IN THIS ISSUE
PIPELINE RESOURCES

By: Tim Young

For a number of years now, Pipeline has taken the time to dedicate at least one annual issue to the ongoing competition between cablecos and telcos for various segments of the market. This is a battle that's most furiously pitched in the home.

The struggle between these access technologies is taking place all over the world these days. In Europe, cable powerhouse Liberty Global just announced that it will buy Kabel-Baden W├╝rttemberg, Germany's third largest cableco, further consolidating its position as the largest owner of Non-US cablecos. Meanwhile, according to a recent report from In-Stat, Western Europe leads the world in IPTV customers, with 17.5 million. (11 million of those are in France, alone.)

In the CALA region, the cableco/telco struggle is a bit more convoluted, as the largest cableco in the region (NET Servicos de Comunicacao) is actually a subsidiary of telco Embratel. Meanwhile, in parts of AsiaPac, hundreds of millions of pay-tv consumers are distributed between scores of carriers, each carrying a part of the world's largest market (the region is home to 57% of the world's pay-tv subscribers, according to the Asia-Pacific Broadcasting Union) while rarely surpassing 5 million subs, individually (according to In-Stat). However, one way to characterize the struggle between cablecos and telcos is to select the biggest heavyweight from each category in the US market and see how they stack up against one another.

Two aces, up close and personal. Aware of one-another's presence and attempting to out-maneuver the other. In aviation, it's called a dogfight.

The Aces

Of course, in this head-to-head, the combatants aren't a P-51 Mustang and a Messerschmitt Bf 109.

In one corner, we have AT&T. It's a big company. Big in a way that planets are big. It's number 7 on the Fortune 500 list, a ranking topped only by 3 oil companies, Bank of America, GE, and WalMart. In the Forbes Global rankings, AT&T's still #13, worldwide, and that's after sliding six spots from the previous year's list. $125billion in revenue.$20billion in income. That's wicked big.

In the other corner is Comcast, which sports a "scant" $38billion in revenue and $6billion in operating income. And that Fortune 500 list? Comcast clocks in at number 57. So while smaller than the largest telco, the largest US cableco is hardly diminutive.

So, let's just take a brief walk through how these companies stack up against one another in a number of important areas:

Pay-TV

This one goes the way you might expect. At least for now, it's Comcast in a walk, in terms of market dominance. As of September 2010, Comcast had some 23 million subscribers to their pay TV service, at least at a basic level, according to the NCTA. AT&T, meanwhile, clocked in at 2.7 million, making it the number nine video provider in the country, behind even its wireline rival, Verizon, which came in at number seven with its 3.3million subs. However, that massive gap is narrowing, if slightly. Comcast dropped 135,000 video subs in Q42010, while "AT&T U-verse is the fastest growing TV provider in the country," said Mari Melguizo, spokesperson for AT&T, "with more TV subscribers added than any of the major TV providers reported in 2009 and 2010."



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