In 2004, cable companies face a tough climate with rising competition but the industry as a whole is in a healthier state than last year and should benefit from increased uptake of new services.
Research by technology consultants
Ovum suggests that broadband remains a key growth area. Cable has little competition from infrastructure-based operators in many countries and will play a significant role in the development of newer broadband markets such as Eastern Europe.
The disparity between North America cable and other markets will remain in place with “stiffer competition, more aggressive tactics on everything from voice to HDTV, but less access services innovation,” according to Ovum analyst Charlie Davies.
He anticipates a further increase in service bundling with triple play very much the order of the day (double play where operators do not offer voice). Cross-discounting of internet access has already emerged and advanced operators are set to offer Voice over Internet Protocol (VOIP) in their packages
Progress on Video on Demand (VOD) has been slow to this point with operators reluctant to invest heavily in services and co-operation with TV networks and studios minimal (see INSIGHTanalysis: Will On-Demand Save Cable?). Davies describes the negotiations with content providers as “complex” but is hopeful that the potential of VOD can begin to be realised in 2004.
As a result of the technology crash of 2001, cable operators are much more cautious in outlook and financial considerations are critical. Further cost cutting, bond buybacks and industry consolidation can be expected this year but service providers need to remain competitive and will have to improve customer care and offer quality content if they are to survive.
