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Cable Technology Feature Article

August 17, 2010

Time Warner Cable Losing U.S. VoIP Share

By Susan J. Campbell, TMCnet Contributing Editor

While the U.S. VoIP market should hold promise for a number of companies, Time Warner (News - Alert) is not enjoying a windfall. In fact, despite the fact that revenues in the U.S. VoIP market continue to grow, Time Warner Cable is losing share, according to a recent piece featured on The Street.

Time Warner competes with other cable providers in the U.S. such as Comcast (News - Alert) and telecom companies like AT&T and Verizon. Pure play services like Skype and Vonage also pull on its market share. And, while it is expected that these losses will taper off in coming years, prolonged share declines could actually depress the company’s stock price by roughly 4 percent. On the upside, Time Warner has enjoyed growth on the digital subscriber side of the second quarter of 2010. Overall, however, capital expenditures have declined, as well as general and administrative expenses. 

As a result of these tends the Trefis price estimate for the company’s stock has been changed from $37 to $48.37.The VoIP market as a whole is crowded and extremely competitive, dominated by the major telecoms that are relying on fiber-optic networks to gain VoIP subscribers through bundled offerings. 

At the same time, dedicated VoIP services such as Skype (News - Alert) have enjoyed significant growth in popularity. Comcast is beating out Time Warner in terms of reach, limiting its ability to take advantage of the growing demand for VoIP solutions.Industry analysts do expect Time Warner Cable’s VoIP market share to continue to decline to reach 15.7 percent by the end of 2010. This decline is expected to reach stable levels by the end of 2012, yet share could decline to 13 percent if the company is unable to gain control of their losing trend. 

In other Time Warner news, the company recently announced that its philanthropic program Connect a Million Minds has reached over 200,000 pledges in connecting kids with afterschool science, technology, engineering and math programs in their communities. CAMM works to increase awareness about the importance of education and careers in these four areas and to provide information on engaging local after-school opportunities for kids.

Time Warner has also joined Comcast in the support of WiFi (News - Alert) roaming. This service allows users to roam onto other cable networks provided by Comcast and Time Warner Cable.

Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.

Edited by Juliana Kenny