What Slowdown? Internet, Cable, Wireless Race is Raging

There's no question that the global economy, the U.S. in particular, is in a difficult situation. Yet ARRIS Group (ARRS) and Qwest Communications (Q) Q3'08 conference calls this week gave yet another indication that the internet, video and wireless markets are successful and growing, no matter what economic conditions exist.

The same trends emerge from a review of Comcast's Q3'08 conference call. (CMCSA)

From ARRIS Group's Q3'08 conference call:

 

Our financial results are the best in our history.

For example in yesterday’s report from Verizon (VZ) on their strong FiOS additions, our customers, the cable service providers, continue to face strong competition and must continue to invest less they fall behind in the race to retain and grow market share.

Our business with Comcast rebounded very strongly primarily due to the successful launch of our DOCSIS 3.0 wideband equipment.

In spite of the gloomy economic environment, the financial and business trends that we've been talking about all this year are still firmly in place. Clearly, Internet traffic continues to grow and both residential and especially business customers are demanding faster and more reliable service.

Although there is some slowing of infrastructure spending:

Our ATS product sales are down approximately $57 million reflecting tightening spending by our customers on infrastructure.

From Qwest Communications' Q3'08 conference call:

Efforts to grow broadband in the quarter, which were supported by promotional activity launched in July, generated over 60,000 new high-speed Internet subscribers.

Our broadband promotions also drove growth in sales of associated access line packages.

We also continue to report success on our direct TV partnership, adding 39,000 video subscribers in the quarter, bringing the base of video subscribers to 761,000. Video penetration now stands at 12% of primary access lines, which places Qwest as best in the industry.

In wireless, total subscribers at the end of the quarter were 766,000, a decline of 6% sequentially. The migration to Verizon (VZ) wireless impacted wireless growth efforts in the quarter as expected.

Continued growth in data and Internet services will likely mitigate the impacts of ongoing voice pressures.

 

Comments

[Nick Gogerty:]

They are all running faster but standing still. a la alice in wonderland. Faster IP eventually means greater commodification of offerings and greater seperation between pipe and content. The Pipe guys are going to give up the margins, jsut like network TV did, only faster.
The IP utility race will mean margin compression over the next 10 years as speed & QoS become the only differentiators. cheesy bundling of segregated services will only last so long and the content pipes get bigger and more interesting every day.

2008 Oct 31 11:54 AM