The last couple of years have seen impressive triple play bundle growth among cable MSOs, much of it at the expense of telecom service providers. Cable MSOs have received much praise, mostly well deserved, for their triple play bundle execution. Well apparently “what’s good for the goose is also good for the gander.” Telecom, particularly Verizon FiOS, is beginning to payback its cable competitors, and MSOs like Comcast are beginning to feel the heat. Evidence of this appeared last week when Comcast revealed their quarterly numbers, citing slower than expected growth in hi-speed Internet and digital cable counts, as well as a continuing decline in basic video sub counts. “We’re seeing increasing competition and a softer economy, and as a result a slightly slower growth rate,” Comcast CEO Brian Roberts said during an earnings call on Thursday. The news impacted cable MSO stocks, sending Comcast down to a 52 week low. Telecom operators have been somewhat slow to respond to cable’s triple play threat, but they are now beginning to see results from their own triple play execution strategy.
Verizon released numbers today that show 717K total FiOS video customers (202K adds in the quarter) and 1.5 million total video customers when you include their DBS subscribers (85K DBS adds this quarter). Verizon claims 15% penetration of eligible FiOS TV homes. Interestingly enough, FiOS net video adds outnumber DBS net adds by a 2.5 to 1 margin, despite the fact that FiOS eligibility is a much smaller footprint than DBS. It really illustrates where Verizon is focusing there video efforts. AT&T announced at TelcoTV last week that they are averaging 10K new U-verse adds per week. While these numbers are relatively small when looked at in the full context of the 113 million television households in the U.S., they do represent a growing threat to cable MSOs. Recent news from Comcast confirms this growing threat. The reality of the brewing competitive battle between cable and telecom has been somewhat one sided for the past few years. Cable has had the lead. Now that telecom carriers are beginning to truly execute on their triple play strategies, the next couple of years will really reveal competition’s impact on the marketplace. It should be an interesting contest to watch.