The reason is growing consumer dissatisfaction with slower speeds available on such networks, compared to services sold by Comcast and other cable TV firms, says Morgan Stanley.
That could be a growing strategic factor in many markets, though it appears mostly an issue in North America, at the moment. In most markets, there is no established cable TV alternative.
Keep in mind that cable TV providers already are the dominant providers in the U.S. market. Should a couple of proposed cable TV industry mergers get approval, no U.S. telco would rank higher than fourth among the largest providers of Internet access in the United States.
Cable TV firms are winning the overwhelming share of net new accounts, as well. In the first quarter of 2015, for example, cable companies won 86 percent of the new accounts.
The other market change is the shift to gigabit speed access as the headline offer, even when most of the actual net additions come for services at lower speeds. Cable companies often can upgrade to gigabit speeds without a major physical revamp of their access networks.
That is not the case for telcos, who (in the U.S. market) will have to switch to fiber to home networks to compete.
If one believes high speed access is the strategic service in a triple play bundle, that has serious implications. In fact, some might even question whether telcos can compete, long term, in triple play markets.
In fact, it is conceivable that just three U.S. cable TV companies--Comcast, Charter and Altice--will soon have 75 percent to 80 percent share of the “25-Mbps and faster” portion of the market.
So it is that Swinburne argues there is yet further upside for Comcast, Charter, Time Warner Cable and Cox Communications. They already dominate the broadband market, but are positioned to gain even more market share.
Morgan Stanley surveyed 2,500 U.S. households during August 2015 and September 2015 on broadband and TV services, and found "U-verse and AT&T DSL had especially weak satisfaction results, and satellite pay-TV subscribers' broadband satisfaction fell materially year over year."
Cable customers reported an average speed of 38 megabits per second, while DSL subscribers said they had 21 Mbps service on average.
Verizon Communications FiOS customers on average had nearly 30 Mbps service and were happier, despite price hikes, says Morgan Stanley.
Two decades ago, one could have gotten a robust debate about the merits of fixed network access architectures using all-copper, hybrid copper-fiber or all-fiber access. The issue then, as now, was not over capacity as such, but the scalability of the business model.
Depending on typical loop lengths, it might still be possible to make a business case for all-copper access, but less so in the United States than in Europe.
Hybrid still works, but fiber-thin hybrid approaches do not work as well as fiber-rich hybrids. It is easier, in many cases, to make the case for all-fiber access, the Morgan Stanley survey suggests.
But in much of the world, the issue is not so much capacity as it is coverage. Any type of fixed access does not compete too well with a mobile approach.
Still, in some markets, one can fairly ask whether telcos will be much of a factor in tomorrow’s consumer markets.
If high speed access trends continue, if the voice business continues to dwindle and then the linear video market shrinks as over the top replacement markets grow, telcos lose even more.
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