As cable companies continue raising the speeds of their broadband offerings, they will maintain their dominance in that market for the foreseeable future and penetrate the voice market faster than Bell companies penetrate video, according to a report released today by Convergence Consulting.

Broadband subscribers

“Even with [regional Bell operating companies] raising residential broadband speeds [due to network investments], we forecast cable will continue to add more residential broadband subs per annum than RBOC/telcos until the end of the decade, and retain dominant share into the next decade,” Convergence said.

Cable companies will hold 62% (or 26 million) of the nation’s residential broadband subscribers by the end of this year, while telcos will hold 37% (or 15.7 million), according to the consultancy. By the end of 2007, those numbers will shift to 59% (or 35 million subscribers) and 40% (or 24 million subscribers), respectively.

Telephone customers

At the same time, cable companies will increase their share of the U.S. residential telephony market from about 5% (or about 5.5 million subscribers) at this year’s end to 12% (or 13.5 million subscribers) in 2007 and 21% (or 23 million subscribers) at the end of 2009, the consultancy said. Meanwhile, telcos’ share of the TV market will reach 2% (or 1.8 million subscribers) by the end of 2007 and 5% (or 5.4 million subscribers) by the end of 2009.

“Cable adding a significant amount of telephone customers in a short time is highly achievable given the high overlap, bundled price and convenience,” Convergence said. “Cable VoIP, with its multiple features and unlimited long distance, currently has the price edge against the RBOCs’ traditional phone offers.”

Bundling

So far, cable companies have a better record of broadband bundling than the Bell companies, Convergence observed. On average, 40% of subscribers to TV service from the top nine cable MSOs also subscribe to their MSO’s broadband service. On the other hand, only 15% of Bell companies’ residential telephony customers also subscribe to Bell DSL or fiber broadband.

Despite Bell companies’ stated commitment to offering their own TV service (backed up by Verizon Communications’ recent launch of video service in its initial FTTP market, Keller, Texas), Convergence sees a continuing dependence on Bell partnerships with satellite TV providers such as Echostar, since advanced DSL offerings like SBC’s may be insufficient for multiple HDTV streams and Verizon’s FTTP coverage will be limited.

Satellite providers

Satellite providers are not adding as many subscribers this year as they did in 2004, a trend Convergence believes will continue, though they will make slight market share gains this year and next and sustain that share through at least 2009. Convergence predicts cable companies’ share of the TV market will slide from 71% this year to 67% in 2007, while satellite providers will up their share from 29% to 31%.