Entries in Video Penetration (4)

Thursday
Dec152011

ILEC Broadband Penetration of Voice Lines at 42.3%

3Q11 Connections: ILEC Video and Broadband Penetration of Voice Lines

With access lines still falling and broadband connections growing, the broadband penetration of voice lines continues to expand at a fairly rapid clip. Truth is, we’ll probably need to reverse these measures at some point—that is, measure voice line penetration of broadband connections. But for now, we’ll stick with the traditional view.

At the end of the third quarter, the public ILECs posted average broadband penetration of voice lines of 42.3%, up 270 basis points versus the end of last year, and up 100 basis points in the quarter. The median was 37.1%, up from 35.2% at year end. At the high end, Shenandoah Telecom’s broadband penetration far exceeded 100% due to its cable acquisitions over the past year. In fact, due to the altered business mix at Shentel, we’ll be reclassifying the company as a cable operator in future quarters.

SureWest’s 57.4% penetration was the second strongest in the sample as the company’s aggressive investment in fiber over the past several  years has begun to pay off. Also coming in above 50% were Verizon (thanks to FiOS) at 53.8%, Windstream at 51.5% and Warwick Valley Telephone at 51.4%. Verizon’s penetration rate jumped markedly following its sale of 4.8m access lines to Frontier last year. On a positive note, not one company saw declines in its broadband penetration in the quarter, although given that access line counts fell for all but one company (Consolidated Communications), those that held relatively flat in terms of penetration may actually be losing broadband connections.

On the video side of the equation, the overall average penetration of voice lines was 28%, but that was skewed by Shentel’s aforementioned cable acquisitions. The median video penetration level was 13.4% at the end of the third quarter, up from 12.7% at the end of June. Four companies in the sample—Alaska Comm., FairPoint, Hawaiian Telcom and TDS—do not yet offer video services.

 

Thursday
Oct202011

2Q11 Connections: ILEC Video and Broadband Penetration of Voice Lines

Broadband Penetration Continues to Rise for ILECs

With each passing quarter, we see more and more consumers opting to forgo wireline voice service, and 2Q11 was no different. Due only in part to this shrinking customer base for voice services, the publicly-traded ILECs continued to improve penetration of their remaining voice customers with television and Internet services.

In 2Q11, the mean and median penetration levels rose slightly for both the video and broadband services offered by LECs.  On average, 41.3% of ILEC voice customers used their telco for broadband Internet services, while around 28% purchased video  services through their ILEC during the quarter.

While the rise in penetration was marginal QoQ, the YoY improvement was more dramatic. Since 2Q10, average penetration of voice customers has improved 24% for broadband services and 52.3% for video services. These improvements however would have been more modest had the level of voice lines remained flat YoY instead of declining 11%. Average broadband penetration would have been 37% as opposed to 41%, while video penetration would have been 10% lower in 2Q11 without voice declines.  

Most notably, Verizon (NYSE:VZ) and AT&T (NYSE:T) reported significant improvements YoY: Verizon’s penetration of voice subs rose from 40% to 52.1%, while AT&T’s penetration jumped from 30% to 40%. Shenandoah Telecommunication’s (Nasdaq:SHEN) continues to be the outlier of the sample when comparing its penetration levels of voice subs to its competitors (147% for broadband and 211% for video in 2Q11). It reports significantly more broadband and video customers than it does voice subs after acquiring ISP and cable provider Jet Broadband and other cable assets in 2010.  

SureWest (Nasdaq:SURW) posted the second highest broadband penetration at 56.7% of voice subs, while Verizon, Windstream (Nasdaq:WIN) and Warwick Valley (Nasdaq:WWVY) also reported penetration levels above 50%. NTELOS’ (Nasdaq:NTLS) broadband penetration of voice subs (20.8%) was once again lowest in the sample in 2Q11.

Behind Shenandoah, New Ulm Telecom (OTC:NULM) and SureWest round out the top three telcos in video penetration of voice subs with 38% and 36%. Meanwhile, at the low end, a handful of LECs maintain video penetration levels at or below 10%.

Wednesday
Jul132011

1Q11 Connections: ILEC Penetration

Broadband and Video Penetration Levels Rise for Most

Broadband and video penetration of voice connections have steadily increased for six quarters now, and as more customers opt for bundled services this trend shows no sign of slowing down.  For the average ILEC, broadband penetration of voice connections reached nearly 42% in 1Q11, while video penetration was over 28%.

The average video penetration figure is, however, skewed by Shenandoah Telecommunication’s (Nasdaq:SHEN) 218% penetration.  After factoring out SHEN, video penetration was around 15% for 1Q11, up slightly from 4Q10. SHEN’s video subs have far exceeded voice subs the past three quarters, attributable to the poor penetration of its cable voice offering, and its acquisition of cable provider JetBroadband. Among homes passed in SHEN’s cable segment, 38% were SHEN video customers while only 5% were voice customers during 1Q11.

Verizon (NYSE:VZ) in 1Q11 achieved better penetration with its video services YoY thanks to a pair of factors.  VZ shed 8m voice connections after selling off a large chunk of its wireline assets, and it increased its FiOS television customer base 17% YoY. 

SHEN was also at the high end of broadband penetration in 1Q11 at 148.5% of voice connections, followed by SureWest (Nasdaq:SURW) at 56%, and Windstream (Nasdaq:WIN) at 49%.  At the low end, NTELOS (Nasdaq:NTLS) and Cincinnati Bell (NYSE:CBB) reported only 1.8% and 4.6% broadband penetration.

A closer look at the ILECs that lack a video offering suggests that bundling all three services can positively influence broadband penetration.  The four ILECs without video service reported broadband penetration levels at or below the mean and median levels of the survey.

Monday
Apr112011

4Q10 CATV Homes Passed and Video Penetration

Cable Penetration Slipping

The success of video offerings by ILECs and RBOCs combined with the continued growth of DirecTV (Nasdaq:DTV) (and presumably some level of cord cutting due to OTT offerings) has led to a slow but steady decline in cable industry video penetration of homes passed. 

In 4Q10 the weighted average penetration was 46.1%, down from 47.8% a year earlier.  Growth in homes passed has also made the comparison more difficult—homes passed numbered nearly 105.8m at the end of 2010; that’s up about 1.4m compared with 4Q09 if you adjust for the fact that RCN is no longer publicly traded and its stats are no longer included in the chart.

At the high end, GCI (Nasdaq:GNCMA) and Cablevision (NYSE:CVC) had penetration rates above 60% at year-end, although both saw their penetration fall versus 3Q10.  Charter Communications (Nasdaq:CHTR) had the lowest penetration of homes passed; at 38.7%, its penetration was off 360 basis points versus the end of 2008, thanks no doubt to its bankruptcy and subsequent reorganization.