MediaFile

Telcos are winning the cable TV battle but are they losing the broadband war?

War scene

The latest quarterly numbers from AT&T and Verizon Communications points to steady addition of TV customers which they are very likely winning from the cable companies as well as satellite players. AT&T said it posted its first ever billion-dollar revenue quarter for its U-Verse services (which includes Internet).  It added 209,000 U-Verse TV subscribers and now has 2.5 million in total. Meanwhile Verizon said it added 174,000 FiOS TV subscribers and now has 3.2 million in total.

Together the telcos, wh0 only launched their competing services less than five years ago now have a more than 5 percent share of U.S. pay-TV homes.

So well done to the telcos! Or is that the whole story? Analysts at Bernstein Research point out that both phone companies lost a combined 65,000 Internet access subscribers (after netting out additions from U-verse/FiOS and losses of DSL customers).

This comes as Wall Street continues to expect cable companies to continue to grab market share in broadband subscribers even as they lose basic cable TV subscribers. After looking at the telcos’ numbers this week, Collins Stewart analyst Thomas Eagan more than doubled his expectations for cable’s share of broadband additions when they report over the next fortnight in a short analyst note.

“We had expected that the cable operators would take 43% share of the broadband adds in 2Q10. It appears now, however, that the cable operators might take more than 90% of the broadband net adds.”

Tuesday media highlights

Here are some of the day’s stories about the media industry:

Amazon Patents Detail Kindle Advertising Model (Mediapost)
Laurie Sullivan writes: “The patents clearly note that Amazon would insert advertisements throughout the ebooks, from the beginning to the end, between chapters or following every 10 pages, as well as in the margins.”

> In-Book Ads Coming to the Amazon Kindle? (Fast Company)
> 6 Reasons Why Ads On The Kindle Don’t Work (Business Insider)

Deadline for Globe bids postponed (Boston Globe)
“The New York Times Co. has postponed tomorrow’s deadline for prospective buyers of The Boston Globe to submit preliminary bids for the newspaper, people briefed on the sales process said. No new date has been set for the bids,” writes Robert Weisman.

DISH’s Ergen won’t give in to TiVo: ‘I’m just stubborn’

charlieergen1999-2.jpgYou can think what you like about the management of DISH Network Corp, the second largest U.S. satellite TV operator, but they’re nothing if not refreshingly frank about the economy, the state of the market and their competitors’ tactics.

Of course, a lot of that has to do with the disarming candor of founder and Chief Executive Charlie Ergen, whose conference calls tend to avoid the sort of obfuscation and Orwellian double-speak the media and investors have to come expect from C-level executives in corporate America.

Ergen had to be especially blunt today on a day his company announced a loss 0f 25,000 subscribers, which according to Bernstein Research’s Craig Moffett, was its first ever loss of subscribers.

Doesn’t matter what the FCC says Wii love you: Comcast

It’s been a rough few weeks for cable operator Comcast Corp. U.S. regulator FCC is on the verge of punishing it for allegedly fiddling with subscribers’ use of peer-to-peer services like BitTorrent while New York Attorney General Andrew Cuomo is threatening to sue if Comcast doesn’t agree to join other Internet service providers to block access to child pornography.

But the largest U.S. cable operator is hoping to win over its customers by offering a free Nintendo Wii to new subscribers to its Triple Play package of video, Internet and phone.nintendowii.jpg

The national free Wii offer runs from Monday till August 17th for new subscribers who have to agree to sign up for two years to one of Comcast’s premium Triple Play packages: Preferred Plus (at $129 a month) and Premier Triple Play ($159 a month).

No more free TVs ding FiOS growth

dennystrigl-verizoncoo.jpgVerizon’s new fiber optic (FiOS) TV service added fewer subscribers this quarter with just 176,000 compared with 263,000 in the first quarter. This  surprised some analysts who had expected FiOS to continue its same rapid pace of growth, backed by Verizon’s huge marketing spend and aggressive push.

But Verizon Chief Operating Officer Denny Strigl (pictured)  told analysts the slowdown in FiOS TV growth was explained by the end of Verizon’s popular promotion giving away free high definition television sets.

On the plus side, not giving away TV sets helped keep mounting subscriber acquisition costs under control thereby boosting its bottom line, the No. 2 U.S. phone company told Wall Street.

FiOS: Bad news in Big Apple for Time Warner Cable?

newyorkcityview.jpgPali Research analyst Richard Greenfield downgraded Time Warner Cable on Monday with one eye on Verizon’s launch of FiOS TV in New York (You have to register to read the link).

Verizon got approval to roll out FiOS TV just last week and is expected to begin installations as soon as August. Reuters ran an analysis last week that showed that Verizon’s roll-out of FiOS will be expensive for the phone company and its cable competitors, particularly Time Warner Cable.

Greenfield said New York City represents only 10 percent of Time Warner Cable’s subscriber base, but its average revenue per user is well above average.