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News and comments on community broadband networks, the communities deploying them and the technologies that support them. Published by Denise Frey and Al Bonnyman.

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Thursday, December 04, 2003


Cable telephony subscribers to top 10 million by year end

In-Stat/MDR has released a report projecting 10 million cable telephony subscribers worldwide by the end of this year with 19 million by 2007, driven primarily by U.S. cable operators.

My own instincts tell me that the 2007 worldwide number is low; most of the major U.S. cable operators have plans to aggressively offer telephony using voice over IP (VoIP) technology starting next year. Even at prices lower than those charged by Bells, this will still be very high margin business for the cable operators that have recently upgraded their systems to the latest HFC (hybrid fiber/coax) technology.

A rapid growth in cable telephony would be devastating for the incumbent Bell telephone companies in the U.S. Cable operators have already taken much of the broadband business that the Bells could have had if they had been more aggressive in rolling out broadband quickly and cheaply.

Strategically, the growth of cable broadband has provided lots of cash to U.S. cable operators -- cash that the Bells could have used for their own broadband development. Now some of that same cash will be going to feed the cable operators' cable telephony business; this, in turn, will eat further into Bell cash flows.

The Bells are finally beginning to become aware of this threat. It's a long way from awareness to effective reaction, however, and if the Bells don't react aggressively and quickly, they will likely go the way of the 19th century's great incumbent, Western Union, over the next ten years.

Communities served by a large Bell and without an up-to-date cable system will be hurt by this, as they'll be stuck with an increasingly brittle and unresponsive sole source for their telephone service.


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