Cable Cos Will Hold Onto Lead Over Satellite - Report
01 Oct 07:32
By Ellen Sheng
DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Satellite TV and phone carriers are rapidly chipping away at cable's lead in the broadband and pay-TV markets, but cable companies will continue to dominate with the help of their new Internet phone services, according to a new report from Convergence Consulting Group.
Cable companies should sign 53% of all new digital TV subscriptions in 2004,compared with 61% in 2003, the report estimated. In broadband Internet, residential cable modem service should make up 56% of new subscriptions, compared with 65% in 2003.
In the last six months, phone carriers such as Verizon Communications (VZ), SBC Communications Inc. (SBC) and Sprint Corp. (FON) have teamed up with DirecTV Group Inc. (DTV) or EchoStar Communications Corp. (DISH) to bundle phone, Internet and TV into a single bill. The approach has helped the companies steal market share from cable operators. The third quarter, which traditionally is the worst for cable operators, saw even more customer losses than expected.
By the end of the year, cable will lose 200,000 more basic TV subscribers than it did in 2003, said the report, while residential DSL subscribers will have added about 1 million more subscribers in 2004 than in 2003.
Despite this, cable still has the upper hand, especially once voice-over Internet protocol adoption starts picking up in 2005, according to Convergence.
The Toronto marketing data firm estimated that cable phone customers, both VOIP or otherwise, will increase to 7.5 million by the end of 2005. The number should hit 4 million by the end of this year.
Price pressures will continue to loom large in 2005. By and large, cable operators have chosen to add bells and whistles in lieu of dropping prices, but that could change if phone and satellite companies continue slashing prices, said Brahm Eiley of Convergence.
Broadband speeds will keep increasing. Convergence sees Comcast Corp. (CMCSA, CMCSK) and Time Warner Cable raising speeds again soon since BellSouth, SBC and Verizon recently raised speeds on their DSL service to 3 Mbps.
Another threat could come from Verizon and SBC. If the companies succeed with their plans to roll out fiber connections to homes, then cable's lead could be further challenged, Convergence said.
Convergence interviews hundreds of access, content, equipment and service providers for its report, which comes out twice a year. |
