Parks Associates: DSL Wins Subscribers but Lags in User Revenue; Cable Modem Service ARPU Beats DSL Service ARPU by $7

Business Wire, June 1, 2006

DALLAS -- DSL service providers have reversed their fortunes in new subscribers, averaging in the past 12 months 200,000 more new accounts per quarter than their cable counterparts, but they have sacrificed revenues to do so, according to Parks Associates' Broadband Market Updates: Beyond Bandwidth.

The report found that starting in the second quarter of 2005, DSL service providers averaged 1.4 million new subscribers over a period of four quarters, while cable providers averaged 1.2 million new subscribers. This finding reverses the trend from the previous four quarters, when cable operators led new-subscriber growth by the same margin of 200,000.

This strong growth in DSL services is not without its cost. According to Broadband Market Updates: Beyond Bandwidth, the ARPU (average revenue per user) for DSL services was $34 in the first quarter of 2006, compared with $41 for cable modem services. The highest variance was $18, between the DSL service provider with the lowest ARPU and the cable operator with the highest ARPU.

"For the next few quarters, DSL service providers will continue to lead in new-subscriber growth," said Yuanzhe (Michael) Cai, director of broadband and gaming at Parks Associates. "Our Q1 2006 consumer data show that among people intending to subscribe to broadband, 48% prefer DSL services and only 18% prefer cable modem services. Nevertheless, being a price leader may work in the short run, but in the long term, DSL service providers need to create appealing multiplay service bundles. Cable operators have leveraged their bundling strategies to conceal broadband price differentials and maintain strong subscriber growth while keeping a consistent ARPU and low churn rate."

Broadband Market Updates: Beyond Bandwidth analyzes recent market trends and significant events impacting future development in the broadband market. It also addresses the outlook for fiber and other alternative access methods, examines the market potential of VAS and bundled services, and profiles consumer perspectives regarding broadband and bundled services.

About Parks Associates: Parks Associates is a market research and consulting firm focused on all product and service segments that are "digital" or provide connectivity within the home. The company's expertise includes home networks, digital entertainment, consumer electronics, broadband and Internet services, and home systems.

Founded in 1986, Parks Associates creates research capital for companies ranging from Fortune 500 to small start-ups through market reports, multiclient studies, consumer research, workshops, and custom-tailored client solutions. Parks Associates also hosts several fall events and co-hosts CONNECTIONS(TM) (in partnership with the Consumer Electronics Association) each year. http://www.parksassociates.com