Voice and video are becoming a zero-sum game for service providers, where any contestant gains a subscriber largely at the expense of another provider. Recent first quarter results in the video, wireless and wired voice segments are a clear example.
Citing competition from the telcos and the worsening economy, Dish Network reported Monday that its first-quarter subscriber growth nosedived nearly 89 percent from a year ago, with only a 35,000 net subscriber gain.
Subscriber growth for Dish Network, which now has 13.8 million customers, lagged way behind that of the nation’s biggest satellite provider, DirecTV (
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Alert), which last week reported 275,000 new subscribers in the first quarter. That was a 17 percent increase for DirecTV.
Another data point: Comcast (
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Alert) basic video subscribers declined 57,000 or 0.2 percent during the first quarter. But Comcast also added 639,000 voice customers during the first quarter, and penetration reached 12 percent or 5.1 million customers.
It isn't so clear whether wired telephone penetration is level or slightly declining. The reason is that the Federal Communication Commission, which collects data on phone penetration, now allows respondents to include mobile phone service as "household phone service."
About all we can know for sure is that large incumbent and smaller phone companies report they are losing traditional landlines, while cable providers report they are steadily adding lines. That represents a pure market share shift effect.
There also is some amount of landline abandonment, where users replace a landline and go wireless only. Overall, it appears the wired voice market is almost completely a zero-sum game where wins can come only at the expense of losses by another provider. In fact, the FCC (
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Wireless still remains a growth story, though there now are some zero-sum elements appearing. Overall, the U.S. wireless industry added 22 million net new customers.
AT&T chalked up 7.4 million mobile subscriber additions over the last 12-month period, for example and Verizon Wireless and T-Mobile grew as well. Sprint (
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In the fourth quarter, Sprint Nextel lost a million customers, after losing smaller numbers of customers in the other quarters. Among the smaller carriers, there was a similar share shift, even as the overall market continued to grow. Virgin was losing customers as Leap Wireless (
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Sanford C. Bernstein & Co. analyst Craig Moffett points out that analysts have been wondering how a number of cable companies, telcos and DirecTV had all managed to tally up bigger-than-expected subscriber gains in the first quarter.
“Well, now we know," he says. "They were coming from Dish.”
Entertainment video now appears to be approaching the zero-sum game stage. Wired voice probably already is there. Wireless still has some room to go, especially if the industry is able to grow mobile broadband connections used for"machine to machine" connections and PCs, for example.
Product bundles are one provider response to a zero-sum game. If the total number of customer units is fixed, revenue can grow only if prices continually are raised or if additional products can be sold to the existing customer base. That's what triple play
or quadruple play is all about.
Gary Kim is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.
Don’t forget to check out TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP Communications industry. The library offers white papers, case studies and other documents which are free to registered users. Today’s featured white paper is Fixed Service Strategies for Mobile Network Operators, brought to you by Comverse.
Internet Protocol (IP) | X |
| IP stands for Internet Protocol, a data-networking protocol developed throughout the 1980s. It is the established standard protocol for transmitting and receiving data
in packets over the Internet. I...more |
Triple Play | X |
| The Triple play refers to 1-multi-channel television (video), 2-telephony (voice) and 3-Internet (data) on existing twisted-pair wire, coaxial cable, satellite, BPL or other mean including a mix of an...more |
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