Earlier this decade, when cable companies started their foray into the phone business, not many gave them much of a chance to succeed. Sure, they could sell a lot of broadband connections, but no one thought they would be players in telecom services such as voice. Fast-forward to today, and the situation is entirely different. During the first half of 2009, cable companies across the globe generated about $30 billion in telecom service revenues, according to Telegeography, a market research company. Voice, in fact, has become the secret weapon for cable companies around the world.
Those revenues come from 49 million voice subscribers and 82 million broadband customers worldwide. Cable companies’ revenues have grown 28 percent every year since 2003 vs. overall wireline business growth of 4 percent. CableCos now account for 29 percent of broadband subscribers and 9 percent of voice subscribers in countries where they are allowed to compete with the phone companies. That works out to about 15 percent of residential telecom revenues in countries where cable and telecoms are allowed to compete.
The reason we are seeing this growth is primarily because of North America. The presence of highly competitive players such as Time Warner Cable (s TWC) and Comcast (s CMCSA) is a major reason why telecoms are on weak footing in the U.S. And there is no sign that U.S. CableCos are easing up the pressure on phone companies.
For instance, during the third quarter (ending Sept. 30), Time Warner added 117,000 new residential high-speed Internet customers (up 32 percent from second-quarter net additions of 88,000 subscribers) and 62,000 voice subscribers (down 39 percent from 103,000 new voice customers added during the second quarter). Comcast, on the other hand, added another 361,000 broadband subscribers (up 455 percent from 65,000 new additions during the second quarter) and 375,000 voice customers, up 61 percent from 233,000 subscribers added during the second quarter.
Even in the highly competitive and mature markets of North America and Western Europe, the leading cablecos have grown their telecoms revenue by almost 10 percent relative to the third quarter of 2008. Despite the added pressure of a deep recession, these leading cablecos have seen their broadband Internet subscriber bases grow by 7 percent and their telephony subscriber bases by 13 percent over the last 12 months. “Comcast, Time Warner Cable and Liberty Global all now feature in the top 15 ranking of broadband Internet service providers, and telecoms remains an engine for growth for many cablecos around the world,” added TeleGeography’s John Dinsdalee.(Telegeography)
CableCos are likely to have a major impact in Eastern Europe and Latin America. In Asia, the role of cable is being viewed as limited. In places like China and India, cable is not allowed to compete with phone companies.