February 13, 2002 -- DSL lines in service in North America totaled 5,509,386 at the end of year 2001, according to new statistics published by TeleChoice, Inc.

The U.S. had 4,363,846 DSL lines in service at year's end. U.S. ILECs now account for 88% of the total, followed by CLECs with 11% and IXCs with about 1%. The ILEC market share increased approximately 3% from last quarter. The IXC deployment figures include only facilities-based deployments and not resold DSL lines. They also do not include Sprint, which counts as an ILEC because the majority of its lines are sold through its local service subsidiaries. Canada exceeded a million lines for the first time, ending the quarter with 1,145,540 DSL lines in service. To gather this data, TeleChoice interviews each DSL facilities-based service provider on a quarterly basis.

For the U.S. market this represents a 542,206 subscriber increase from the end of third quarter 2001. This is 11% more subscribers than were added in the third quarter, and it is the second quarter in a row where the net subscriber additions have increased over the previous quarter. Additionally, this is the first quarter in 2001 in which more than 500,000 subscribers were added. Among major ILECs, BellSouth again had the largest percentage growth, with overall lines up 34% compared to the end of the previous quarter. Overall, ILECs increased their lines in service by 18% over the third quarter. The IXC share of the market remains small compared to the overall market but has begun to show signs of growth coming into 2002.

As expected, growth in the CLEC segment of the market was negative, with the transfer of some Rhythms network assets to WorldCom and the shut down of others. Overall, the CLEC sector contracted by 10%. Growth of individual CLECs was relatively flat with the largest player, Covad, growing by only 1% during the quarter. As Covad has successfully emerged from Chapter 11 and has received significant funding, it is anticipated that there may be a rebound in this sector of the market during 2002.

The Canadian market outpaced the U.S. market during the quarter, with an overall growth rate of 23%. The installed base of Canadian providers grew by 216,928 subscribers over the quarter, 46% more subscribers than were added during the third quarter.

"The fourth quarter was a difficult one for the entire economy, but DSL providers overall maintained a healthy growth rate," notes TeleChoice DSL Analyst Pat Hurley. "After two awful quarters to start the year, U.S. providers increased the number of lines installed for two quarters in a row, and in Q4 installed more than a half million lines for the first time this year. Significantly, service providers that have been aggressive about expanding their DSL footprint, like BellSouth's aggressive rollout of DSL to neighborhood remote terminals, have seen their investment pay off with much higher growth rates than the industry average. Additionally, providers across the board are reaping the benefits of previous investments in provisioning automation systems and processes, with greatly decreased install times and quicker times to positive cash flow for self-install customers."

"ILECs have continued to increase their hold on the market, with nearly 90% market share," notes TeleChoice Executive Vice President Claudia Bacco. "It is imperative, however, that they continue to focus on improving availability and continue their moves towards offering a broad range of value-added services. While they have established their dominance within the DSL market, they still face considerable competition from cable providers who have nearly doubled the market penetration and are beginning to offer a variety of value-added services, including voice, to attract and retain residential customers."

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