RBOC long-distance gains slowed in 2Q04, reports RHK

August 24, 2004 South San Francisco, CA--The four large RBOCs continued to increase their share of the U.S. long-distance market, with more than 44 million subscribers at the end of the second quarter. However, subscriber growth slowed to 8% in the quarter, the slowest quarterly growth rate in more than three years, according to RHK research.

Aug 24th, 2004

August 24, 2004 South San Francisco, CA--The four large RBOCs continued to increase their share of the U.S. long-distance market, with more than 44 million subscribers at the end of the second quarter. However, subscriber growth slowed to 8% in the quarter, the slowest quarterly growth rate in more than three years, according to RHK research.

In fact, quarterly subscriber growth had averaged 16% in the previous five quarters. The slowdown indicates that the RBOCs may have passed the inflection point in long-distance growth: SBC Communications has already become the third-largest long-distance carrier, and Verizon Communications the fourth-largest.

Nevertheless, RBOC long-distance growth is likely to regain some strength in the coming quarters. Traditional long-distance carriers AT&T and MCI are pulling back from the consumer market in light of recent regulatory changes regarding unbundled network element-platform (UNE-P) rules. "This will benefit the RBOCs as they increasingly focus on selling integrated service bundles," said Shing Yin, program director for RHK's Telecom Economics research.

Service bundles from cable multiple system operators are an emerging threat, however. "Although cable telephony is still a small market, our end-user research revealed that consumers are more receptive to bundles from cable companies than from telephone companies," Yin added.

RHK's Telecom Economics Program provides a detailed analysis of global service provider trends, by examining changes in capital intensity ratios, bandwidth and traffic demand, and revenue trends for wireless and wireline services.

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