Top U.S. ISPs by Subscriber:
Third Quarter 2002 Analysis

Of the ISPs we track, narrowband subscriptions actually outpaced DSL uptake three fold in the third quarter—1.3 million dial-up to 541,000 DSL connections. Narrowband subscriptions also outpaced cable by a slim margin—1.3 million dial-up to 1.1 million new cable modem connections.

by Patricia Fusco Managing Editor, ISP-Planet [November 15, 2002]

Broadband service providers continue to grow at a faster pace than narrowband service providers—but not that much faster. Predominantly narrowband Internet service providers added nearly 1.3 million new subscribers in the third quarter of 2002. Meanwhile, broadband providers added nearly 1.7 million new U.S. connections during the same time frame—DSL provider's added approximately 541,000 new connections and cable modem services added more than 1.1 million new subscribers.

Narrowband leaders
America Online, the perennial leader of U.S. dial-up ISPs, serves more than 26,700,000 subscribers, having added 200,000 new users during the third quarter of 2002. But despite being the largest ISP in the U.S, AOL posted the smallest overall growth of the narrowband ISPs we track—just 0.7 percent for the same time frame. At this rate, AOL will likely end the year with an estimated 28,600,000 U.S. subscribers.

MSN posted great gains over the past five months growing its subscriber base by 9.9 percent since May 9, 2002—that's the last time MSN made its subscriber data public. (Unfortunately, MSN would not breakout which subscribers are using what service. We estimate that that about 1.1 million MSN TV [formerly WebTV] users were included in its tally.) MSN added about 1.3 million new subscribers since May, or about 260,000 new users per month on average. We estimate that MSN grew its subscriber base by about 780,000 new users in the third quarter, attaining an estimated 8.7 percent growth rate for the period.

United Online reports that paying subscribers hit a record 1.85 million in the third quarter. This reflects a net increase of 150,000 subscribers, or 8.1 percent, over second quarter figures of 1.7 million paying customers. Total active users, including users of the company's free services, totaled 4.8 million at the end of September 2002.

United Online has the same number of active users as EarthLink has total paying subscribers—4.8 million. Consequently, we consider EarthLink to be the third largest ISP in the U.S. In the third quarter, EarthLink's broadband business grew by 77,000 subscribers, ending with 681,000 broadband customers. Narrowband subscribers decreased 5.4 percent from a year ago just over 3.9 million.

Subscriber growth by acquisition continues to be an option for narrowband ISPs. EarthLink acquired Volaris Online and its estimated 250,000 subscribers in October and United Online acquired the assets of Bluelight.com with its 165,000 paying customers in September. We expect to see great gains made by both United Online and EarthLink by year end as they assimilate these newly acquired customers.

Broadband leaders
SBC reports adding 226,000 customers in the third quarter—that's and average of 2,456 new DSL connections each day. Presumably, Prodigy added the remaining 24,000 new users to the companies' combined figures.

Verizon lit up 155,000 new DSL connections in the third quarter—that's an average of 1,684 new DSL customers each day. No matter how you count it—be it lines, users or subscribers—that's a lot of truck rolls.

BellSouth reports serving 924,000 DSL subscribers at the end of the third quarter—up 13 percent from 803,623 at the end of the second quarter. But dial-up customers dipped a bit, down 3.2 percent from 702,236 subscribers at the end of the second quarter to 680,000 subscribers at the end of the third quarter. All together, when combining narrowband and broadband subscribers, we rank BellSouth as the 10th largest ISP in the U.S. serving more than 1.6 million subscribers.

Meanwhile, Qwest managed to add another 17,000 DSL lines between July and September, while Covad connected another 2,000 new accounts. Both beleaguered broadband service providers are off the pace of larger, deep-pocketed Regional Bell Operating Companies (RBOCs).

New cable modem connections in the U.S. continued to grow at a staggering pace in the third quarter. For example:

• Cox Communications added 185,000 new cable modem customers in the third quarter of 2002—the equivalent of connecting 2,010 new customers every day for 92 days.
• AT&T Broadband reports adding 172,000 new high-speed data users in the third quarter—the equivalence of connecting 1,869 new customers each day during the second quarter.
• Comcast reports adding 169,800 high-speed Internet customers over the same time frame, or 1,845 new users every day.
• Charter added 150,000 new customers, or 1,630 new cable modem connections each day over the same period.
• Cablevision added 69,500 new customers, or just 755 new users each day on average.

Six of the eight cable modem service providers we track produced double-digit growth of their respective subscriber bases during the third quarter of 2002. The financially strapped bundled communications services provider RCN may have made operational improvements during the third quarter, but the company continues to struggle to compete with other broadband options in its service area. RCN's subscriber base actually decreased by 1,119 users in the third quarter, but it's a minor drop of 0.2 percent.

Of the top ISPs we track, predominantly dial-up service providers added nearly 1.3 million subscribers during the third quarter and broadband providers added nearly 1.7 million subscribers. Taken as a whole, broadband adoption outpaced narrowband by nearly 400,000 subscribers in the third quarter of 2002.

But taken separately, narrowband subscriptions actually outpaced DSL uptake three fold—1.3 million dial-up to 541,000 DSL connections. Narrowband subscriptions also outpaced cable modem connections by a slim margin in the third quarter—1.3 million dial-up to 1.1 million cable modem connections. Unless narrowband subscribers start abandoning dial-up ISPs in droves, broadband access providers will not usurp current U.S. market leaders for many quarters to come.

Online Resources:
	Subscriber Value by Category
	Subscriber Ranking History

Related articles:
	[Aug. 21, 2002]	Top U.S. ISPs by Subscriber: Q3 2002
	[Aug. 21, 2002]	Top U.S. ISPs by Subscriber: Q2 2002
	[May 29, 2002]	Top U.S. ISPs by Subscriber: Q1 2002