Wireless Substitution, Cable Digital Voice Cost U.S. Telcos $23 Billion a Year

In-Stat researchers estimate North American cable operator digital voice service revenues will hit just under $10 billion during 2009, from an installed base of 23 million cable telephony households.

Cable telephony subscriber growth continues to be strong, with almost eight million new subscribers added around the world in 2008, says In-Stat. Growth in North America has been particularly strong.

Globally, cable telephony service revenues represented about $12.6 billion in 2008, up from $10.7 billion in 2007.

Total worldwide cable telephony subscribers reached 37 million by the end of 2008, and will rise to over 64 million by 2012, In-Stat projects.

So something on the order of $9 billion in annual revenue seems to be earned by U.S. cable operators in voice revenues that used to be provided by U.S. telcos. In fact, the revenue loss for telcos is greater, since most customers switch to cable for the lower prices.

If one assumes a 20-percent average discount, that's a loss of nearly $11 billion in lost U.S. telco voice revenue.

Assume there are 20 million U.S. households that have gone wireless-only, with a former average monthly bill of $30. That is about $7.2 billion in "lost" or "shifted" revenues. If one assumes a more-likely monthly bill of $50 a month, the lost revenue amounts to $12 billion.

In that case, wireless substitution and losses to cable operators are about equal contributors to telco voice line losses.