One nightmare that likely rouses both Randall Stephenson and Ivan Seidenberg, the CEOs of AT&T (NYSE: T) and Verizon Communications (NYSE: VZ), from their slumber is the cable companies' ongoing encroachment into their legacy markets.
Okay, so the cable versus telco broadband has been one of your classic street fights, raging between two industry segments that couldn't be more different in terms of focus, strategy and culture.
On one side there's the old reliable telephone company with century-old traditions of voice reliability, versus the cowboy cable operator that made its name in first advancing multiple channels and features not possible on traditional TV and later broadband over their coaxial cable.
And while both AT&T and Verizon are making progress expanding their respective fiber-based broadband drives, it's clear that if you look at the latest earnings of both of these telcos, cable is successfully succeeding in winning over customers in non-FiOS and U-verse markets.
The numbers don't lie. During the third quarter, Verizon lost 165,000 DSL subscribers, while AT&T lost 88,000 DSL users in non-FiOS and non-U-verse markets.
What's making it even harder for AT&T and Verizon to escape the DSL erosion nightmare is the advent of DOCSIS 3.0 and channel bonding techniques, both of which enable cable operators to offer not only 50, but even 100 Mbps bandwidth to residential customers and SMBs.
Combine higher speeds with a decently priced triple play bundle and it's no surprise that consumers are ditching the telcos in markets where they can't get FiOS or U-Verse.