For the first time, the landline phone industry, led by AT&T and Verizon, lost broadband subscribers to cable companies. Thanks to the higher speeds that cable providers can offer, cable companies have continued to add new household and small business customers. From April to June, the eight largest phone companies in the U.S. lost 70,000 DSL customers while the top four cable companies reported a gain of 290,000.
Phone lines, often decades old, are poorly suited to carry reliable Internet signals compared to the heavily shielded cables that carry TV signals. This makes it easier and cheaper for cable companies to provide fast Internet service, with providers regularly offering download speeds of 100 megabits per second, about 20 times faster than DSL.
This is a tremendous blow to phone companies, which had been using broadband to offset a long-running loss of subscribers to regular phone service. With both declining, it could lead to a de facto monopoly on broadband in many area of the U.S., resulting in a lack of choice and higher prices.
Verizon, in an effort to compete, has replaced its phone lines with optical fiber in some areas. However, expanding service is expensive, so Verizon has stopped adding new areas to its FiOS build-out.