New Credit Suisse cable and satellite analyst Stefan Anninger seemingly predicts telco digital subscriber line penetration will fall to just about 15 percent share of the installed U.S. consumer broadband base by 2015, cutting the telco installed base nearly in half in five years. At least, that is what a headline on a "USA Today" story seems to scream. 

If you assume that broadband access provides the foundation for all other fixed-line services, and that the characterization is correct, that could easily be viewed as a disastrous state of affairs for telco providers. But it isn't clear whether that is the proper conclusion to draw from Anninger's report.

He forecasts that cable companies will have 56 percent of the market, up from 54 percent today. That implies that other providers will have about 44 percent share of the installed base. In other words, cable providers will gain about two points of installed base share by 2015. That's a different sort of figure than implied by the "15 percent" headline.

What Anninger seems to say is that Verizon's FiOS service, AT&T's (News - Alert) U-verse and wireless services each will account for about 7 percent of all broadband users in 2015, with the remainder split among other technologies, including satellite. But that's a different statement than saying "telcos will only have 15 percent installed base by 2015." The reason?

The headline compares company share of an entire market with industry share of the market. If it is true that Verizon and AT&T each might have 7 percent share of the entire U.S. market, the appropriate analogy would be that Time Warner Cable, Comcast or Cox (News - Alert) Communications each will have X percent share of the entire market. 

The industry share still appears to be that cable will have 56 percent and that other providers, mainly telcos, will share 44 percent share with satellite providers. But no observer thinks satellite broadband will amount to more than a tiny fraction of total broadband connections. So one might say the the actual conclusion is that cable share will grow by two percentage points over the next five or so years. 

The analysis is some key ways hinges on the assumption that "headline speeds" are related more or less directly to consumer buying of those packages.

The problem for DSL, Anninger says, is that current DSL offerings offer 4 megabits per second speeds, which will come as a surprise to AT&T, Verizon (News - Alert), Qwest and other providers, who can, and do offer higher speeds, but find most consumers do not buy the highest-rated speed tiers today, even though they are available. 

By 2015, most broadband subscribers will want to supply at least 7 Mbps, and DSL cannot be upgraded to those levels, the report seems to suggest.

Again, that will come as quite a surprise to AT&T, Verizon, Qwest and others, who already provide top speeds higher than that, and moreover know what has to be done, incrementally, to boost speeds higher, much as cable operators also are working on ways to boost speed in the future. 

Anninger says telco providers may be able to offer 18 Mbps in five years, but that cable operators will be able to provide speeds up to 200 Mbps. Much depends on executive decisions, consumer demand and capital market support, not technology. In a technical sense, everybody is quite clear on what needs to be done to boost potential bandwidth. The big issue is expected return, not technology. 

Neither cable nor telco networks can be upgraded to offer 100 Mbps or 200 Mbps without major network upgrades and, in some cases, key changes in how services are provided. Cable operators can clear out lots of linear video bandwidth by changing from a "broadband" to a "switched digital video" approach, and by driving fiber closer to the customer. They also can change the apportionment of bandwidth in downstream and upstream directions, in a more radical way. 

That option has been available for decades, but would be hugely disruptive, as all current active and passive devices on the network are channelized for a "low split" division of spectrum, allocating most bandwidth for downstream apps. Cable operators could move to a "mid-split division of bandwidth. That option has been available for decades, but has not been adopted because the whole rest of the infrastructure is optimized for a "low split" division of bandwidth. 

Still, Anninger believes cable will have a huge advantage in 45 percent of the country where DSL and cable will be the only two wireline broadband options. Nearly seven out of 10 broadband users will have cable in those territories in 2015, up from about six in 10 today, Anninger predicts. 

But raw bandwidth is not the only crucial determinant of consumer behavior. Anninger's survey also indicates that more than 60 percent of FiOS (News - Alert) and U-verse broadband customers are "very satisfied" with the services. Only 36 percent of cable customers were equally pleased. Both telcos and cable operators have lots of room to package and price services in various ways to increase appeal. 

Technology is not the barrier, nor, in all likelihood, will it prove to be decisive in determining consumer market share. Nor would some of us expect the market share dynamics to shift as much as shocking headlines indicate. Broadband is a foundational service, and both cable and telco suppliers know exactly what they have to do to supply any level of end-user demand. The issue is that the demand has to be there.