| This report provides an in-depth examination of bundled-service market dynamics as they have unfolded in the residential telecommunications market, with forecasts on how those dynamics will evolve. We compare both the cable and telephone carrier sectorson their marketing and pricing strategies in deploying triple-play service bundles over the last few years, and how the addition of wireless services is affecting the competition. The report documents why the major phone carriers will need to continue investing in major network upgrades to compete against cable in the delivery of multichannel video and future video-capable “converged” services. The report includes more than 25 charts and tables.
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INTRODUCTION AND EXECUTIVE SUMMARY
Cable’s network advantage
Telcos’ long road from defense to offense
Analyzing the triple-play transition
THE EVOLUTION OF THE BUNDLE
Cox blazes the trail
AT&T Broadband: a pioneer that stumbled
Cablevision, Time Warner lead the VoIP charge
Comcast: aggressive push after late launch
Multiple services, multiple benefits
Cable triple play reaching smaller markets
RBOCs begin marketing satellite video
The need for on-net video
Wireless: a telco advantage?
THE HIGH SPEED DATA MARKET
Competitive Strategies
Competing on speed and price
FiOS challenges cable’s speed advantage
Broadband Availability
Broadband ARPU
Subscribers and Penetration
THE RESIDENTIAL VOICE MARKET
Erosion of RBOC voice lines
Are line losses peaking?
The evolution of cable’s voice offensive
Cable’s voice growth: how far, how fast?
THE MULTICHANNEL VIDEO MARKET
Trends in cable video
Telco-satellite alliances target cable video subs
Bundling impacts on subscriber growth
Cable voice drives ARPU growth
Revenue growth: advantage cable
CONCLUSION
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Cable Will Increase Lead in Residential Bundled-Services Market, Study Concludes
SILVER SPRING, MD, Feb. 7, 2007—Cable companies are outperforming telephone carriers by a widening margin in the battle for household wallet-share—and that is likely to continue as both industries add advanced mobile features to their service bundles, market research provider Pike & Fischer has found in a new independent analysis.
Marketing alliances between telephone carriers and satellite video providers have failed to blunt cable’s competitive edge, particularly as cable operators have rolled out digital phone service and begun wider discounting of so-called “triple-play” bundles of voice, video and high-speed Internet services, Pike & Fischer concludes in a new study. Both industries are now adding mobile services to those bundles, and cable may win that battle even though the telephone carriers already have their own mobile networks, the Silver Spring, MD-based company says.
Cable companies are adding mobile services to their bundles through a joint venture with Sprint. The Pike & Fischer report finds that cable companies will leverage their massive capital investments of the past decade and programming expertise derived from their core TV business to develop new “converged” services that include premium video content for cell phones and remote DVR programming.
“While the phone companies, which already provide mobile service, arguably have an early advantage in this arena, the alliance between Sprint and leading cable companies raises the specter of cable not only catching up in the integration of mobility, but even jumping ahead,” said analyst Mitchell Shapiro, author of the report.
“Our research highlights why the big phone companies are now investing in network upgrades that allow them to deliver multi-channel video and converged services over their own networks,” Shapiro says. “Taking this step will give them the technical capability to compete with cable’s current and future service offerings, and allow them to retain video revenues rather than pass them onto their satellite partners. But these market-by-market upgrades will take time, and won’t cover all of the RBOCs’ territories. And there’s no guarantee they will succeed financially, especially with the competitive wild card of web-based services looming over the telecom sector.”
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Mitchell Shapiro
Mitchell Shapiro, a Senior Consultant for BAS, has been analyzing media and telecom markets for more than 17 years. He has authored numerous in-depth reports for Pike & Fischer on competitive dynamics, vendor shares and market growth in the broadband industry, including studies on the high-speed Internet pricing, the market for municipal broadband services and strategies for deploying fiber-optic networks. He also regularly tracks the financial performance and broadband initiatives of the regional Bell operating companies.
Mitch previously served as senior vice president at Probe Research, where he was responsible for the company's tracking and forecasts of broadband network, service and CPE markets. He has also served as a senior consultant with Pangrac & Associates, a broadband engineering and strategic consulting firm, and as an analyst with Paul Kagan Associates, where he tracked technology trends and equipment markets in the cable and cellular industries. He holds a B.A. in Economics from the University of Michigan and an M.A. in Telecommunications from Michigan State University.
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