Telco TV's Impact on Cable MSOs
There have been a couple of interesting news items in recent weeks about IPTV deployments and the encroachment that AT&T and Verizon in particular are having on the video business for cable operators.
IPTV Subscribers are Growing
First, the DSL Forum has announced the latest worldwide IPTV subscriber figures in an October 8 press release. Worldwide growth, according to Point-Topic data, was 176% between June 2006 and June 2007, and the total number of users sits at 8.2 million. Parks Associates' own count from year-end 2005 to year-end 2006 was a 229% growth rate, so the numbers are progressing nicely, despite a general slowing of growth in Asia, where PCCW in Hong Kong and Chunghwa Telecom in Taiwan have been the two dominant providers. With Korea Telecom's entry into the IPTV market with Mega TV, however, growth can be expected to be healthy. Furthermore, we predicted a total of around 10.9 million worldwide households with IPTV services at year-end 2007 (IPTV: From Quadruple Play to Multiplay), so it looks as though we're on track to reach that figure.
Where is Telco TV Impacting the Cable MSO Business?
In the U.S., all eyes are on the competitive dynamics that AT&T and Verizon are now bringing to the table. Specifically, we're interested in whether the entry of U-verse TV and FiOS TV are showing an appreciable impact to the businesses of the cable operators with whom the telcos are most directly competing. Comcast's Chief Operating Officer Steve Burke, for example, has publicly noted the threat that Verizon's FiOS service poses to the company. However, Cablevision may be at most risk. For example, Cablevision notes in a recent SEC filing that Verizon's FiOS service now passes an estimated 25% of households in its service areas. And, recent subscriber counts from the four largest public cable MSOS - Cablevision, Charter, Comcast, and Time Warner Cable - indicate that Cablevision is lagging well behind Comcast and Time Warner. Comparing Q2 2007 growth to Q2 2006 figures shows the following:
Cablevision Q2 2006: 6.8% / Q2 2007: 1.6%
Comcast Q2 2006: 4.1% / Q2 2007: 6.2%
Time Warner Cable Q2 2006: 3.0% / Q2 2007: 2.4%
Cable CAPEX on the Rise; Stocks on the Decline
Today, there was an interesting article on Fiber Today about Wall Street's reaction to Verizon's initial FTTH plans and their current view of cable stocks. Investors intitially punished Verizon for the large CAPEX it was putting into its network upgrades; the stock has now risen more than 40% since a low of $32 per share earlier this year. At the same time, cable stocks have declined. Both Cablevision and Comcast have experienced a 20% drop in their share prices. The Fiber Today article does a nice job of explaining the dynamics that are shaping these recent trends, including the risk posed by the telcos in taking cable customers and the acknowledgment by cable MSOs that CAPEX will be increasing as they seek to improve their capabilities to offer more interactive and high-definition video services and even more robust broadband. Comcast, for example, notes that CAPEX will increase about 24% in 2007, and Time Warner indicates a rise of 26%. After spending billions in the 1990s to upgrade their networks from analog to digital, it appears that the cable industry will be investing more heavily again in upgrades and improvements to their services. And, in the short term, investors may cast a wary eye at these expenditures.
TV Competition and Impact on the Digital Home
As broadband and television operators in particular seek to differentiate their basic packages and offer new connectivity-related services to their product mix, we expect that certain solutions - chief among them home networking and communications equipment, customer premise equipment (set-tops and residential gateways), and so-called "federated devices" (network storage appliances, etc.) will see strong growth in coming years as they become integral pieces of service offerings.
To account for the new services that broadband carriers and television operators will deploy, home networking and customer premises equipment will evolve beyond basic broadband and data sharing to include new voice applications (voice-over-Wi-Fi and/or mobile-to-fixed-line-handoff services) and distributed entertainment. We see opportunities for more advanced set-top boxes and other third-party storage devices (such as media server NAS devices) to fulfill a dual role of providing secure backup and distributing entertainment content in and outside of the home.
IPTV Subscribers are Growing
First, the DSL Forum has announced the latest worldwide IPTV subscriber figures in an October 8 press release. Worldwide growth, according to Point-Topic data, was 176% between June 2006 and June 2007, and the total number of users sits at 8.2 million. Parks Associates' own count from year-end 2005 to year-end 2006 was a 229% growth rate, so the numbers are progressing nicely, despite a general slowing of growth in Asia, where PCCW in Hong Kong and Chunghwa Telecom in Taiwan have been the two dominant providers. With Korea Telecom's entry into the IPTV market with Mega TV, however, growth can be expected to be healthy. Furthermore, we predicted a total of around 10.9 million worldwide households with IPTV services at year-end 2007 (IPTV: From Quadruple Play to Multiplay), so it looks as though we're on track to reach that figure.
Where is Telco TV Impacting the Cable MSO Business?
In the U.S., all eyes are on the competitive dynamics that AT&T and Verizon are now bringing to the table. Specifically, we're interested in whether the entry of U-verse TV and FiOS TV are showing an appreciable impact to the businesses of the cable operators with whom the telcos are most directly competing. Comcast's Chief Operating Officer Steve Burke, for example, has publicly noted the threat that Verizon's FiOS service poses to the company. However, Cablevision may be at most risk. For example, Cablevision notes in a recent SEC filing that Verizon's FiOS service now passes an estimated 25% of households in its service areas. And, recent subscriber counts from the four largest public cable MSOS - Cablevision, Charter, Comcast, and Time Warner Cable - indicate that Cablevision is lagging well behind Comcast and Time Warner. Comparing Q2 2007 growth to Q2 2006 figures shows the following:
Cablevision Q2 2006: 6.8% / Q2 2007: 1.6%
Comcast Q2 2006: 4.1% / Q2 2007: 6.2%
Time Warner Cable Q2 2006: 3.0% / Q2 2007: 2.4%
Cable CAPEX on the Rise; Stocks on the Decline
Today, there was an interesting article on Fiber Today about Wall Street's reaction to Verizon's initial FTTH plans and their current view of cable stocks. Investors intitially punished Verizon for the large CAPEX it was putting into its network upgrades; the stock has now risen more than 40% since a low of $32 per share earlier this year. At the same time, cable stocks have declined. Both Cablevision and Comcast have experienced a 20% drop in their share prices. The Fiber Today article does a nice job of explaining the dynamics that are shaping these recent trends, including the risk posed by the telcos in taking cable customers and the acknowledgment by cable MSOs that CAPEX will be increasing as they seek to improve their capabilities to offer more interactive and high-definition video services and even more robust broadband. Comcast, for example, notes that CAPEX will increase about 24% in 2007, and Time Warner indicates a rise of 26%. After spending billions in the 1990s to upgrade their networks from analog to digital, it appears that the cable industry will be investing more heavily again in upgrades and improvements to their services. And, in the short term, investors may cast a wary eye at these expenditures.
TV Competition and Impact on the Digital Home
As broadband and television operators in particular seek to differentiate their basic packages and offer new connectivity-related services to their product mix, we expect that certain solutions - chief among them home networking and communications equipment, customer premise equipment (set-tops and residential gateways), and so-called "federated devices" (network storage appliances, etc.) will see strong growth in coming years as they become integral pieces of service offerings.
To account for the new services that broadband carriers and television operators will deploy, home networking and customer premises equipment will evolve beyond basic broadband and data sharing to include new voice applications (voice-over-Wi-Fi and/or mobile-to-fixed-line-handoff services) and distributed entertainment. We see opportunities for more advanced set-top boxes and other third-party storage devices (such as media server NAS devices) to fulfill a dual role of providing secure backup and distributing entertainment content in and outside of the home.
posted by Anonymous at 11:32 AM
0 Comments:
Post a Comment
<< Home