Today has been a good day for telco items in the Globe & Mail, there's a very nice feature on how digital cable is making solid gains. Citing the most current Statistics Canada data - 2004 - the article notes that cable subscribers outnumber satellite TV subs by about 3:1. That ratio has held steady since 2003, but year-over-year, satellite has posted better growth (5.4% vs. 0.4%), as it cuts into the cable pie.
In response to this incursion, our cablecos have been aggressively pushing digital TV, and adoption has been climbing steadily. In 2003, there were 1.4 million digital subs in Canada, and that base grew 34% in 2004 to 1.8 million. That's actually not far below the 2.3 million subscribers using satellite. If these growth patterns hold fairly steady, digital subs will surpass satellite subs this year. That's good news for the cablecos.
In 2003, digital accounted for about 18% of all cable subs. That level rose to 24% in 2004, and following this growth pattern, 32% of cable subs will be digital by the end of this year. That's a pretty strong penetration level, and satellite can't match the overall value proposition, especially when the world moves to interactive/integrated services. Of course, satellite will hold its own in remote areas that cable can't reach, but in the urban markets, it's easy to see why the telcos are looking to IPTV as their savior against cable.
It's a complicated game, and the technologies are still evolving, but in the big scheme of things, this is where the big money will be made. That's why there's much more focus here from both the cablecos and the ILECs than on VoIP. Our Tier 1 VoIP offerings have all had very rational pricing and modest rollout strategies, except for Videotron. And on that note, it's interesting to see how Videotron is now raising its prices on long distance in a bid to stem some of the losses from its bargain basement pricing - Mark Evans has a nice posting on this from earlier this week.