OneTRAK study answers question: Where is FiOS TV getting video subscribers?

The entry of FiOS TV can cause incumbent cable systems to lose 10% of their subscriber base, but Verizon’s new video service also seems to be taking a disproportionate share of subscribers from DBS and even cable overbuilders.

That’s the conclusion of a study conducted by One Touch Intelligence, a market intelligence and analysis firm, which examined the 2006 year-end subscriber counts of Verizon FiOS, Comcast Corp. and RCN Corp. in 34 Massachusetts communities.
The key takeaways:

1) Initial incumbent cable subscriber losses can exceed 10%.
2) Traditional overbuilders, such as RCN, can lose 15% of their subscriber base, effectively insulating the incumbent cable provider.
3) As many as 40% of FiOS TV subscribers could well be coming from DBS.

“It’s not that surprising that FiOS TV has been able to take a portion of cable subscribers in markets where they have launched,” said Matt Stump, managing editor of One Touch Intelligence’s OneTRAK service and author of the report.

“What’s interesting is the hit RCN is taking, both from Verizon and Comcast, and the apparent drain of DBS customers. We estimate some 40% of Verizon subscribers are coming from DBS, although DBS penetration in that suburban market of Boston may be no higher than 20%.”

One Touch Intelligence analyzed subscriber data recently made public by the Massachusetts Department of Telecommunications and Cable, which requires all cable operators in the state to file year-end subscriber count figures by municipality. Verizon is now included in those reports. The subscriber figures are as of Dec. 31, 2006, and cover 34 communities where Comcast and Verizon offer video service. RCN also operates in nine of those communities.

In Lynnfield, North Reading, Reading and Winchester, where Verizon had marketed FiOS TV for the longest period of time – between six and 10 months in 2006 – Comcast’s penetration fell anywhere from 7.8% to 13.6% by year-end 2006.

But in two other communities (Burlington and Woburn) where FiOS TV had been available for longer than six months, and where RCN also offered service, it was RCN that took the hit, with subscriber losses of 15.7% and 13.2%, respectively, while Comcast losses were only 1.3% and 2.7%.

Throughout 2006, Comcast actually added subscribers in six of nine communities where it competed against RCN and Verizon, although in four cases, Verizon did not begin service until December.

Overall, Comcast and RCN lost a combined 7,029 subscribers in the 34 communities where Verizon launched FiOS TV. Verizon counted 11,984 subscribers by year’s end in those 34 communities.

“Apart from a handful of new multichannel video subscribers, or customers taking service from two providers, the bulk of that remaining gain for Verizon likely came from the two DBS providers,” Stump said, roughly 40%.

“This initial analysis is just that – initial,” Stump said. “Changes in product offerings (DirecTV’s 100 HDTV channels) and marketing tactics will all play into individual market dynamics, which will alter the growth and decline curves of the combatants. But the Massachusetts numbers do give an early indication what effect Verizon is having in the marketplace.”

A full copy of the report is available at www.OneTRAK.com. A detailed spreadsheet with the market-by-market subscriber data is available to OneTRAK subscribers. Subscription information for the service can be found on the website.

OneTRAK is a service of One Touch Intelligence, the leading provider of managed intelligence services for companies in the communications industry. One Touch Intelligence offers clients a unique blend of industry monitoring, reporting, and analysis and can custom package and distribute intelligence services using proprietary online delivery systems. One Touch Intelligence was founded in March 2005 and is headquartered in Denver, Colorado.

Matt Stump is Vice President, Communications Intelligence for One Touch Intelligence, and joined the company in May 2006, after 26 years as a business media reporter and editor for Multichannel News, Cable World and Broadcasting & Cable Magazine.

Contact Information

Matt Stump

VP, Industry Intelligence

One Touch Intelligence

Contact via E-mail