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Hello? Cable Will Grow Wireline in ’12

4/09/2012 12:01 AM Eastern

Cable operators are expected to grow their share of wireline telephone customers in 2012, despite slowing growth over the past few quarters, according to a report by Convergence Consulting Group.

Cable operators
currently control
about 30.2%
of wireline telephone
customers,
Convergence
said in its more
recent report
The Battle for the
American Couch
Potato
: Bundling,
TV, Internet, Telephone, Wireless, up from
the 26.8% of the market it controlled in 2010.
The Toronto-based media and technology
research firm estimated that cable operators
would grow their share of the market to
33.6% by the end of this year. 

 

 

Cable operators are expected to grow their share of wireline telephone customers in 2012, despite slowing growth over the past few quarters, according to a report by Convergence Consulting Group.

A combination of declining telco wireline
customers and subscribers who are cutting
the phone cord completely are the reasons
for the share gains, Convergence founder
Brahm Eiley said.

Regional Bell operating companies
(RBOCs) and telcos lost about 9.7% of their
residential access lines in 2011, Eiley estimated,
compared to 10.2% in 2010. Total residential
access lines have declined from 97.5
million in 2008 to 81.9 million in 2011.

“The bottom line is the market is shrinking
for wireline,” Eiley said.
Telephony growth has slowed for cable operators
over the past few years, as well. According
to Convergence, cable added 4.3
million telephone customers in 2008, 2.2
million in 2010
and 1.5 million
in 2011.

But t hose
declines have
managed to stay
ahead of a faster
shrinking base,
helping to boost
cable’s market
share.

The cable
guys aren’t gaining
like they
used to, but the base is smaller,” Eiley said.
Miller Tabak media analyst David Joyce
said that the decline in wireline usage has
been a trend for a while, as people switch to
wireless. Although cable phone additions
have slowed, he added, the service is still
considered a value.

“It’s almost cheaper to take the triple play,
including the phone, rather than just the
double play,” Joyce said.

While phone customers are rapidly cutting
the cord, the pace of customers expected
to sever their pay TV service ties is expected
to decline slightly in 2012, said a second Convergence
report, The Battle for the American
Couch Potato: Online & Traditional TV and
Movie Distribution
.”

Convergence estimated that about 3.6
million U.S. homes would have cut the
cord by year-end. Th at’s up about 950,000
from 2.65 million in 2011, but slightly behind
the 1.05 million increase of 2010.
Eiley said that while cord-cutting is not
expected to be a huge threat to pay TV
operators — cord-cutters represent only
about 3.6% of total pay TV households in
the U.S. — they also can’t be ignored.

“Do I think it will have a huge impact?
I don’t think so,” Eiley said. But he said it
is evidence that cable operators that have
been pushing hard for online authentication
and walled gardens for content have
to be careful of what they wish for.

“You’ve got to strike a balance,” Eiley said.
“If you take everything away, people are
likely to steal. If you give everything away
for free, you encourage cord-cutting.”

 

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