Fitch: US ILEC Access Line Erosion Heavily Weighted Toward Wholesale.
CHICAGO -- Total switched access lines showed a decline of 1.6% sequentially between the third and fourth quarters of 2005, and Fitch Ratings Fitch Ratings
An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. estimates that less than a quarter of this is associated with primary lines. The full-year 2005 access decline was 6.2% compared to 5% for 2004.
Of particular interest in the 4Q05 was the impact of cable multiple system operators' (MSOs) digital phone offerings on the ILECs. The fourth quarter represented the most widespread and aggressive cable MSO (1) (Multiple System Operator) Typically refers to a cable TV organization that owns more than one cable system, but it may refer to an operator of only one system. phone marketing that the sector has experienced to date. The quarterly decline in access lines was approximately 2.485 million, but adjusting for Hurricane Katrina Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. and business line disconnections reduces the decline to approximately 2.089 million lines. Estimating adjustments for high speed data substitution as well as wholesale access line erosion reduces the decline to approximately 500,000 primary lines. Earlier period aggregate line losses would indicate that approximately two-thirds of all primary line losses are due to wireless substitution. Therefore, one-third of primary line erosion can be associated with cable phone offerings, or 165,000 primary lines.
Interestingly, cable MSOs reported more than 500,000 net new telephone subscriber additions in the fourth quarter. Therefore, this would indicate that approximately 67% of all cable telephony subscriber additions are coming from low-margin former UNE-P UNE-P Unbundled Network Element - Platform customers.
'It is likely this trend will continue as there are still significant numbers of wholesale access line subscribers that have made the decision to switch from the incumbent telephone company already and are easily attracted to competitor offerings,' according to Michael Weaver, Managing Director, Fitch Telecommunications and Cable team.
Other wireline data points would also suggest that cable MSOs are luring a material number of UNE-P customers, since wireline revenue trends are showing relatively modest declines from traditional services in spite of the competitive environment. Factoring in the strong digital subscriber line See DSL.
(communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and (DSL DSL
in full Digital Subscriber Line
Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary )-driven data results, wireline revenues are up modestly for full-year 2005.
The Fitch report, 'Quarterly ILEC (Incumbent Local Exchange Carrier) A traditional local telephone company such as one of the Regional Bell companies (RBOCs). Contrast with CLEC. See ELEC and TELRIC. Aggregates and Comparative Statistics' provides numerous operational and financial measures for the industry, representing approximately 95% of total industry access lines. This information is shown in a historical formal for easy trend comparisons. Additional trend discussion, aggregate data points, and individual operator comparisons are also available in the report.
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