Cable Tops 7M VOIP Subs in Q4
LR Cable News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 4/13/2007
In our latest tally, Cable Digital News calculates that U.S. and Canadian MSOs collectively signed up slightly more than 1.35 million new IP phone customers in the fourth quarter, beating their third-quarter gains by about 90,000 subscribers. Thanks to this increase, we estimate that the North American cable industry finished up 2006 with close to 7.4 million VOIP customers, up from about 6.0 million customers at the end of September and just over 2.7 million at the end of last year.
Overall, CDN estimates that the cable industry now counts more than 9.5 million telephony subscribers, including those using older, more traditional circuit-switched technology. With about 2.1 million circuit-switched phone customers between them, Cox Communications Inc. and Comcast Corp. (Nasdaq: CMCSA, CMCSK) together account for nearly all of the non-VOIP subscribers.
The fall rise in VOIP subscriptions occurred as Time Warner Cable Inc. (NYSE: TWC), still the cable industry's leading IP phone provider by a hair, picked up the pace from a laggard two quarters. It also occurred as Comcast set a new industry record again for VOIP signups, drawing it almost even with Time Warner.
In addition, the VOIP increase came at the same time that U.S. and Canadian MSOs added about 1.37 million high-speed Internet access subscribers. As before, this data suggests that most new cable broadband data customers are taking phone service too as cable operators increasingly promote their "triple-play" bundles of voice, video, and data.
The Q4 totals mean that North American cable operators are now enlisting an average of almost 15,000 new IP phone customers a day, up from nearly 14,000 customers per day in the third quarter. Indeed, Comcast alone is now signing up close to 5,600 new subscribers each day.
Plus, the latest figures mean that U.S. and Canadian MSOs signed up about 4.3 million IP phone customers in 2006. In a Cable Industry Insider report last year, Light Reading projected that cable operators would rack up at least 3.8 million VOIP subscribers in 2006 and then another 5 million in 2007, boosting the industry's grand total to at least 11.5 million by the end of this year.
As several RBOCs have admitted, the cable industry's gains are increasingly coming at telco expense. Although the phone industry's precise losses to cable are tricky to quantify because the growth of wireless subscribers is also taking its toll, industry analysts estimate that cable now accounts for up to 50 percent of those losses.
At the end of 2006, Time Warner continued to lead the cable VOIP business with 1.860 million VOIP subscribers. The MSO netted 211,000 IP phone subscribers in the fourth quarter, up from 187,000 in the summer.
But, even with the quarter-to-quarter increase, Time Warner's growth is definitely leveling off. The company, which is now extending VOIP service to many former Adelphia Communications cable systems, has not matched its earlier quarterly hauls of 250,000 subscribers or more for the past three quarters.
On the other hand, Comcast is still gathering steam after getting off to a later start. North America's biggest MSO snared an industry-high 508,000 VOIP subscribers in the fourth quarter, up from 483,000 in the preceding quarter. Thanks to the increase, Comcast lifted its total IP phone customer count to 1.855 million, putting it in excellent position to pass Time Warner and quite possibly even Vonage Holdings Corp. (NYSE: VG) by this summer.
In fact, Comcast announced in late February that it had passed the 2 million mark for VOIP subscribers. MSO executives say they're aiming to add a whopping 2.6 million IP phone customers this year.
Cablevision Systems Corp. (NYSE: CVC), which recently fell to third place in the MSO rankings despite its own strong growth, netted 109,000 VOIP subscribers in the quarter, boosting its Optimum Voice subscriber total to slightly over 1.2 million. The company also raised its industry-leading VOIP penetration rate to a remarkable 26.5 percent of homes passed in the New York metro area.
Fourth-place Cox, the cable industry's biggest phone provider until recently because of its large circuit-switched properties, does not break down its phone customer totals by technology. But the privately owned MSO -- which added an estimated 110,000 IP phone customers in the fall to lift its total to 600,000 -- is still expanding its VOIP reach. The company is now rolling out the service to its last four markets.
— Alan Breznick, Senior Analyst, Heavy Reading