A new study by Kagan Research claims that VOIP revenues for the cable industry are primed for a major jump in the second half of 2006 and should have an ancillary affect on both subscriber retention and overall revenues.

 

The company’s Broadband Cable Financial Databook claims that VoIP subscriptions will jump to 6.5 million by the end of the year, a 60 percent jump over year-end 2005.

 

A key driver in this growth is the continued consolidation within the cable industry, led primarily by Comcast (News - Alert) and Time Warner, which only recently finalized the respective acquisitions of various systems once owned by the now-defunct Adelphia Communications. Recent deals throughout the industry have resulted in a large number of clustered systems that are better able to compete with regional voice carriers. The report estimates that nearly 90 percent of all cable subscribers are served by the top 10 MSOs.

 

More significantly than straight VoIP revenues, however, are the potential gains to be made from related services, such as interactive advertising and enhanced business services, not to mention gains in operating efficiency and economies of scale.

 

“These factors, along with the continued growth of core businesses, will combine to push cable residential revenue to $119.8 billion by 2015, of which just 41 percent will be delivered by basic cable, versus 47 percent in 2006," said Robin Flynn, Kagan senior analyst, in a written statement.

 

Much of the VoIP growth will come as a result of increased marketing efforts among leading cable operators. The study predicts that the number of homes targeted for voice services advertising and promotions will more than double to 68.7 million by the end of the year.

 

Other services are also poised to make significant gains as well. High-speed data penetration among basic video subscribers is expected to surge to 45 percent this year, up from 39 percent at the end of 2005. Digital cable subscribers are set to top 31 million, up from 28.6 million last year.

 

All of this is expected to push total residential revenue to $68.2 billion, a 9.6 percent jump over 2005, with the average household shelling out about $87 per month for cable services.

 

The Kagan report comes on the heels of other recent research that predict good times ahead for the cable industry.

 

In early August, Light Reading’s Cable Industry Insider projected close to 4 million new cable-VoIP subscribers in 2006 in the U.S. and Canada, with another 7 million set to go in 2007.

 

Still unclear, however, is whether the cable industry is gaining subscribers at the expense of competing service providers or is simply riding a wave of broad-based VoIP enthusiasm.

 

In the Light Reading report, Time Warner was listed as the second largest VoIP provider with 1.4 million subscribers, a close second to Vonage (News - Alert) with 1.9 million. Cablevision and Time Warner were said to hold about 40 percent over the overall VoIP market.