The numbers tell the story of a highly positive first quarter for the telecom industry, but not everyone is viewing those numbers in the same light.

For example, the industry added 3.6 million North American broadband subscribers in the first quarter, according to broadbandtrends.com, and DSL lines continued to grow at a faster pace than cable modems. That caused one industry analyst to conclude that telcos will overtake cable in the broadband race by the end of 2006.

Clifford Holliday, analyst for Information Gatekeepers Inc., has been saying in his quarterly assessments that the Bell companies are adding DSL subscribers at a pace that wipes out cable's one-time 2:1 leadership position in U.S. broadband deployment. Based on the first-quarter numbers, he's sticking to that prediction.

“It is pretty much trending the way I expected,” Holliday said. “Cable picked up a little bit this quarter, but not a lot. The way Verizon and AT&T are going, they are just killing them. My real impression is that the telcos are just under-pricing them to death. I would be extremely surprised if the cable companies are able to stop this onslaught.”

Teresa Mastrangelo, principal analyst with broadbandtrends.com, agrees with Holliday that the telcos now own 44% of the broadband market, up from one-third a couple of years ago, but she doesn't see them overtaking cable until late in 2007, or possibly 2008.

“I have them crossing over in 2008, and it could be in the fourth quarter of '07, where the combination of DSL and fiber-to-the-premises will start to outpace cable,” Mastrangelo said. If anything, she added, cable is doing a better job recently of selling its service bundles.

“There have been six quarters where DSL has beaten cable, but the last two quarters, the gap closed — cable closed back in on DSL,” Mastrangelo said. “Cable is seeing the benefits of bundling. They are selling $99 bundles that are very attractive.”

The price of that bundle is a bit misleading, she said, because anything beyond basic voice, data and video services will cost more than $99, but cable is effectively selling the bundle.

“We don't see the telcos selling as good a bundle yet,” Mastrangelo said.

Wall Street is beginning to acknowledge cable's successful bundling strategy, according to Kagan Research. Its Kagan Cable MSO Average climbed 20.1% between late December and early May, said analyst Renee Shaening in a research note. She credits the bundled sales.

“You can look at all the services separately, but it's more relevant to view them together,” Shaening said. “They are being sold in bundles that are a powerful marketing proposition. The bundle reduces subscriber churn, and selling bigger service packages ratchets up [average revenue per user].”

In general, the telecom industry posted better financials in the first quarter, with some companies — such as Qwest Communications — posting milestone quarters with initial profitability and others — including Global Crossing — projecting positive outlooks for the rest of 2006.

Qwest posted the most growth — 13.4% — of the broadband players, Mastrangelo said, as the company continued to push out its DSL availability.

That success wasn't always reflected on Wall Street, however, as Qwest's stock rose slightly just after its earnings announcements but tumbled with the rest of the market in mid-May. Global Crossing's stock has been trading up since mid-March but took a dip in early May.