Atlantic-ACM: 23 Million Cable VoIP Subs by 2012

Charlie Reed at Atlantic ACM has written an interesting report on VoIP adoption and the growth of Cable companies w.r.t VoIP market share.

 

Atlantic ACM’s analysis (se below; I’ve highlighted some key points in bold) suggests 23 million cable VoIP subscribers within five years.

 

 

 

Cablecos are logging rapid VoIP growth. The following is an update to our ongoing tracking of these providers:

 

Cablevision, the first provider out the gate with a VoIP offering, continues to gain significant market traction, The company added 109,000 subscribers in the first quarter of this year from its small footprint of just 4.5 million homes around the Metro New York and Long Island areas. One key metric that ATLANITC-ACM focuses on in cable research and projections is the percentage of high-speed data (HSD) subscribers that have VoIP lines. Cablevision currently sits at 62 percent and rising.

 

Given Cablevision’s significant penetration rate, it is not surprising that Comcast, which entered the market later and passes ten times as many homes as Cablevision, logged more than half a million subscribers in the first quarter. Hence, even though Comcast serves 2.4 million subscribers, its HSD penetration of 20 percent, when VoIP is available to 73 percent of its subscribers (85 percent by year-end), points to significant continued growth for the cable giant. If Comcast is able to match Cablevision’s current penetration rate, and continues growth in HSD subs, it could ultimately rack up more than 10 million VoIP subscribers.

 

Time Warner Cable had a much earlier entry into VoIP than Comcast and has logged 30-percent penetration to date, with 234,000 additional subscribers in the first quarter. System upgrades are required in key areas in order to offer VoIP, as is the case with Comcast, but here again a simple matching of Cablevision’s penetration rates to date, if upgrades are completed and HSD subscriber growth continues, would equate to between six and seven million subscribers.

 

Charter, Insight and others are laggards on the adoption front, with less than 20-percent HSD combined penetration, but network upgrades would allow them to move more toward the penetration rates of market leaders.

 

The Bottom Line:

Using HSD penetration as a forecasting metric does not reveal the entire picture. There are fundamental differences that could keep others from achieving Cablevision’s position, including the fact that the company began a few years earlier, when there was less competition from bring-your-own-broadband (BYOB) providers, wireless substitution was less prevalent, and it serves a more clustered market, which is better for marketing purposes. Nonetheless, the Cablevision model provides insight into the potential for cablecos on the VoIP front using the power of bundling, and it makes clear that significant growth is on the horizon for these providers even if they do not approach Cablevision’s extraordinary penetration rates.

 

Considering VoIP penetration of cable modem subscribers, as well as a number of market and company-specific factors, ATLANTIC-ACM forecasts that US VoIP cable subscribers will reach nearly 23 million by 2012.