pace in 2009, allowing Verizon and AT&T to become notable competitors in the TV market. IPTV subscriber numbers will maintain strong growth, having reached nearly 2 million for Verizon FiOS TV and 1 million for AT&T U-Verse TV by late 2008.

·         Broadband continues its strong growth, achieving a penetration of nearly 25% in 2008, although the US still has only the 15th highest penetration rate in the OECD, down from 4th place in 2001. The total number of broadband subscribers is expected to continue to grow solidly over the next five years, although at a declining growth rate as household penetration approaches saturation. DSL is expected to return to higher growth rates as a deepening recession makes the price competitive offering of DSL more attractive.

·         WiFi had become commonplace in the USA during 2007, with a burgeoning hotspot network and WiFi moving beyond the laptop to cellular handsets. The significance of the WiFi market was highlighted in 2008 with the purchase by AT&T of WiFi hotspot operator Wayport for $275 million, giving AT&T the largest number of WiFi hotspots in the country.

·         Wireless subscriber growth will slow during 2009 as penetration exceeds 90%. Despite declining subscriber growth rates, the significance of the wireless sector will continue to strengthen, with the percentage of wireless-only households having reached approximately 15% by early 2009.

·         In 2009 Verizon Wireless completed its acquisition of Alltel Corp, making Verizon Wireless the largest wireless operator in the country with over 30% market share and giving the top-three providers nearly 80% of the wireless market.

·         During 2009 wireless revenues will continue to enjoy strong growth, following growth of nearly 50% in 2008, underpinned by robust wireless data revenue growth. By early 2009 wireless data revenues accounted for approximately 25% of total wireless service revenues, up from around 18% in 2007. Significantly, the majority of wireless data revenues are now being generated by non-messaging applications and services such as music downloads, mobile TV, video blogs and Internet-accessed entertainment services.

·         The deployment of 4G wireless technologies will gain significance in 2009, following the 2008 launch by Sprint Nextel and Clearwire of their WiMAX network and the announcement by Verizon Wireless that it will start deploying LTE from late 2009.

·         The transition to digital TV gathered pace with mandatory analogue switch-off scheduled for February 2009. Nevertheless, in January 2009 President Obama requested Congress to postpone the switch-off date as substantial numbers of households had not reached digital TV readiness.

·         While it was originally thought BPL would grow out of the need for broadband services in underserved rural and regional areas, in 2008 it became clear that the urgent need to address climate change through measures such as smart grids will be the main force for deploying BPL networks. In California alone it is estimated that approximately 17.5 million smart meters will be deployed between 2008 and 2010.

·         In the area of policy, President Obama has indicated his support for a net neutrality law and for stronger antitrust enforcement. He appointed a new FCC Chairman, Julius Genachowski, which gives the FCC a greater mandate to regulate in the interests of competition and the consumer.

Forecast homes passed by fibre – 2009 - 2015

(Source: BuddeComm forecasts)

Notes:

¹Non-RBOC includes CLECs, ILECs, Municipalities and Qwest, although Qwest is formally an RBOC.

²Includes FttH and FttN.

Data in this report is the latest available at the time of preparation and may not be for the current year.

The following notes provide some background to our scenario forecasting methodology:

·         This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.

·         The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.

·         All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.