HDTV Drives 2.3 Million Churn Events

HDTV purchases seem to be driving some amount of service provider churn: nine percent of HDTV owners say that they switched multi-channel video providers when they purchased their HDTV, according to Leichtman Research Group. About 22 percent of all households purchased a new TV set in the past 12 months, with 43 percent of this group spending over $1,000 on a new TV.

There are about 114.5 million U.S. TV households. That suggests 25.2 million TV homes bought HDTVs. If nine percent of those buyers switched providers, that suggests 2.3 million homes switched providers, or about two percent of TV households, over the last 12 months, because of an HDTV purchase.

50 Mbps? Try 8 Mbps

U.K. workplaces with downstream broadband speeds topping 10 Mbps have risen from 18 to 25 percent, Point Topic says.

About 13 percent of businesses had speeds of 50 Mbps or above. About 21 percent of businesses have a connection capable of less than 2 Mbps, 33 percent run at up to 8 Mbps, 12 percent have 10 Mbps connections, six percent have 100 Mbps service, five percent use 50 Mbps and two percent have connections running at 100 Mbps.

The most common downstream speed among businesses is 8 Mbps, with 33 percent of businesses buying connections at that rate.

One wonders whether a quarter of cable modem subscribers will be willing to spend about $150 a month to get service at about 50 Mbps downstream, given demand so far for business broadband at speeds above 10 Mbps.

50-Mbps Demand Test

Comcast has begun introducing 22 Mbps and 50 Mbps broadband access, and the company says it will make the new services available to 10 million premises in at least 10 markets over the next few months. Comcast’s Extreme 50 service, offering up to 50 Mbps downstream and up to 10 Mbps upstream, costs $139.95 per month, plus taxes, when bought with cable TV service. The Ultra service, running at up to 22 Mbps downstream and 5 Mbps upstream, costs $62.95 a month, plus taxes, when bought in conjunction with cable TV service.

In the Pacific Northwest, Comcast will primarily compete with DSL services from Qwest Communications International (which advertises download speeds up to 12 Mbps) and Verizon Communications (up to 7.1 Mbps).

A business-class package offering 50 Mbps downstream and 10 Mbps upstream, sells for $189.95, plus taxes, and bundles in firewall services, static IP addresses, 24/7 customer support, and a suite of software from Microsoft.

We now will get a demand-side test of how many customers presently want to pay for service at such speeds.

Smart Phone Behavioral Differences

So far, it appears that Apple iPhone users download applications more often than other smart phone users. Some 72 percent of iPhone users say they have downloaded more than five applications on their phones, compared to only 23 percent of other smart phone owners.

Where 34 percent of smart phone owners have not added an application to their phone, just seven percent of iPhone users report they never have downloaded an app, according to a recent survey by Compete.

The issue is what this behavioral difference makes. It may be partly that iPhone lead adopters are tech savvy, compared to other smart phone users. It also may be that apps are easy to find and add to the iPhone.

It is conceivable download rates for Google and Blackberry devices might ultimately rise to match what iPhone now sees, Compete analysts suggest.

Wireless Won't Suffer, Ovum Predicts

One of the questions service provider executives are trying to answer is whether communications and multi-channel video services will hold up as well as they have in past recessions. Through the third quarter there still had been no evidence of damage. Some will note that the impact of October's credit crisis will not be seen until the fourth quarter, and that is a correct observation.

But there might be reasoned hope for stability. As noted before, only in one year since about 1945 has wireline revenue growth even flattened. With that single exception, wired network revenue always has grown, recessions or not.

Cable TV revenues have had the same sort of pattern since the 1980s, for example, and at least so far, there has been no detectable evidence of mobile revenue slowing.

In fact, Ovum predicts the North American mobile market will escape catastrophe as a result of macroeconomic conditions in 2009 and will continue to grow, albeit not at the rates we have seen in 2008, predicts Steven Hartley, Ovum senior analyst.

Ovum argues that U.S. mobile connections will rise 6.3 percent while revenue also rises 6.3 percent in 2009. In Canada connections are expected to grow 7.5 percent while revenue grows 11.3 percent.

The United States added 3.9 million connections in the third quarter and year-on-year total connections growth was 10 percent, Ovum says. Only Sprint saw a decline in connections in the third quarter (losing a net 1.3 million subscribers.

Canada's national wireless operators also saw continued connections growth, with Rogers connections base growing eight percent year-on-year, Bell Canada growing seven percent and Telus 10 percent.

One might argue that the fourth quarter will not be so robust, or that the real damage to come will be in the margin area, not the revenue area. Still, growth at the level Ovum predicts would be fairly convincing proof that wireless now has attained "necessity" status.

Something One Doesn't Typically See

Commenting about the recent Comcast peer-to-peer blocking adjudication at the annual Phoenix Center conference, Federal Communications Commission Chairman Kevin Martin noted one truly unusual aspect of the case. 

"Normally people fess up and promise never to do it again," Phoenix Center head Lawrence Spiwak  noted. Those of you who have had even casual acquaintance with the deference routinely shown to the FCC in Washington policy circles will agree.  

"In this case, Comcast first said they didn't do it, then said they did, but that the FCC had no authority over it," Martin said. That's unusual behavior. 

Network management is one thing; interfence with lawful applications another, Martin said. 

"It did not seem to be reasonable that Comcast denied that was what they were doing," Martin said. "It is a problem when you have a company that won't admit it is doing something" independent evidence shows it is. 

Not many who routinely deal with the FCC could say they have seen this sort of thing very often. 

U.S. Business Landline Purchases Up

Here's something you might not have suspected: U.S. businesses have added 700,000 wired network connections over the past five years, despite shedding large number of narrowband voice lines. 

Ethernet, business grade DSL and business grade cable modem connections have driven the growth. 

So despite narrowband line losses, service providers have seen overall growth of business lines of 15 percent over the past five years.