The Death Of Broadband (T)(CMCSA)(VZ)(S)(CLWR)(TWC)

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Verizon (VZ) is trying to take business from cable companies like Comcast (CMCSA) and Time Warner Cable (TWC) using its new $23 billion fiber-to-the-home project. The cable guys are trying to take business from Verizon and AT&T (T) using their voice-over-IP and digital VOD products.

Now Sprint (S) and Clearwire (CLWR) are coming to market with wireless WiMax broadband.

The companies and Wall St. probably thought that this was all being done in a growing broadband market, so that stealing customers from one company to the other would not be a zero sum game.

But, in a look at the quarterly results for telecom and cable companies, The Wall Street Journal found strong evidence that broadband adoption is slowing considerably. The large broadband subscribers added only 1.2 million net new customers in Q2, 21% fewer than in the same quarter a year ago. As The Journal points out: "The broadband deceleration comes after years of being on fire with growth."

The statistics have wide implications. Not only could a slowing of broadband adoption hit the sales and incomes of telecom and cable companies, but, it could makes the high-speed world a little less attractive to content providers. Movies studios have assumed, at least for the last couple of years, that consumers were moving inexorably from DVD and theaters to cable VOD and download services. TV broadcasters and programmers have made the same assumption and have begun to move content online.

Broadband will almost certainly always be a good business and 56 million households have the service now. But, that pie has to be cut up among a number of large service provides, and content holders will only get a small portion of these people to use their services at any one time.

Broadband penetration is Korea is almost 90%. Maybe all of these US companies will have to move there.

Douglas A. McIntyre