Cable's Potency Explained

6:15 PM -- In the TIA's 2005 Telecommunications Market Review and Forecast, the cable networks get a nod as a big RBOC competitor, but the forecast also predicts slowing cable growth and service price drops:

Cable system operators, having spent more than $80 billion since the mid-1990s to upgrade their networks to compete with satellite providers, now are able to offer broadband Internet access and telephone service to a majority of their television subscribers. In 2003, they began rolling out lower cost voice over Internet protocol (VoIP) service and by 2004 had gained more than 3 million telephone subscribers at the expense of the RBOCs. They also gained more than 15 million broadband subscribers and retained an important advantage over the RBOCs — the ability to include television in a telephone/broadband service bundle. Because they have their own networks, they are not dependent on the RBOCs to reach customers and were unaffected by the rulings on leasing rates for network elements. Cable system operators have emerged as the RBOCs’ most potent competitors…

We expect an additional two years of double-digit subscriber growth, but by 2008 increases will drop to mid-single digits. We project there will be 25 million cable modem subscribers in 2008, a 10.1 percent compound annual increase. Average monthly rates will fall from $42.10 in 2004 to a projected $36.21 in 2008, a 3.7 percent compound annual decrease. Cable modem service revenue will expand at a 6.1 percent compound annual rate, from $8.6 billion in 2004 to $10.9 billion in 2008.

— Phil Harvey, News Editor, Light Reading

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