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Top U.S. ISPs by Subscriber: Q3 2003

  |  January 5, 2004   |  Comments

The third quarter saw incremental growth, but two key ISPs failed to disclose subscriber numbers.

We use Jupiter Research (a unit of this site's corporate parent) estimates for the total number of subscribers in the United States: 77.4 million subscribers. This number does not include: subscribers at work, at universities, or in government. It only includes residential consumer accounts.

All subscriber counts are as of September 30, 2003, except for MSN, which has not provided updated numbers.

Top U.S. ISPs by Subscriber: Q3 2003
Rank ISP Subs.
(millions)
Date & Source Market
Share
1 America Online 24.7 [Oct. 22, 2003]
Trending Schedules [.pdf]
25.6%
2 MSN 8.7 [May 12, 2003]
SEC Filing
9.0%
3 United Online
[NetZero + Juno Online]
5.2 [Oct. 30, 2003]
Press Release
5.4%
4 EarthLink 5.0 [Nov. 14, 2003]
SEC Filing
5.2%
5 Comcast 4.9 [Oct. 30, 2003]
Press Release
5.1%
6 SBC 3.1 [Oct. 21, 2003]
Press Release
3.2%
7 Verizon 2.1 [Oct. 28, 2003]
Press Release
2.2%
8 Cox 1.8 [Oct. 28, 2003]
Press Release
1.9%
9 Charter 1.5 [Nov. 3, 2003]
SEC Filing
1.5%
10 BellSouth 1.3 [Oct. 22, 2003]
Press Release
1.4%
11 Cablevision .98 [Nov. 11, 2003]
Press Release
1.0%
12 Adelphia .88 [Dec. 5, 2003]
Point-Topic
0.9%
13 Qwest .57 [Nov. 19, 2003]
Press Release
0.6%
14 Covad (includes 43,200
dialup accounts)
.53 [Oct. 24, 2003]
SEC Filing
0.6%
15 RCN .40 [Nov. 11, 2003]
Press Release
0.4%
16 Mediacom .26 [Nov. 5, 2003]
Press Release
0.3%
17 ATX(includes former
CoreComm and Voyager.net)
.25 [Nov. 19, 2003]
Press Release
0.3%
18 Insight BB .21 [Oct. 29, 2003]
Press Release
0.2%
19 Hughes DIRECWAY .18 [Nov. 17, 2003]
SEC Filing
0.2%
20 LocalNet .09 [Oct. 16, 2003]
Corporate Communications
0.1%
21 Cincinnati Bell .09 [Oct. 30, 2003]
Press Release
0.1%
22 Internet America .07 [Nov. 12, 2003]
Press Release
0.1%
23 Other U.S. ISPs 33.3 34.7%

Note that AT&T WorldNet does not report subscriber numbers and is not on our list. Microsoft has not published updated numbers for MSN since its last annual SEC filing, and MSN may be losing subscribers. US Wireless Online has not yet published updated numbers and is temporarily off our list.

We would like to add RoadRunner to the list, but our data from AOL lists only "total cable broadband subscribers" and we do not know how many of those are already listed in our AOL total. AOL's cable broadband subscriber total is 3,046,000, up from 2,856,000 last quarter.

Note also that the RBOCs do not report dialup subscriber numbers. Although the dialup business is not fashionable, it should remain a cash cow.

In an aside, please note that the RBOCs have seen astonishing growth in their long distance business this year (which may make them even less willing to get into VoIP). For instance, SBC reported that it now serves 11.5 million lines, of which about half were added this year.

If you know of any other ISP that should be on this list, please do not hesitate to contact us.

Subscriber Growth

During the third quarter of 2003, the incumbents (the RBOCs and the MSOs) did well while other companies did not do as well.

Note that the sole independent dialup ISP on our list, LocalNet, grew as fast as anyone else.

There continue to be some doubts about the veracity of published numbers, and some may be too optimistic. Publicly traded ISPs can distort their numbers directly, by reporting subscribers who don't exist, or more subtly, by claiming to have added a certain number of subscribers.

In July, for example, we pointed out:

Verizon claimed actual additions of 30,000 subscribers for the quarter, while reporting 160,000 new subscribers. These numbers just don't add up. The company said on Jan. 29, 2003, that in Q4, the company had "148,000 new net digital subscriber lines (DSL), for a total of 1.8 million lines" and then said on April 22, 2003, that in Q1, the company had, "160,000 net additional digital subscriber lines (DSL) in the quarter" but "1.83 million DSL lines in service as of the end of the first quarter."

These problems continue to exist. Insight BB, for example, provided the number of subscribers added, but did not disclose a total. The number we are using for Insight BB, 208,500, is therefore the maximum possible number of subscribers the company has. The actual number may be less.

Change in ISP Subscribers from Q2 to Q3 2003
Company Subscribers Change Percent
Change
Q3 Q2
AOL 24,658,000 25,346,000 -688,000 -2.7%
MSN 8,700,000 8,700,000 0 0%
United Online 5,200,000 5,200,000 0 0%
EarthLink 5,000,000 5,040,000 -40,000 -0.8%
Comcast 4,900,000 4,400,000 500,000 11.4%
SBC 3,100,000 2,773,000 327,000 11.8%
Verizon 2,100,000 1,900,000 200,000 10.5%
Cox 1,700,000 1,700,000 100,000 5.9%
Charter 1,489,700 1,349,000 140,700 10.4%
Bell South 1,300,000 1,225,000 75,000 6.1%
Cablevision 984,800 921,000 63,000 7.0%
Adelphia 876,991 781,073 95,918 12.3%
Qwest 577,000 560,000 17,000 3.0%
Covad 534,200 495,300 38,900 7.9%
RCN 395,837 392,554 3,283 0.8%
Mediacom 261,000 234,000 27,000 11.5%
ATX 254,800 299,700 -44,900 -15.0%
Insight BB 208,500 197,500 29,000 16.2%
Hughes DIRECWAY 177,000 166,000 11,000 6.6%
LocalNet 98,000 89,000 9,000 10.1%
Cincinnati Bell 93,000 74,000 19,000 25.1%
Internet America 76,000 82,000 -6,000 -7.3%
Average N/A N/A 39,896 6.0%
Total 62,784,828 61,907,127 877,701 N/A

Unique Subscribers

In order to calculate the number of subscribers in the rest of the U.S., we have to take the number of subscriber in the U.S., provided by Jupiter Research, and subtract the number of unique subscribers in the ISPs in our list.

Jupiter Research estimates that there were 77.4 million residential subscribers in the U.S on September 30, 2003, up from 75.3 million on July 30, 2003, 75.2 million on March 31, 2003, and 74.3 million on December 31, 2002. The ISPs in our rankings account for approximately 44,974,927 unique subscribers. We try not to count any subscriber twice. For example, a subscriber to EarthLink DSL may also be counted in Covad's DSL numbers and in the ILEC's DSL numbers as well. We therefore do not count EarthLink broadband towards our total.

MSN did not disclose the composition of its subscriber base, and did not update its subscriber numbers. We are no longer making any assumptions about the size or composition of its subscribers, and for lack of better data, are assuming they are not unique.

None of the Regional Bell Operating Companies (RBOCs) reported dialup subscribers, so we count all dialup subscribers as unique.

We count EarthLink's 3.8 million user dialup base as not unique (even after discounting 294,000 prepaid People PC users, 295,000 "value" customers, and by an unknown number of customers obtained through the Apple relationship, all of whom may well use other ISPs in addition to EarthLink) as a tool of convenience to address concerns with numbers reported by other ISPs.

We suspect that at least 5 percent of the broadband subscribers listed for DSL and cable providers have not been connected or have tried to cancel their contract, and the number may be higher, but we do not have accurate churn data, and so discount the rest of EarthLink's subscriber base instead of discounting an arbitrary percentage of the monopoly providers' subscribers.

Finally, we assume that every user of United Online's free services has another account at a different ISP, so we count only United Online's paying subscribers.

This leaves us with the following unique subscriber numbers:

Unique Subscribers
Company Unique
Subscribers
AOL 22,658,000
MSN 0
United Online 2,700,000
Earthlink 0
Comcast 4,900,000
SBC 3,100,000
Verizon 2,100,000
Cox 1,800,000
Charter 1,489,700
BellSouth 1,300,000
Cablevision 984,800
Adelphia 876,991
Qwest 577,000
Covad 0
RCN 395,837
Mediacom 261,000
ATX 254,800
Insight BB 208,500
Hughes DIRECWAY 177,000
LocalNet 98,000
Cincinnati Bell 93,000
Internet America 76,000
Total 44,050,628

Note that this number is sharply higher than the unique subscribers from the previous quarter. That is partly because we lack data on MSN. Better data on MSN would sharply alter our calculations about market share. Also, we estimate that 2 million AOL users either have free accounts or subscribe to another ISP in addition to AOL.

Here's how we calculate the number of subscribers of the rest of the ISPs in the U.S. We substract the number of unique subscribers, 47,096,628, from the 77.4 million total individual subscribers. That gives us 33,349,372, or approximately 33.3 million subscribers for the rest of the ISPs in the U.S., which is 34.7 percent of the market. Note, however, that if large companies are inflating their own numbers by an aggregate total of more than 3,277,000 subscribers (the number of valid EarthLink subscribers we count as zero unique subscribers), the size of the small ISP market will be understated.

Market Share Calculation

So how many subscribers were not unique subscribers? The total subscribership of our ISPs is 62,784,828, up from 61,941,127 at the end of the previous quarter (which included US Wireless Online, an ISP not on the list this time). Of this, we believe that 44,050,628 are unique subscribers. The remainder, 18,734,200, we believe appear in the numbers of more than one ISP on our list.

In order to calculate market share, we add the remainder, 18,734,200, to the Jupiter Research subscriber total, 77,400,000, to get 96,134,200, which we use to determine the market share of each ISP. This is the total number of unique subscribers in the United States plus the number of double-counted subscribers in the ISPs listed in our table.

Here is a sample market share calcluation: AOL's apparent ISP total (including non-unique subscribers) is 24,658,000 (24.7 million on our table). We divide 24,658,000 by 96,134,200 to obtain the market share percentage shown on our table, 25.6 percent.

Transparency

In building this subscriber rankings, we are constantly frustrated by the quality of the data we are forced to work with, as explained above. We have, in contrast, endeavored to make our sources plain and our calculations obvious. We welcome feedback, and have received some constructive criticism from the readers of BroadbandReports.

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ABOUT THE AUTHOR

Enid Burns

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