You might argue results have been mixed. AT&T and Verizon have made the strategy work, shifting revenue generation in the fixed network business to broadband services, at least in the consumer lines of business
Overall, both AT&T and Verizon have been powerfully assisted by the advantage of growth driven by mobile services. But that should not distract from the important fact that both have replaced lost fixed network revenues with new sources.
Smaller providers, unable to leverage the benefits of scale that seem essential for video entertainment services, arguably have not been so lucky.
In large part, the AT&T and Verizon successes have been driven by market share shifts.
For some time, cable TV providers and telcos have been trading market share; cable ceding video customers to telcos while telcos shed voice customers to cable operators. Both industries have relied upon those market share gains to offset legacy product revenue declines.
In the high-speed access market, telcos mostly have been losing the market share battle to cable. On the other hand, high speed access is a key part of the broadband services revenue story.
U-verse revenue growth contributed to a two percent year-over-year increase in
AT&T’s consumer wireline revenues during the first quarter of 2013. Consumer U-verse revenues grew 30.8 percent over 2012 and now represent 48 percent of wireline consumer revenues.
Verizon’s consumer wireline revenue growth of 4.3 percent was driven by FiOS revenues, which grew 15 percent in the first quarter of 2013 and generated 69 percent of consumer revenues.
The importance of video revenues can be contrasted with first quarter results at CenturyLink, which has not in the past provided video entertainment services across its legacy Qwest Communications network footprint.
CenturyLink reported a 3.4 percent year-over-year revenue decline for its Consumer Group during the first quarter.
Those broadband revenues, especially television revenues, will continue to be important, as U.S. telcos lost 0.966 million wireline voice connections during the first quarter of 2012, compared to a net loss of 1.105 million for the same quarter of 2012.
Verizon’s residential voice connections declined by 5.6 percent on a year-over-year basis, while AT&T’s consumer voice connections dropped 12.5 percent. CenturyLInk’s overall access line loss was 5.7 percent.
And though telcos generally lag cable in net new high speed account gains, the largest telcos collectively added 290,000 broadband customers during the first quarter, about 98 percent of their same quarter 2012 net additions.
AT&T and Verizon continue to take video-service subscriber share from the cable companies. AT&T video service penetration now is 19.4 percent of eligible homes, while Verizon video penetration is 34.1 percent of eligible homes.