Global Broadband Subscribers Set to Rise by Nearly 60 Percent by 2015

“Global broadband subscriber activity serves as a long-term barometer of the overall health of the broadband industry, as well as an accurate prognosticator of prospects for the space’s associated markets in broadband equipment and broadband-related semiconductors,” said Lee Ratliff, senior analyst for broadband and digital home at IHS. “With demand for Internet access rising quickly in China as well as in other fast-growing economies in the Asia-Pacific region, the broadband supply chain is set for strong growth in the coming years.”

Together, China and the AsiaPacific region accounted for a disproportionately large share of new subscribers in 2011—China alone accounted for 38 percent of all new subscribers worldwide, followed by Asia-Pacific with 14 percent. However, the growth of the Asian territory is bifurcated: Much-slower expansion in the future will occur in developed countries like Japan, Hong Kong, Singapore and Taiwan, compared to the rapid increase set to take place in developing areas such as China, India and Indonesia. Still, Asia-Pacific is expected to expand at a robust compound annual growth rate (CAGR) of 16 percent overall from 2010 to 2015.

Growth also will be very fast in Eastern Europe, Latin America and the collective region of the Middle East and Africa known as MEA, with CAGRs ranging from 16 to 33 percent from 2010 to 2015.

Meanwhile, North America and Europe—where broadband penetration is among the highest in the world—will see slower expansions in broadband subscriber numbers, with CAGRs of 5 and 7 percent respectively during the same period.

In the United States, broadband subscriber activity has been particularly dynamic, with telephone companies and traditional cable providers competing fiercely to win new customers. Although the telcos and their offerings—exemplified by AT&T Uverse and Verizon FiOS—fared well during the initial uptake of their fiber services, that growth has moderated. As a result, traditional cable providers like Comcast and Time Warner have taken back the lead, accounting for as much as 58 percent of net additions in the region during the second quarter of 2011, the latest time that full figures are available.

For the broadband equipment market, the transition from broadband to much-faster wideband technologies has kept revenue growth healthy. Equipment revenue in the second quarter of 2011 climbed to $3.3 billion, up a solid 14 percent from $2.9 billion in the previous quarter.

Among broadband technologies, asymmetric digital subscriber line (ADSL) continues to account for more than half of all net additions in the world with 51 percent share in the second quarter of 2011, driven by demand in developing regions, particularly China and Latin America. The combined market share of fiber technologies came in second with about 34 percent of the market, followed by cable modems at 9 percent and the technology known as very-high-bit-rate digital subscriber line (VDSL)—a speedier variant of ADSL—with 6 percent.

In the broadband semiconductor market, Ikanos Communications Inc. from California continued to lose share as it shifted away from ADSL to focus on VDSL. The beneficiaries of such a development have been Broadcom Corp., also of California, and Lantiq, an international fabless semiconductor company based in Germany.

The three vendors have converged in the VDSL market, with Ikanos gaining a point of share in the second quarter after six quarters of market share losses to Broadcom and Lantiq.