Broadband stalls in the U.S.

The era of rapid broadband growth in the U.S. could be over according to UBS telecoms analyst John Hodulik who told clients that while just over half of the nation's 111 million homes (58 million) had broadband as of September 2007, only 77 percent of households have a PC.

"We estimate 90 percent of homes currently have access to broadband service. Assuming the 77 percent of homes are evenly distributed among that 90 percent, then 69 percent of the 111 million homes, or 76 million homes, have a PC and can get broadband."

He says this puts penetration of eligible homes at closer to 76 percent and "suggests the days of wireline broadband connectivity as a major growth driver of U.S. telecom are largely over."

In hindsight, year-on-year growth has been falling since first quarter 2006. UBS predicts 2007 will be the first year the number of new broadband Internet subscribers added during the year falls. "We expect 2007 DSL/fiber net adds to total 4.6 million in 2007 compared to 5.6M in 2006, a decline of 18 percent. We expect cable net adds to decline 9 percent annually 3.9 million."

Broadband growth has been a key driver of the telco and technology economy so the tapering of demand growth will have sharp multiplier effects.

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