THE CABLE PIPELINE

Cable’s dominance in Multichannel Market Share will continue to erode going from a recent SNL Kagan report on subscriber growth in Multichannel Market Trends for the U.S. So, why is this worth considering since the Cable Industry has a significant majority of customers throughout the U.S. footprint?  

What is significant is that the Telco’s, including Verizon’s – FIOS, and AT&T’s U-Verse seem to perform successfully against Cable TV whenever their footprints overlap and head-to-head competition is present. Both Telco’s have continued to launch their alternative Cable products within markets where their wire-line services can be more easily converted to carry Digital Cable offerings including HD, broadband, and wireless.

Note that Verizon’s FIOS FTTH architecture is quite expensive to build and is being launched in more urban settings with very high density markets, negating some of the risk in returns on capital investment.

DBS is expected to do well through 2013 but will begin to decline as it reaches 2019. I think this will come down to applications, broadband delivery and content where wire-line providers have the advantage, but DBS will continue to do well in underserved markets.

Over-the-top Video Substitution, (see chart), will double its subscriber growth from 2013 through 2019 as consumers will continue to look for alternatives to incumbent providers. Cable companies have been downplaying the erosion of customers whenever data has cropped up on customer losses, but as I suspect, remains a topic of contention within the confines of the board room.

What does the report indicate as a long-term trend? The Cable Industry will loose ground to Telco’s and Over-the-Top Substitution, but will continue to dominate the wire-line market. Urban markets will reap the most benefits from competition, new applications, and content roll-outs, while the underserved markets will have to contend with whatever is left over to fill that void.