Bundling Of Multiple Services Will Save The Day For Cable MSOs, Says ABI; DBS, DSL and Telcos: Will They Shake Up the Cable Monopoly?

Business Editors/High-Tech Writers

OYSTER BAY, N.Y.--(BUSINESS WIRE)--July 23, 2003

Cable operators for the past several years have been diligently upgrading their networks to offer advanced digital services. In the course of these upgrades, these cable operators have incurred tremendous capital burdens along with operational responsibilities related to the provisioning of advanced digital services such as video on demand (VOD) and cable telephony. Research firm ABI, however, believes that by combining video, voice and data, otherwise known as the "triple play," into one bundled package, cable operators can offer a more cost-effective solution to the end user. Bundling multiple services along with video distribution will help cable MSOs fend off competing technologies-and rivals.

"With the implementation of advanced digital services such as VOD, high-speed data and cable telephony, consumers who otherwise would not have subscribed to cable television, or who are frustrated with regular cable television as a stand-alone service, are now finding value in signing up for these bundled services," explains Vamsi Sistla, ABI Senior Analyst and report author. "Even though the digital cable churn rate may be high for now, the bundling of services will make business much more promising for cable operators."

ABI's research also finds that:

-- Total cable MSO equipment and service revenue will account for

over $57 billion by year-end 2003

-- Revenue generated by digital cable subscriptions will surpass

that for analog cable subscriptions in the year 2005,

accounting for over $19 billion

-- By the end of 2004, there will be over 40 million digital

cable subscribers, surpassing the number of analog cable

subscribers

-- By 2008, the market share of cable SME (small- to medium-sized

enterprises) broadband will reach over 20%, compared to 4% in

the year 2003. Cable's SME broadband revenue will grow

annually at a CAAG of 63% through 2008.

-- The FCC's "plug and play" agreement, if approved, will throw a

curveball to the future of the set-top box (STB) industry, and

might change the sector dynamics in the next 3 to 4 years.

"The cable business will undergo a massive shift in its focus in the next 10 years, with revenue from video services declining, and revenue from high-speed data services, cable telephony and SME services increasing," continues Sistla. While DBS is aggressively focusing on DVR deployments, cable operators are focusing on VOD services; some of the larger cable operators such as Time Warner and Comcast are also looking at offering proprietary DVR solutions to their subscriber base. The industry will start to see this trend move across the board from all the major cable operators. Cable and DBS operators will start to focus on high-definition services, from 2004 and beyond.

The new ABI report, "U.S. Cable Television Infrastructure: CATV Equipment Markets and System Trends," identifies the subscribers for various services, such as high speed Internet, SME broadband, cable telephony and VOD. In addition, this report covers total equipment market revenue and shipments, including headend equipment, coaxial and fiber cables, and optical and RF electronics. Trends in subscriber growth, plant upgrades and services are covered. Forecasts through 2008 are provided for subscribers, revenues and various equipment covering the U.S. CATV industry.

About ABI

ABI is an Oyster Bay, N.Y.-based technology market research firm founded in 1990. ABI publishes research and technology intelligence on the wireless, automotive, electronics, networking and energy industries. Details can be found on the web at abiresearch.com or by calling 516-624-3113.