Verizon and AT&T Eye Cable TV’s Customers

AT&T and Verizon are bundling television with their traditional services as a survival tactic

Verizon FiOs is making significant inroads to Cox, Time Warner Cable and Comcast coverage areas

Cable churn averages 3% per month, Verizon FiOS has the best churn in the Pay TV industry, 1.5% per month

Verizon and AT&T needed to improve their infrastructure and add TV services, as they both say, for survival. Time Warner Cable, Comcast, Cable Vision, Cox and the other cable companies have made huge inroads into both broadband services and telephone services. As an example, two thirds of Cable Vision customers receive broadband service along with their TV service and a third also purchase telephone service from CableVision. This bundle has allowed CableVision to grow its Average Revenue Per User (ARPU) at a rate of 14% per year for the last three years. Not to mention that CableVision’s ARPU is 215% of Verizon’s ARPU and 234% of AT&T’s ARPU.

However, Verizon has made great progress recently in TV services, additions of subscribers almost rival that of the Satellite providers. Verizon Telecom had an excellent first quarter by adding 141K new FiOS TV customers an average of 2,200 new customers per business day. These are impressive growth numbers and FiOS is targeting the cable company subscriber as they are most likely to want an integrated bundle. As with DIRECTV and EchoStar, FiOS is attacking the cable industry weakness: poor customer service. Verizon is ranked as the best at keeping it’s subscribers in the TV business with a FiOS churn of 1.5% per month compared to 1.6 for both EchoStar and DIRECTV and the Cable industry average of 3%.

As for Comcast and Time Warner Cable It makes great competitive sense to enter the business telephony and broadband market as this is a highly opportunistic area to compete on price with Verizon and AT&T.