More Than 80% of Basic Cable Subs Take Broadband Service Too

Cable providers may be losing video connections, much like telephone companies are losing their legacy voice lines, but they are steadily improving their penetration of voice and broadband services.

At the end of the day, virtually all providers—cable and ILEC—are offering triple-play bundles and providing customers with monthly net savings to buy all services. So where historically the cable provider and the ILEC would share the customers in a given market, today it’s a full-blown market share war: If I go with the cable provider, I will take my voice and broadband services from it…if I go with the ILEC, I’ll be looking to buy video and broadband services from it. The jury is still out on which sector will come out on top; it’s no doubt more likely that certain companies within both sectors will come out on top within their respective markets. In the third quarter, the public cable companies were providing voice service to 43.9% of basic video subscribers, up from 39.5% at the end of last year. Impressively, 81.5% of basic cable connections were also taking broadband services from their cable provider, up 550 basis points this year-to-date. Looking at penetration based on homes passed is more telling, however. Here, cable operators were providing broadband service to 35.5% of homes passed and voice penetration of homes passed was just more than 19%.

At the end of the third quarter, the public ILECs posted average broadband penetration of voice lines of 42.3%, up 270 basis points versus the end of last year, and up 100 basis points in the quarter. The median was 37.1%, up from 35.2% at year end. At the high end, Shenandoah Telecom’s broadband penetration far exceeded 100% due to its cable acquisitions over the past year. In fact, due to the altered business mix at Shentel, we’ll be reclassifying the company as a cable operator in future quarters.