At the heart of the battle over whether telcos should be required to obtain local video franchises lies one almost inescapable fact: Virtually every video customer a telco wins will come at the expense of either cable or satellite.

In the FCC's recent 12th annual report on video competition, cable's share of the multi-channel video programming distributor market slid from 71.6% in 2004 to 69.4% in 2005. Direct broadcast satellite rose from 25.1% to 27.7%. Telcos didn't register.

Those numbers will shift around, but it's unlikely the overall market will increase, said Victor Schnee, president of Probe Financial Associates, which put out a report last week noting that DirecTV has faced some challenges in growth but could be positioned to be a leader in HDTV.

“With telephony [the service telcos are defending with their video services] one of the things that fools everyone is that you have more than 100% penetration with cell phones,” he said. “If you look at the figures, somewhere around 85% of households can be accounted for with some type of pay TV. Unless you can come up with a scenario that is very improbable at this point, the most likely case is people won't subscribe to more than one [video service].”

Bells should keep satellite friends despite slowing growth. “If there's one group you don't want to push into broadband, it's the satellite guys,” Schnee said.