Pipeline Publishing, Volume 5, Issue 1

	This Month's Issue:
	Cableco vs. Telco

The Cable Industry Today:
A Quick Look at Where it Stands

By Craig M. Clausen and Joseph J. Kestel

Following an okay 2005 and a stellar 2006, the cable sector was beaten up by industry-watchers in 2007. Implementation of VoIP service went better than expected overall, creating high expectations mid-decade; when AT&T and Verizon went into high-gear with their fiber rollouts last year, with promising early success, they took the spotlight away from cable once again.

But cable is poised for another renaissance. VoIP services continue to grow; new services, such as interactive programming and ultra-high-speed Internet access, offer better consumer satisfaction and additional revenue; and an industry-wide strategic push into the commercial customer segment is yielding solid early returns and beginning to throw the telcos back on their heels.

Continued Dominance in Video and High-speed Internet

Cable companies' historical strength has been their dominance as providers of subscription-television services (see Table 1). Earlier this decade, competitors, mainly in the form of satellite television providers like DirecTV and DISH Network, cut into this dominance. However, by migrating consumers from analog to digital platforms, cablecos have regained some tangible advantages and generally slowed subscriber losses in recent years.

Cablecos' expanded video offerings—including video on demand (VOD), integrated digital video recorders (DVRs), and other digital service enhancements like interactive program guides—have improved and compare favorably with not only satellite services but also the telephone companies’ Internet protocol television (IPTV) offerings.

However, by migrating consumers from analog to digital platforms, cablecos have regained some tangible advantages and generally slowed subscriber losses in recent years.

Another strength is high-speed Internet service rolled out to compete directly with telephone companies’ DSL deployments. Cable broadband services become available throughout most of the United States relatively quickly, and because they are not dependent on proximity to a telco central office like DSL services, they sometimes are a consumers' lone broadband option.

The penetration rates of telcos' DSL services have increased over the past few years, but

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Figure 1:

Television Subscribers in the United States, 2000-2007
(percentage of total subscribers)

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