Cable Revenues To Soar On Back Of New Services

According to a report just out from Allied Business Intelligence (ABI), cable TV companies are about to undergo a period of intense growth, driven mainly by the introduction of new services.

These new services, the report notes, will include cable telephony, cable modems, and increased levels of cable ad insertion. The growth, ABI says, will push revenues to $34.9 billion during the current year, and even higher in subsequent years.

According to the annual report, "CATV Infrastructure Trends: 1999," total CATV revenues are set to rise by 9.6 percent during 1999, and will grow by a compound average annual growth rate of 10.2 percent from 1998 to 2003.

Interestingly, the report concludes that some of this growth will stem from the deployment of new services which shift existing consumer payments from competitor services to CATV operators. Video-on-demand, for example, the report says, will shift consumer expenditures from video stores to the CATV operators.

Marc Liggio, a senior analyst with ABI, said that high-speed data access, better known as cable modems, will shift some expenditures from telcos which provide ISDN (integrated services digital networks) and ADSL (asymmetric digital subscriber line) services.

"According to Liggio, many subscribers will be those who did not previously pay for high-speed data access.

"Such services will still provide $303 million in additional revenues in 1999, representing one percent of total revenues, but will rise to over four percent within five years," he said, adding that high speed data services will have a 63 percent compound average annual growth (CAAG) rate from 1998 to 2003.

According to ABI, although cable telephony has started relatively slowly in the US, with only a forecasted $203 million in revenues in 1999, it is expected to rise from 1999's 0.6% of total US CATV revenues to over 10 percent by the time 2003 rolls around.

Liggio predicts that the CAAG rate of cable telephony revenues will be on the order of 130 percent from 1998 to 2003.

"Unlike cable modems, which appeal primarily to that part of the population that are avid users of the Internet, cable telephony appeals to everyone, since most of the population -- and nearly everyone who subscribes to cable television -- is already paying for telephony service from a telco," he said.

ABI's Web site is at http://www.alliedworld.com.

(Contact: Mark Liggio, ABI 516-624-3113)