Cable Companies May Be the Voice of the Future, According to IDC

FRAMINGHAM, MA – MARCH 8, 2004 – Cable multiple systems operators (MSOs) are in the early phases of what could become a no-holds-barred battle with the incumbent local exchange carriers (ILECs) for a slice of the consumer voice market. Looking toward the future, IDC expects U.S. cable companies to sign up 19.7 million customers for voice services by 2008, generating an additional $11.8 billion in revenue.

"Although features enabled by next-generation technology will differentiate voice products, voice telephony is a commodity market. For cable MSOs to develop and take share from incumbent carriers, they must provide superior customer service at a reasonable price," said Will Stofega, senior analyst with IDC's Residential Telecommunications Services program.

Although offering basic voice service is hardly a glamour business for MSOs, it does boost average revenue per user (ARPU) and forms the basis for bundled services that are competitive with those offered by traditional telecom carriers. Still, to date, MSO telephony subscriber numbers pale when compared with those posted by incumbents, and penetration is relatively sparse. According to IDC's 2003 U.S. Residential Telecommunications Survey, less than 4% of those surveyed receive telephony services from a cable company. However, of those respondents that receive service from their cable provider, almost 72% were former customers of their local phone company.

IDC recently released U.S. Cable Telephony 2004-2008 Forecast: Golden Egg or Lead Balloon? (IDC #30797) examines the market potential for consumer telephony as provided by cable MSOs. This study also provides a forecast of the total number of cable telephone subscribers as well as a breakout by technology. In addition, this study provides an assessment of the drivers and inhibitors of demand for cable telephony services as well as actionable advice regarding deployment and marketing strategies.

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