It's pretty much a given these days that the tier one U.S. telcos' wireline voice is a dying business beset by cable competition and the ongoing subscriber wireless substitution. However, one area telcos are continually banking on with their respective wireline properties is a continual build up of their broadband access networks.
Of course, the 'big three' providers AT&T, Qwest and Verizon are going at the broadband opportunity in their own way.
AT&T and Qwest are content to leverage their existing copper network in a Fiber to the Node (FTTN) manner that pushes fiber deep into a neighborhood and gets passed on to a copper connection. Of course, FTTN is where the comparison between AT&T and Qwest ends. AT&T is launching an IPTV service and has wireless to boot, while Qwest, apart from selling satellite TV, continues to maintain that its FTTN network will provide more than enough bandwidth for online and other interactive video and consumer applications.
Then, there's Verizon and its Fiber to the Premises FiOS rollout, which while seeing a bit of a slower growth curve in Q3 09 is still gaining momentum as it continues to expand its presence in not only high-trafficked cities such as New York City, but Central New York, Westford, Massachusetts, Washington, D.C. and Allentown, Pennsylvania.
Regardless of the medium chosen to deliver their wireline broadband service sets, the focus in broadband these days is on customer retention. These customer retention methods include an increased focused on triple and quad play bundles and other value-add features such as online storage and security.
"The name of the game for service providers today is mitigating churn--that is, holding on to what they've got," said Ben Piper of Strategy Analytics. "Research we recently fielded in the US market (to be published soon) showed that Americans report very high satisfaction with their current service provider (75 percent are "somewhat" or "very satisfied"). That said, when presented with a compelling competitive offer (20 percent price discount or doubling in speed), roughly two-thirds would jump ship."
Piper told us that while there's still growth, it's not going to be at hockey stick proportions seen in other years. "The days of consistent double-digit broadband growth are probably behind us," said Ben Piper, Strategy Analytics. "The U.S. market is rapidly maturing--we are estimating 63 percent household broadband penetration by year-end-- and the new customer pool is dwindling. Q3 was a fairly flat quarter for the telcos in terms of subscriber growth, and we expect to see similar results from Comcast and TWC when they report this week."
With the tier one telcos done with their earnings, you'll probably ask what about the tier 2 providers and cable? As you might guess correctly, we'll follow up with the Q3 cable performance report later this week with all of the major cable MSOs and tier two providers in two other separate reports. --Sean