The Battle for the North American Couch Potato: Bundling, Internet, TV, Telephone (October 2006, 310 pages) contains detailed analysis of strategy, prices, products, and technology by company and by market- see table of contents. Hundreds of interviews with access, content, service and equipment providers were conducted in putting together this Report. Other sources include annual/quarterly reports, CRTC, FCC.

Brief US Commentary (Canadian Commentary Follows Below), see table of contents for more of what is included:

Note: YE is year-end. We forecast cablecos will have 8% of residential telephone subscribers by YE2006 and 24% by YE2009 (up from 5% YE2005). Whereas we forecast RBOCs/telcos will have under 1% of TV subs by YE2006, and 6% by YE2009. Overall RBOC residential wireline telephone line loss in 2005 was approximately 8%; we forecast 9% for 2006.

The top Cablecos have on average 45% of their TV customers taking Internet with them, whereas the RBOCs have on average 25% of their residential telephone customers taking DSL/fiber Internet access with them. Hence cable adding a significant amount of telephone subs in a short time is highly achievable given the high overlap, bundled price and convenience (note Cablevision and Time Warner sub numbers). Cable VOIP with its multiple features and unlimited LD currently has the price edge against the RBOCs' traditional phone offers.

Although we are impressed by Verizon's fiber approach and pricing strategy, the project at its current coverage rate will not be completed until the next decade. We are uncertain as to whether AT&T and BellSouth current capex commitments to network upgrades will be enough to satisfy in the long run the capacity needs of offering multiple HD streams and higher speed Internet access.

After losing basic subs for years, overall cable basic sub losses slowed in 2005. We forecast cable will gain a small amount of basic subs in 2006 and lose a minor amount in 2007; the Adelphia acquisition will help stem losses. For 2008-09 we expect losses due to TelcoTV. Digital sub additions will continue to be progressively better (VOD/SVOD revenues, DVR and HD sub additions will also improve). VOIP is having a strong knock-on effect in terms of adding TV & Internet subs.

Due to price rises, focus on churn, increased competition from cable, as well as the entrance of RBOC TV, DirecTV/EchoStar will continue to see less subscriber gains.

Even with RBOCs raising residential broadband speeds and lowering prices, we forecast that the cablecos will continue to add more residential broadband subs per annum than the telcos for the rest of the decade. We forecast YE2006 cable at almost 60% of the residential subscriber broadband market- we forecast that will decline to 55% by YE2009. Except for Verizon, in most cases cable offers more speed for the price than the RBOCs.

In the short-medium run, studios, MySpace, Google, Apple, etc will have no monetary impact on the RBOCs, cable and satellite. In the long run these players do pose a threat.

In Canada, (see table of contents for more detail):

Note: YE is year-end. By YE2006 we forecast Cablecos will have 12% of residential telephone subs and by YE2009 27% (up from 6% YE2005). Whereas we forecast Telcos will have 2% of TV subs by YE2006 and 9% by YE2009 (up from 1% YE2005). Overall Canadian Telco residential telephone lines loss for 2005 was approximately 4%; we forecast 8% for 2006.

Canadian cablecos have on average 50% of their TV customers taking Internet with them, whereas the telcos have on average 30% of their residential telephone customers taking DSL with them. Hence cable adding a significant amount of telephone customers in a short time is highly achievable given the high overlap, bundled price and convenience.

Cable VOIP with its multiple features and unlimited LD currently has the price edge against the telcos traditional phone offers, and is typically the key price differentiator in the cable versus telco bundle battle. Telcos have answered back: Bell has been the most aggressive with its new VOIP offers and LD price cuts, SaskTel and MTS have also cut LD. We expect this battle to only intensify with alterings of plans/prices (we are not expecting radical cuts in the short run) going forward.

Due to their early entrance and pricing strategy, MTS and SaskTel have been holding their own with Telco TV and are spending further on their networks to offer HD and faster broadband. Aliant and Telus have both recently entered the TV game; Bell like AT&T has changed the timing of its IPTV entrance. We are uncertain as to whether Aliant, Bell and Telus' current capex commitments to network upgrades will be enough in the long-run to satisfy the capacity needs of offering multiple HD streams and higher broadband speeds.

We are not forecasting as robust a 2006 and onwards for ExpressVu and StarChoice given more Telcos pushing into the TV space (including Bell itself) as well as in ExpressVu's case a move towards less discount pricing (DVR and HD promotions and bundling has been eliminated).

Cable gained basic TV subscribers in 2004, the first time in years, and 2005 basic TV sub gains were even stronger; we also forecast basic gains in 2006 (we expect small basic cable losses 2007-2009 due to Telco TV). Digital cable subscriber additions continue to accelerate (digital cable subs exceeded satellite at YE2005). Cable's triple play is helping raise/sustain both TV and Internet subscriber gains.

Cable continues to maintain its market share lead in residential broadband subscribers (cable has 55% and telco 44%) due in part to cable's speed, in almost all cases, for the price advantage. We expect that cable will continue its strategy of raising speeds. Cable added more residential broadband subscribers than the telcos in 2005, and we forecast that cable will continue to add more subs than the telcos per annum for the rest of the decade.