A recent report by Leichtman Research Group Inc. (LRG) reveals that the cable multi service operators (MSOs) in the U.S. have successfully maintained their lead over telecom operators in the high-speed broadband (Internet) market. This comes as a respite, especially at a time when the cable TV operators have been losing their foothold in the core video market to fiber-based telecom operators and online video streaming service providers.
For the first-time in the 66-year long history of the cable TV Industry, cable MSOs outpaced telecom operators in the high-speed broadband market in the second quarter of 2014. Since then, it has been more or less a joyride for cable MSOs in the space.
According to data compiled by LRG, 17 large cable TV and telecom operators jointly had approximately 89.5 million high-speed Internet subscribers at the end of the third quarter of 2015, representing about 94% of the nation’s total broadband market. Of the count cited, cable MSOs commanded nearly 54.3 million subscribers (60.7%) while the remaining 35.2 million customers (39.3%) were serviced by telecom operators.
In the third quarter, 10 major cable TV operators added a net of 787,629 high-speed Internet subscribers while 7 major telecom operators lost 143,338 net subscribers resulting in a total net subscriber addition of 644,291 for the broadband industry. Through the first nine months of 2015, the cable TV operators have gained around 2.3 million subscribers in contrast to a loss of about 130,000 subscribers on the part of the telecom operators.
In the third quarter, top two cable MSOs in the U.S., namely, Comcast Corp. CMCSA and Time Warner Cable Inc. TWC added 320,000 and 246,000 high-speed broadband subscribers, respectively. On the other hand, telecom behemoth AT&T Inc. T lost 129,000 subscribers while Verizon Communications Inc. VZ gained a measly 2,000 subscribers. LRG revealed that while AT&T and Verizon gained 305,000 subscribers through their fiber-based U-Verse and FiOS Internet services they lost a significant 432,000 subscribers within their legacy DSL network.
Over the last seven years, the internal dynamics of the pay-TV market have been gradually shifting from cable TV offerings toward fiber-based video services of large telecom operators. Moreover, the strong presence of online video streaming providers is posing a significant threat to the existing pay-TV business model. Video offering, which represented the core business function of cable TV operators, seems to be fast slipping out of their hands.
Nevertheless, of late, with the deployment of the next-generation DOCSIS 3.0 technology, cable TV operators have extensively penetrated into the high-speed Internet market. In an attempt to capitalize on this technology, leading cable TV operators are increasingly emphasizing on the broadband market. At this juncture, a strong momentum in the high-speed data (Internet) market bodes well for cable MSOs.
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