Telcos, cable-cos trading places, for now at least

Last week's earnings reports highlighted a couple of telecom industry trends we were well aware of, but also drove home the point of how radically these trends have changed the industry landscape. Verizon Communications reported that it now has 1.2 million TV customers, and Comcast reported its now has 5.1 million voice telephony customers. These numbers mean that Verizon, via its FiOS TV offering, is now the 11th-largest video service provider in the U.S. Comcast, with its Comcast Digital Voice service, is the fourth-largest provider of residential voice services.

Also, since Verizon is the fastest-growing player in video and Comcast the fastest-growing in voice, we can likely expect them to continue their respective climbs.

Will we see more of the largest telcos and cable TV companies swapping places on the lists of biggest voice and video providers? We may indeed, particularly as AT&T continues to grow its TV offering and more cable TV companies invest in both residential VoIP and wireless voice. However, it is also unclear if this trend has any real staying power.

These companies are happily orchestrating an industry and market shift they all have had in their strategic plans for some time. Successfully entering a new domain traditionally ruled by a major competitor must be satisfying in and of itself, but the end game is supposed to be getting more customers locked in to triple-play and quadruple-play bundles, right?

Sign-up for bundled service continues to hold great promise, but the more startling reality is that telcos and cable TV companies are simply trading places, posting big gains in one area in exchange for big losses in another. Some market observers believe that in a difficult economy, some customers may be using their new-found choice in service providers to go after the best deals--dropping their cable TV provider and signing up for the telco's new video offering at the same time they are cutting the voice landline cord to the telco in favor of a better voice deal from the cable guy (a scenario that greatly benefits telcos, by the way).

If that is true, then it will be interesting to see what happens when the initial service sign-up discounts run their course, or the patience consumers have with a new service provider runs its course. The market share swap certainly fuels our imaginations, but it could also turn out to be to a mere blip in the telecom industry timeline when things seemed like they were about to change, but really didn't. Meanwhile, the new metric we'll watch for is bundled service subscribers, a number that no one seems to readily share.

For more:
- see this report [1] at Multichannel News

Related articles:
- Comcast last week reported big growth in voice customers Comcast report [2]
- Verizon showed major growth in its TV customer base Verizon report [3]

- Dan [4]