Leading cable companies around the world are proving highly successful in the broadband sector, often attracting more customers and generating higher revenues than telecommunications companies offering DSL services in the same markets.
According to a survey by
Point Topic cable operators have already signed up a high proportion of their customers to internet services, often at a higher average revenue per user (ARPU) than rival DSL companies.
Some cable companies have installed cable modems with around 40% of their subscribers, whilst half of those surveyed had passed the 20% penetration level. By comparison, only about half of the telcos offering DSL in the same countries have passed 8% penetration insofar as their DSL lines represent 8% of their total access lines. However, telcos reach a much wider market and Point Topic says that DSL is never likely to reach a penetration of more than 40% to 50% of cable internet.
A common strategy for the cable operators has been to draw customers in with low-cost, low-speed entry level services and then sell them up to higher speeds, says the report. As costs rise only moderately with speed of service, the cable companies can offer services with peak speeds of 1 Mbps or more at attractive prices.
“It is hard for the DSL service providers to compete with this strategy because their high fixed costs make it hard to offer low speed services economically, and technical reasons make it difficult to offer high peak speeds. DSL offerings tend to be stronger in the middle range, at least in Europe and North America,” it says.
Prices for cable internet services vary widely between the operators and countries, although the UK and Sweden enjoy relatively low prices. The initial installation charges for cable internet are generally lower than for DSL, but monthly rental is often higher so that cable Internet customers generate higher ARPU in the long term.
