Gary Kim

Not only are the largest telecommunications companies and cable companies dramatically changing their revenue sources, but the basic “product” has become a bundle of services, anchored by broadband services of two types: high speed Internet access and video entertainment.

So the largest US cable TV companies now arguably are Internet service providers with substantial video and voice operations, while AT&T’s fixed networks segment might become a business driven by video entertainment, while it continues to have significant high speed access and voice operations.

How soon will AT&T and Verizon, whose revenues once were driven by voice products, find they both generate more fixed network revenue from video and high speed access than from voice?

Answer: AT&T will likely get there sooner than Verizon.

In fact, AT&T might find that voice is just the third most important revenue source, in the consumer fixed network segment, just as soon as it acquires DirecTV. Should AT&T succeed in its bid for DirecTV, video entertainment would possibly reach $37.1 billion, eclipsing even data services -- at about $28.3 billion in annual revenue -- as drivers of AT&T fixed network segment revenues.

After a DirecTV acquisition, voice would be only the trailing third most important revenue source for the fixed network segment. Of $89.7 billion in total revenues, voice would represent 22 percent of fixed segment revenues. Video would represent 41 percent of total fixed network revenues. Internet access and other data services would represent 32 percent of total fixed network revenues.

Oddly enough, whether Sprint decides to bid for T-Mobile US, and whether that deal is approved or rejected, the US mobile market is may likely retain its current structure. Only the names might change.

Over the longer term, Comcast may emerge as the number-three provider, no matter what happens with Sprint and T-Mobile US.

The reason is a fundamental change in consumer communications and video entertainment markets, putting a premium on the ability to sell a quadruple play or triple play package that is functionally equivalent to a quadruple play. More than 97 percent of AT&T’s 5.7 million video customers subscribe to bundled services, according to the company.

“This consumer preference is not unique to AT&T, as 78 percent of basic subscribers of the six largest cable operators take at least a double-play of services, predominantly video and broadband,” the company says. In 2006, cable TV operator bundle adoption was 56 percent. Since then, adoption has grown, globally.

It has been a rule of thumb that US cable TV operators have operating costs lower than their major telecommunications competitors. But on one metric -- revenue per employee -- AT&T and Verizon arguably perform much more efficiently than US cable TV operators.

Between 2007 and 2012, AT&T eliminated 67,620 jobs, almost a quarter of its workforce. At least in part, that accounts for average sales per AT&T employee of $495,000 in 2012, up from $209,000 in 2006. Over the same five-year period, Verizon eliminated 48,000 jobs. Industry wide, employment in the entire telecom industry has fallen by almost 200,000 since 2007, according to the US Labor Department.

Most of those cuts have come in the fixed network business, as mobile segment headcounts have been roughly flat between 2001 and 2008, and have been declining since 2008. Between 2008 and 2010, the mobile segment lost about 40,400 jobs overall, by some estimates. By other estimates, US mobile business jobs dropped by only about 10,000.

The point is that, by any estimate, most of the lost US communications jobs have come from the fixed network business. Still, it remains the case that US cable operators have operating cost structures lower than the leading US telecommunications companies.