Graph: Cable & Telco product offerings Graph: Fast facts on DSL market potential

According to In-Stat, between the end of 2000 and the first quarter of 2002, the top four RBOCs lost 3.7 million residential access lines. With local and long-distance phone charges currently accounting for 45% of a Telco¹s revenue model, the Triple Play bundle is deemed to be of significant strategic importance.

MARKET DEMAND

Delivering video over copper

Phylogy redefines rate and reach with its TripleStream products enabling rapid deployment of video services into the Telco network.

Since the mid-1990s, demand for broadband services has grown dramatically. According to a recent survey by In-Stat Research, market penetration of broadband in the U.S. is growing from less than 30 percent of households in 2004 to nearly 50 percent by the end of 2009, thus creating a highly competitive environment between and among telecommunications companies and cable television providers. While each of these service providers have traditionally offered high speed Internet access, CableCos provided video services and Telcos offered voice services. In the last 12 months, CableCos began offering voice services, prompting Telcos to develop a video services strategy.

The result is an aggressive push to be the first to capture a majority of the "Triple Play" market: a bundling of Video, Voice and Data services. Those successful in executing this trilogy will expect to realize higher average monthly revenues per household, higher per-household profit margins and a significant share of the $200 billion spent annually on local video, voice, long distance, and high speed Internet services by residential customers across the U.S.

Cable companies today deliver video and Internet services to more than 60 million homes. Additionally, for more than 30 years cable companies have been building networks to neighborhoods that can transmit Triple Play services to individual homes over coaxial cable. To defend their market position, Telcos believe it to be essential that they complement their traditional revenue-producing voice and data services.

The traditional land-line business that sustained the Bells for more than a century is eroding by 8% to 10% a year. According to Michelle Abraham of In-Stat, between the end of 2000 and the first quarter of 2002, four RBOCs (Qwest, SBC, BellSouth, and Verizon) lost 3.7 million residential access lines. Cell phone usage is increasing, and many subscribers no longer require a separate phone line for Internet access.

With local and long-distance phone charges currently accounting for 45% of a Telco's revenue model, the Triple Play bundle is deemed to be of significant strategic importance.

For Telcos to effectively compete, there are currently two options:

  1. Building expensive fiber-optic networks. Many calculate the cost to be approximately $1,000 per customer - a high investment with no guarantee of recovering costs through Triple Play sales. SBC and Verizon, for example, are expected to spend a combined $10 billion deploying fiber optics in key markets over the next three years;
  2. Utilizing the existing copper-based network. Using legacy phone lines that carry traditional voice communication, Telcos can achieve Triple Play speeds over longer distances with new DSL technologies. Phylogy's TripleStream Line Conditioners allow Telcos the opportunity to leverage their current assets for greater returns.