Disclaimer: This author has no business relationship with Pike and Fischer and receives no compensation from that firm. Based on our objective evaluation, we do recommend this report and respect the firm’s research methodology and fact finding.
Pike and Fischer’s new Broadband Competition Outlook 2011 report states that broadband service providers are rushing out new service enhancements and applications to keep the existing customers they have and to draw the attention of (hard-to-attract) new subscribers. The research firm notes that growth in subscription based pay TV, Internet and telephone customers are all on the decline (most people don’t realize how hard the global economic slump has impacted telecom subscribers).
The P & F report states, “Beginning in 2009, the RBOCs saw net growth in on-network video customers begin to level off significantly. Verizon, for example, began to struggle with sustaining growth in its FiOS TV service and scaled back its planned deployment in order to maintain fiscal discipline. Verizon had more than 940,000 FiOS TV subscribers in 2009, but that number is likely to have dropped to below 600,000 when the full-year 2010 results are released in late-January 2011. As a result of subscriber attrition, new revenue sources are urgently needed by broadband providers inorder to be profitable. In 2011, service providers will see net growth slow, with customer additions for the year anticipated to fall below 4 million. The year-end total of high-speed Internet households will near 82 million, representing 70% of total U.S. households.”
The P & F report examines the latest strategies of the major broadband service providers, including Verizon, CenturyLink, Time Warner Cable, Qwest and AT&T. In 2011, P & F analysts expect to see service providers experiment heavily with tiered pricing and new features as they try to determine just how much consumers are willing to spend for the latest advances in home communications and entertainment. In this report, P & F offers more details on these trends and provide forecasts on customer growth for new multichannel video services, residential high-speed Internet, IP telephony, and broadband wireless services — including “4G” connectivity.
With consumers looking for more efficient ways to spend their money, 2011 could be the year when so-called over-the-top, network-agnostic services become the low-cost or free alternative, rather than adjunct, to pay TV and even home phone service. Although online content distributors such as Hulu and Google’s YouTube are shifting from an all-free business model to adding some premium tiers, those options are still far less expensive than a monthly cable or satellite TV subscription.
DVD-rental service Netflix is also making pay TV providers nervous with its new $7.00-per-month streaming-only option, a move the company made after discovering that its subscribers spend more time watching content streamed over the company’s Web site than via DVDs. P &F notes that over-the-top services, like those offered by Netflix (and similar companies), heighten the value of a robust high-speed Internet connection. Who will benefit from that dynamic remains to be seen!
One aspect of this P & F report we found intriquing was the assertion that Verizon and DirecTV are testing a residential LTE based broadband Internet and entertainment service, which would certainly compete with MSO/CableCo triple play offerings. The report states, “As fourth-generation wireless service evolves over the course of 2011 and beyond, consumers may find other ways to bypass the traditional communications services and associated fees. Verizon Chief Executive Officer Ivan Seidenberg predicts that the recently launched LTE wireless service could encourage cable customers to drop their digital phone subscriptions and just use their cable providers’ broadband service to make over-the-top voice- or video-over-IP calls. In fact, Verizon Wireless and DirecTV are reported to be quietly testing an in-home LTE-based broadband and entertainment service near Erie, Pa. Of course, some of those users will represent cannibalization of Verizon’s own lower-speed wireline services.”
The research firm provides forecasts on customer growth for new multichannel video services, high-speed Internet, IP telephony, and the features and applications that ride on those technologies. While the tumultuous economic conditions have made forecasting the growth in broadband adoption unusually difficult, the firm has incorporated publicly available projections on housing, unemployment, and other economic indicators into their 2011 competition forecasts, In particular, projections are given for:
-Multichannel Video: Cable, DBS and Telco
-Cable Commercial Services
For more details please visit www.broadbandadvisoryservices.com. To order Broadband Competition Outlook 2011 visit: www.broadbandadvisoryservices.com or call 1-800-255-8131 ext. 248