“Is there anyone here who doesn’t believe this is an exciting time to be in the telecommunications industry?” AT&T (News - Alert) CEO Randall Stephenson said at a NXTComm keynote. Many listeners might have thought other adjectives were more apt.

 

It is true that global communications revenue has grown at single-digit rates in unbroken fashion, year after year.

 

But the tier-one telcos collectively continue to lose access lines at an accelerating pace. During the first quarter of 2008, AT&T, Verizon and Qwest (News - Alert) lost 2.237 million access lines, a 31.4 percent increase relative to the access-line erosion experienced during the first quarter of 2007, and the fourth consecutive quarter of higher sequential access-line erosion.

 

The former RBOCs lost approximately 432,000 wireline revenue generating units during the first quarter of 2008, compared with a gain of 218,000 the same period last year.

 

But that's not the only relevant metric. Telcos now have other products to sell, so consumer data revenue largely mitigates voice revenue declines.

 

During the first quarter of 2008, broadband revenues (including data and video services) at Verizon (News - Alert) expanded by 56 percent relative to the same period last year and accounted for 25 percent of consumer retail revenues, say analysts at Fitch Ratings. Similar results can be noted for AT&T as well.

 

On a collective basis, the former RBOCs added nearly 800,000 new broadband subscribers during the first quarter, though that is a decline of approximately 32 percent when compared with broadband additions reported during the first quarter of 2007.

 

But the former RBOCs also added approximately 2.3 million RGUs during the first quarter, overwhelming the residential access-line erosion.

 

True, there has been a meaningful decline of legacy digital subscriber line subscribers added during 2008 by AT&T and Verizon, as these companies focus on their respective fiber-based high-speed data solutions and subscribers migrate from DSL platform to the respective fiber platforms.

 

During the first quarter of 2008, Verizon added a total of 266,000 broadband subscribers, including 262,000 FiOS (News - Alert) customers and only 4,000 DSL customers. DSL gross additions increased six percent sequentially at Verizon while FiOS Internet customers increased 23 percent.

 

AT&T and Verizon captured 58 percent of the 707,000 video subscribers added during the first quarter of 2008. Fitch expects that will slow the pace of access-line losses.

 

Verizon added 263,000 FiOS TV subscribers during the quarter, increasing total FiOS TV subscribers to approximately 1.2 million. The company’s FiOS TV service is available to 6.5 million premises, and Verizon increased penetration to18.7 percent across its FiOS markets.

 

Verizon now has its sights set on the New York market as well, and ultimately will be selling TV to another 3.1 million households.

 

AT&T now sells U-verse video services in 43 markets across the United States, passing more than nine million living units. AT&T accelerated the pace of U-verse television subscriber additions during the first quarter by adding approximately 148,000 subscribers.

 

The bottom line is that Verizon grew consumer average revenue per unit by 9.6 percent during the quarter; AT&T grew ARPU 5.4 percent and Qwest grew ARPU 7.8 percent.

 

Maybe global telecom isn't the rosy, high-growth business Stephenson paints for all contestants. But it isn't a shabby business, either, at least for the tier-one U.S. telcos. But “exciting” might be a bit hyberbolic.