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Friday, January 24, 2003 8:56:49 AM
Online staff -- Electronic News, 1/23/2003
Broadband may be the poison in telecom's pill.
Two reports issued separately this week say that the weakened telecom market may be on its way out if it doesn't sharpen up its technology edge to compete with emerging bigger and better broadband products.
Cedar Knolls, N.J.-based Probe Research suggested that industry-driven events are, for the first time, beginning to hint at the possibility of industry "catastrophe" for telecom.
Probe characterizes a catastrophe scenario as one where any collapse would spread to the major players, resulting in a crippled market with no companies exerting leadership.
"In earlier years it was always assumed that only the confluence of a number of extreme external events could trigger a catastrophe scenario in the industry," said Victor Schnee, Probe's founder and president, in a statement. "Now, this is not necessarily exclusively the case."
Schnee believes the most disturbing part about the telecom catastrophe is that there is ample evidence suggesting the industry itself is a partial cause of its own collapse, and said it is a market with little change, dynamics at low ebb, and demand stifled with a slowdown in the rates of change and growth.
With telecom's sinking decline, broadband is gaining ground.
According to a study by Allied Business Intelligence (ABI), by incorporating advanced features such as personal video recorder (PVR), video on demand (VOD) and thin client functionality (video networking capabilities), set-top boxes (STB) are becoming more complex brain centers for the living room.
As technological advancements continue to improve, STB manufacturers will assist multiple service operators (MSO) in creating new technologies for subscribers.
However, that will not come cheap. MSOs will pay from $600 to $1,000 for a highly integrated STB versus $250 for a plain old box, ABI said.
"MSOs are demonstrating the willingness to spend more on increasing the functionality of set-top boxes," said Adam Becker, a senior analyst with ABI, in a statement. "With anemic growth of basic subscribers, reducing churn and increasing revenues per subscriber are the major tenets of service provider strategies. They can see the ROI (return on investment) potential and can justify the investment."
In 2002, 33.4 million STBs were sold, with 3.8 million of those units incorporating PVR functionality, according to ABI. By 2008, the market researcher predicts that of the 72.5 million STBs shipped, about 68 percent, or 49.2 million units, will have PVR capabilities.
http://www.e-insite.net/index.asp?layout=article&articleid=CA272101&title=Article&spaced....
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