Cable service bundles are not only luring telephone service customers, but they have helped stem the tide of video customers to satellite services, according to the latest update in a regular report on local service competition.

The Convergence Consulting Group’s “Battle for the North American Couch Potato: Bundling, Internet, TV, Telephone Report” shows that, for the first time in a decade, cable won’t lose basic cable subscribers to Direct Broadcast Satellite competitors this year, said Brahm Eiley, analyst with the firm.

“The cablecos are doing very well, adding a lot of telephone subscribers and, as well, this is the first year that the cable guys are not going to lose basic TV subs since the last decade,” Eiley said. “The multi-product bundle approach is turned out to be very successful for them. If you look at the numbers that Time-Warner, Comcast and Cablevision are reporting you can see that, they are exceeding their own forecasts. It’s a tough story for the RBOCs, given the amount of residential phone line loss – about 8% last year and about 9% this year.”

CCG is forecasting the cable companies will have about 8% of the total residential phone market by the end of 2006 and about 24% by the end of 2009. By contrast, the telephone companies will have less than 1% of the video market by the end of 2006 and 6% by the end of 2009, or 6.5 million subscribers.

Only Verizon is holding its own in the limited areas where it has deployed FiOS and been able to offer FiOS TV, Eiley said. “We think Verizon will be reasonably successful, but they don’t have the coverage area and won’t until next decade,” he said.

Satellite companies will start hurting because they sell a single product line, Eiley added. “Satellites has done a lot of things right, their big issue is that they are just a one product offering and as more customers buy multiple products from a single provider, they lose out,” he commented.

For year-end 2006, CCG projects 68.1 million cable TV subscribers to 29 million satellite TV subscribers, for a total of $69 billion in TV subscriber revenue, up 9% over 2005. It expects to see 18.6 million Digital Video Recorder subscriptions and 12.7 million HD subs, as well as $1.5 billion in video-on-demand revenue.

The report also projects continued leadership of cable in selling broadband Internet access, despite price cuts and speed increases for telephone companies’ DSL offerings. CCG expects the cable companies “will continue to add more residential broadband subs per annum than the telcos for the rest of the decade,” and hang on to 55% of the market by end of 2009.