TORONTO – Incumbent telcos Bell and Telus have proven that cable's "big pipe advantage”, is in fact, overrated, according to Canaccord Genuity telecom analyst Dvai Ghose.
In a research note to clients this week entitled ‘Revenge of the Telcos’, Ghose said that Telus and Bell continue to take TV and broadband share from the likes of Rogers and Shaw, at the same time as cable telephony has matured. Part of this shift can be attributed to the telcos’ Mediaroom platform which offers desirable features such as whole home and remote PVR, a superior interactive guide and social media interoperability. While next generation cable boxes offer some of these features, Ghose writes that telco boxes are cheaper than cable boxes, cablecos may have to subsidize box upgrades for customer retention, and, it is more enticing for the telcos to subsidize because they are trying to win back the home.
He also maintains that the telcos are using bandwidth more efficiently than cable companies. “While cable has greater bandwidth, their broadcast infrastructure is much less efficient than the telcos' switched-video”, he writes. “Cablecos may have to overlay IPTV, with further negative consequences for capex and FCF (free cash flow). Consensus assumes that cable capex will decline by 5% in 2013, even though none of the cablecos are saying so.”
In addition, Ghose claims that Telus and Bell offer the best wireless exposure, calling wireless data “the only real growth driver in the sector”. Descrbing Bell and Telus’ wireless spectrum and network sharing as “a huge advantage”, he calls Videotron's wireless results “disappointing” and predicts that Shaw “cannot hurt Telus in its key wireless segment.”
– Lesley Hunter
