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Cable Technology Feature Article

October 22, 2013

High Speed Internet Access Drives Cable Results

By Gary Kim, Contributing Editor

It has by now become clear to most observers that fixed network service providers, whether telcos or cable operators, strategically rely on high speed access for revenue growth. In fact, most would credit faster speeds delivered by cable networks as a key reason U.S. cable operators have been gaining more customers in the high speed access business than have telcos.

For example, AT&T (News - Alert) U-verse revenue growth contributed to a two percent year-over-year increase in AT&T’s consumer wireline revenues during the first quarter of 2013. Consumer U-verse revenues grew 30.8 percent over 2012 and now represents 48 percent of wireline consumer revenues.

Verizon’s (News - Alert) consumer wireline revenue growth in the same quarter of 4.3 percent was driven by FiOS revenues, which grew 15 percent in the first quarter of 2013 and generated 69 percent of consumer revenues.

Netherlands cable operator Ziggo (News - Alert) in its third quarter 2013, though losing customers overall, added 43,000 new broadband access subscribers during the quarter, a significant increase on the 12,000 added in the third quarter of  2012.

At the end of the quarter, Ziggo had lost a net 11,000 subscribers, year over year. But that was a far better performance than the loss of 31,0000 customers in the same quarter a year earlier

Ziggo says that increases in Internet access speeds and the continued roll-out of its Wi-Fi hotspots were key drivers for growth of its broadband customer base.

Broadband revenues, especially television revenues, will continue to be important for Verizon, AT&T and other U.S. telcos, since the telephone industry continues to lose voice customers.

Verizon’s residential voice connections declined by 5.6 percent on a year-over-year basis, while AT&T’s consumer voice connections dropped 12.5 percent. CenturyLInk’s overall access line loss was 5.7 percent.

And though telcos generally lag cable in net new high speed account gains, the largest telcos collectively added 290,000 broadband customers during the first quarter, about 98 percent of their same quarter 2012 net additions.

AT&T and Verizon continue to take video-service subscriber share from the cable companies. AT&T video service penetration now is 19.4 percent of eligible homes, while Verizon video penetration is 34.1 percent of eligible homes.

The point is that high speed Internet access drives fixed network strategy, even if it is not the single biggest revenue generator at the moment.

Edited by Stefania Viscusi

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