2008 USA - Telecoms, Wireless and Broadband

Publication Date	February 2008
Publisher	BuddeComm
Product Type	Report
Pages	196
ISBN Number	not applicable
Product Code	BUD00248

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Summary

For those seeking high level strategic information and objective analysis on this region, this report is essential reading and provides further information on:

Forecast growth in select telecommunication markets.
The emerging trends and convergence in the USA voice, broadband and digital TV sectors.
How the USA is faring in terms of global broadband development.
The current and emerging broadband technologies and their long-term projections.
The growth of wireless voice and data and the deployment of 3G and 4G technologies.
Key information on the major telecommunication operators.

BuddeComm's USA Annual Publication, 2008 USA - Telecoms, Wireless and Broadband, profiles the fixed-line, wireless (mobile) and broadband markets in the USA. It also examines the convergence of these technologies with each other and with digital media such as digital TV and the emergence of new telecommunication services such as VoIP and IPTV.

These markets continued their trends towards a triple play model during 2007 and early 2008. In particular, the telcos started making genuine strides towards their vision of triple play, by aggressively accelerating their deployment of optic fibre networks across their footprint. Their sense of urgency was highlighted by the rate of wireline losses; both Verizon and AT&T Inc posted fixed-line losses of around 10% for 2007. The main beneficiaries of the telcos' significant churn rates, were the cable companies, whose VoIP services enjoyed rapid subscriber gains.

The Internet economy continued its meteoric rise, with sites such as Facebook becoming $100 billion companies virtually overnight, highlighting the enormous scale of network economies that can be harnessed by the Internet's expansive reach. Online advertising and e-commerce are becoming an increasingly significant share of the overall advertising and retail markets. Microsoft's bid for Yahoo!, if successful, would give the merged entity, together with Google, a combined 50% of the $20 billion per annum online advertising market.

This report provides overviews, analyses and detailed statistics on the US fixed-line, wireless and broadband markets including their sub-markets such as DSL, cable, FttH, wireless broadband, utilities broadband, the Internet, VoIP and IPTV.

Key highlights:

During 2007 total revenue for the telecommunications industry grew by around 8% to reach over $1 trillion. Telecom service revenues reached $458 billion, of which wireless service revenue accounted for approximately 31%.
The number of traditional fixed-line customers continued to drop sharply during 2007, with Verizon and AT&T both reporting declines of around 10% in residential wireline accounts. The growth in VoIP was a major contributor to this decline, in particular cable VoIP, with subscriber growth rates around 75%.
Thus the RBOCs continued to focus on their fibre deployments in response to increasing competition from the MSOs' VoIP and triple play offerings. State-by-state video franchising reform continued apace, thus facilitating the deployment by the RBOCs of IPTV on their expanding fibre networks. By late 2007 FttH deployments in the US were growing at over 110% per annum.
Total broadband subscribers continued to grow solidly, although in terms of broadband penetration, the US continued to edge towards the bottom half of the OECD tables. For more information, see chapter 5.2.2, page 50.
Broadband DSL subscriber growth continued to outpace cable subscriber growth, though cable still leads in terms of market share. However, with the telcos aggressively deploying fibre networks, they will soon overtake the cable companies in terms of broadband market share.
WiFi was becoming increasingly commonplace in the USA during 2007, with a burgeoning hotspot network, laptops being automatically equipped with WiFi cards and WiFi moving beyond the laptop; nevertheless doubts were being raised over the viability of municipal WiFi programs following the difficulties experienced in cities such as San Francisco, Chicago and Philadelphia.
On the regulatory front, after a series of complaints were filed with the FCC by public interest groups, the Commission demonstrated some support for the principles of net neutrality in late 2007 by launching an inquiry into network management practices by broadband providers. For more information, see chapter 2, page 3.
The US wireless industry continued to enjoy considerable growth through 2007 reaching approximately 83% subscriber penetration by early 2008. Significantly, the percentage of wireless-only households exceeded, for the first time, the percentage of wireline-only households.
The wireless industry was characterised in 2007 by a number of acquisitions by major carriers of smaller regional and rural carriers. The acquisitions are seen as a means by which major carriers can increase their subscriber numbers and network footprints as wireless penetration reaches saturation point. For more information, see chapter 8.1.2, page 142.
Wireless data revenues continued to enjoy strong growth in 2007, underpinned by robust wireless data revenue growth. Thus while overall voice ARPU decreased during the third quarter of 2007, data ARPU sustained a steady incline. By late 2007 data service revenues accounted for approximately 18% of total wireless service revenues, up from around 4% in 2004. Significantly, the majority of wireless data revenues were being generated by non-messaging applications and services such as music downloads, mobile TV, video blogs and Internet-accessed entertainment services.
During 2007 the MVNO market witnessed a number of high-profile exits, causing a cloud of uncertainty to hang over the sector. A number of causes which may explain the trend include over-reliance on a content-focussed business-model and/or distribution issues with MVNOs failing to secure channel deals with large retailers. For more information, see chapter 8.3.1, page 160
The selection of 4G wireless technologies became more compelling in late 2007, with Sprint Nextel on the verge of an extensive WiMAX deployment and Verizon Wireless announcing its decision to start LTE trials in late 2008. These open access platforms both offer significant scope for increased convergence among services and devices.
In the broadcasting sector, with mandatory analogue switch-off scheduled in February 2009, the transition to digital TV gathered pace in 2007. This drove the growth of VoD services in particular. For instance, by 2007 it was estimated that approximately 45% of all cable subscribers utilised VoD. For more information, see chapter 7.6, page 121.
During 2007 the major satellite providers, DirecTV and the DISH Network, continued to make gains at cable's expense, due in part to their competitive pricing plans and comparative advertising campaigns against their cable competitors. However, with the market moving towards a triple play model in the longer term, satellite will struggle to maintain these gains as it cannot match the cable companies' broadband networks. For more information, see chapter 7.8.3, page 132.

Forecast wireless subscribers, penetration and revenue growth - 2008 - 2013

Year Subscribers (million) Penetration Revenue ($ billion)
2008 270 88% 154
2009 284 92% 168
2010 295 95% 181
2011 304 97% 196
2012 310 98% 204
2013 313 98% 212

(Source: BuddeComm forecasts)

Content

1. Key Statistics
2. Regulatory Environment
- 2.1 Analysis
  - 2.1.1 Unbundling
  - 2.1.2 Net neutrality
- 2.2 US regulatory environment
  - 2.2.1 Overview
  - 2.2.2 Regulatory authorities
  - 2.2.3 Regulatory milestones - 1969 - 2007
  - 2.2.4 Brief historical overview
- 2.3 The Telecommunications Act 1996
  - 2.3.1 Overview
  - 2.3.2 Key pro-competitive provisions of the Telecom Act
  - 2.3.3 Highlights of the Act
  - 2.3.4 Results from the Act
- 2.4 Foreign competition
- 2.5 The FCC and satellite services
- 2.6 Merger and acquisition activity
- 2.7 Access and unbundling
  - 2.7.1 Unbundling network access
  - 2.7.2 RBOCs ordered tshare Internet lines
  - 2.7.3 FCC unbundled network triennial review order of 2003
  - 2.7.4 Cable broadband and DSL confirmed as information services
- 2.8 Regulation of converging technologies
  - 2.8.1 VoIP
  - 2.8.2 Videand TV
3. Major Telcos - Statistics & Analysis
- 3.1 US telecom industry
  - 3.1.1 RBOCs, ILECs, CLECs and IXCs
  - 3.1.2 Cable MSOs, VoIP and other competition
  - 3.1.3 Analysis - 2007
- 3.2 Major players
  - 3.2.1 Overview
  - 3.2.2 AT&T Inc
  - 3.2.3 Verizon Communications
  - 3.2.4 Qwest Communications
4. Internet Market
- 4.1 Analysis
- 4.2 Overview
- 4.3 Internet statistics
- 4.4 Broadband
  - 4.4.1 Broadband development
  - 4.4.2 Broadband connectivity
  - 4.4.3 Net neutrality
- 4.5 USA Internet usage
  - 4.5.1 Internet usage patterns and demographics
  - 4.5.2 Web surfing statistics
  - 4.5.3 Online advertising and e-commerce
- 4.6 ISP market
- 4.7 Email
  - 4.7.1 Spam, viruses & other malware
  - 4.7.2 Anti spam legislation
- 4.8 Instant Messaging (IM)
5. Broadband Market
- 5.1 Key highlights
- 5.2 Overview
  - 5.2.1 Regulatory overview
  - 5.2.2 Broadband statistics
  - 5.2.3 Cable MSOs versus Telcos
- 5.3 Cable broadband
  - 5.3.1 Overview
  - 5.3.2 Cable broadband statistics
- 5.4 Digital Subscriber Line (DSL)
  - 5.4.1 DSL overview
  - 5.4.2 DSL statistics
- 5.5 Fibre-to-the-Home (FttH)
  - 5.5.1 Overview
  - 5.5.2 FttH network rollout
  - 5.5.3 Policy and regulation framework
  - 5.5.4 Choice of FttX technology
  - 5.5.5 Non-RBOC FttH networks
  - 5.5.6 RBOC FttH roll-out
- 5.6 Broadband over Powerline (BPL)
  - 5.6.1 Overview
  - 5.6.2 BPL opportunities
  - 5.6.3 BPL deployment issues and obstacles
  - 5.6.4 BPL technology
  - 5.6.5 BPL regulations
  - 5.6.6 BPL deployments and trials
  - 5.6.7 BPL industry participants
- 5.7 Wireless broadband
  - 5.7.1 Overview
  - 5.7.2 Analysis - 2007 - 2008
  - 5.7.3 WiFi (WLAN)
  - 5.7.4 WiMAX
  - 5.7.5 Satellite broadband
6. VoIP
- 6.1 VoIP market overview
  - 6.1.1 VoIP statistics
- 6.2 VoIP regulation
- 6.3 VoIP technology in the US
  - 6.3.1 Overview
  - 6.3.2 History
  - 6.3.3 IP telephony gateways
  - 6.3.4 Value-added features
  - 6.3.5 Hosted VoIP solutions
  - 6.3.6 Circuit-to-packet network migration
  - 6.3.7 IP-based private networks and computer telephony integration
  - 6.3.8 Mobile VoIP
- 6.4 Major VoIP providers
  - 6.4.1 Cable VoIP
  - 6.4.2 Alternative providers
  - 6.4.3 TelcVoIP
7. Convergence
- 7.1 Market overview
  - 7.1.1 Key developments
  - 7.1.2 IP networks
  - 7.1.3 Regulatory issues
- 7.2 Telctriple play
  - 7.2.1 Triple play over fibre
  - 7.2.2 Alliances with satellite TV
- 7.3 Cable triple play
  - 7.3.1 Triple play over HFC
- 7.4 Satellite over IP
- 7.5 Quadruple play
  - 7.5.1 Verizon
  - 7.5.2 AT&T
  - 7.5.3 Pivot joint venture
  - 7.5.4 Qwest
- 7.6 Overview of the broadcasting market
  - 7.6.1 Analysis
- 7.7 Regulatory issues
  - 7.7.1 Analogue switch-off
  - 7.7.2 Franchise laws
  - 7.7.3 À la carte
  - 7.7.4 TV white spaces decision
- 7.8 Digital TV
  - 7.8.1 IPTV
  - 7.8.2 Cable DTV
  - 7.8.3 Satellite Direct Broadcasting Service (DBS)
  - 7.8.4 Digital Terrestrial TV (DTTV)
- 7.9 Consumer electronics
  - 7.9.1 Digital TV sets and HDTVs
  - 7.9.2 DVRs
8. Wireless Communciations
- 8.1 Market overview
  - 8.1.1 Analysis
  - 8.1.2 Acquisitions and mergers
  - 8.1.3 Wireless statistics
- 8.2 Major wireless operators
  - 8.2.1 AT&T Mobility (formerly Cingular Wireless)
  - 8.2.2 Verizon Wireless
  - 8.2.3 Sprint Nextel Corporation
  - 8.2.4 T-Mobile USA
  - 8.2.5 Alltel Corporation
  - 8.2.6 US Cellular Corporation
  - 8.2.7 Market consolidation
  - 8.2.8 Market convergence
- 8.3 Market trends
  - 8.3.1 Mobile Virtual Network Operator (MVNO) market
  - 8.3.2 Prepaid market
  - 8.3.3 Third Generation mobile (3G)
  - 8.3.4 WiMAX and VoIP versus 3G
  - 8.3.5 WiFi and cellular convergence
  - 8.3.6 Sprint/MSjoint venture
  - 8.3.7 Wireless data
  - 8.3.8 Wireless Local Number Portability (WLNP)
9. Forecasts
- 9.1 Notes on scenariforecasts
- 9.2 Forecasts - Internet services t2012
- 9.3 Forecasts - broadband services t2013
- 9.4 Forecasts - fibre services t2013
- 9.5 Forecasts - VoIP services t2012
- 9.6 Forecasts - wireless market t2013
10. Glossary of Abbreviations
List of Tables
- Table 1 - Country statistics USA - 2008
- Table 2 - Telecom revenue statistics - 2007
- Table 3 - Telephone network statistics - 2007
- Table 4 - Internet user statistics - 2007
- Table 5 - Broadband statistics - 2007
- Table 6 - Mobile statistics - January 2008
- Table 7 - National telecommunications authority
- Table 8 - Revenue comparisons for major telcos - 2001 - 2007
- Table 9 - AT&T revenue summary - 2000 - 2007
- Table 10 - AT&T subscriber statistics - 2002 - 2007
- Table 11 - AT&T segment operating revenues - 2006 - 2007
- Table 12 - BellSouth revenue summary - 2000 - 2006
- Table 13 - BellSouth Communications group operating statistics - 2001 - 2006
- Table 14 - Verizon Communications financial summary - 2000 - 2007
- Table 15 - Verizon Communications operating statistics and annual change - 2006 - 2007
- Table 16 - Qwest revenue and net profit/loss - 2000 - 2007
- Table 17 - Top ten ranking by country for Internet users - June 2007
- Table 18 - Country comparison of monthly at-home Internet usage - 2006 - 2007
- Table 19 - Broadband penetration in select OECD countries - 2001; 2006 - 2007
- Table 20 - Broadband access among Internet households in select countries - 2001 - 2007
- Table 21 - Home Internet connection speeds - 1999 - 2007
- Table 22 - At work Internet connection speeds - 2000 - 2007
- Table 23 - US Internet users, annual change and penetration - 1996 - 2007
- Table 24 - Total monthly US online searches - 2004 - 2007
- Table 25 - US average monthly web usage - 2006 - 2007
- Table 26 - Proportion of time online by activity - June 2007
- Table 27 - Top 10 search engines: growth and share of market - June 2007
- Table 28 - Top ten websites and market share - 2007
- Table 29 - Top ten websites, audience and time spent by parent company - August 2007
- Table 30 - Fastest growing web properties: visitors and monthly growth - June 2007
- Table 31 - Annual growth of selected global social networking sites - June 2007
- Table 32 - Ten largest US global social networking sites and visitors - July 2007
- Table 33 - Top 10 US online streaming videsites statistics - May 2007
- Table 34 - Online advertising revenues and market shares - 2007
- Table 35 - Top 10 online advertisers spending and impressions - October 2007
- Table 36 - Leading Internet advertising by industry and impressions - July 2007
- Table 37 - Top 10 audiences and time spent by parent company - 2006 - 2007
- Table 38 - Fastest growing e-commerce sectors and annual change - 2006 - 2007
- Table 39 - Online retail sales and annual change - 2003 - 2007
- Table 40 - ISPs, access types, residential subscribers and market share - September 2007
- Table 41 - Annual email volume and annual change - 2000 - 2007
- Table 42 - Email clients, personal email, by popularity - 2006
- Table 43 - Email clients (business email), by popularity - 2006
- Table 44 - Proportion of global spam volume in selected countries - 2007
- Table 45 - Zombie IPs in selected countries - 2007
- Table 46 - Top 10 products pitched in spam emails - Q1 2007
- Table 47 - Fastest growing IM destinations and visitor per month - 2007
- Table 48 - Broadband subscribers, annual change and penetration - 1999 - 2007
- Table 49 - Broadband household penetration - 2000 - 2007
- Table 50 - Broadband subscribers by technology - 2002 - 2006
- Table 51 - Broadband lines (>200kb/s in both directions) - 2005 - 2006
- Table 52 - Top cable and DSL providers, subscribers & market share - September 2007
- Table 53 - Broadband subscribers and population penetration in selected OECD countries - 2001; 2007
- Table 54 - USA broadband penetration and OECD ranking - 2001 - 2007
- Table 55 - Broadband penetration in Internet households, selected countries - 2001 - 2007
- Table 56 - USA broadband speeds against top 14 OECD ranking - 2007
- Table 57 - US cable industry infrastructure expenditures - 2000 - 2007
- Table 58 - Top 10 cable MSOs' coverage, subscribers and penetration by technology - 2007
- Table 59 - US cable modem subscribers and annual change - 1998 - 2007
- Table 60 - Subscribers for top cable modem providers - 2002 - 2007
- Table 61 - Cable versus DSL, market share and subscriber growth - 2006 - 2007
- Table 62 - DSL subscribers and annual change - 1999 - 2007
- Table 63 - DSL subscribers by major carrier - 2002 - 2007
- Table 64 - ADSL subscribers, market share & annualised change by type of provider - 2006
- Table 65 - FttH homes passed and connected - 2001 - 2007
- Table 66 - FttH communities and states - 2004 - 2007
- Table 67 - FttH market share by type of provider - 2006 - 2007
- Table 68 - Non-RBOC and overall FttH take-up rates - 2002 - 2007
- Table 69 - Top 10 wireless ISPs' subscribers and communities served - 2007
- Table 70 - Public WiFi hotspots - top 10 countries and top 10 cities - 2008
- Table 71 - Number of hotspots in the top 10 US states - 2006; 2008
- Table 72 - Top seven US WiFi hotspot operators - 2006
- Table 73 - VoIP subscribers of major providers - September 2007
- Table 74 - Cable VoIP subscribers and annual change - 2003 - 2007
- Table 75 - US cable industry infrastructure expenditures - 2000 - 2007
- Table 76 -Cable VoIP subscribers and annual change - 2003 - 2007
- Table 77 - Broadcasting coverage, subscribers, annual change and penetration - 2007
- Table 78 - Market shares of major MSO, DBS and telcvideproviders - 2005; 2007
- Table 79 - Homes passed by cable HDTV service and annual change - 2002 - 2007
- Table 80 - Cable CAPEX, customer and advertising revenues - 1996 - 2007
- Table 81 - Basic cable and digital subscribers - 2000 - 2007
- Table 82 - Top 25 cable MSOs ranked by subscribers & market share - June 2007
- Table 83 - DBS versus MSmarket shares - 2001 - 2007
- Table 84 - Satellite DBS subscribers by major network - 2000 - 2007
- Table 85 - DISH ARPU, churn and subscriber acquisition costs - 2005 - 2007
- Table 86 - DirecTV ARPU, churn and subscriber acquisition costs - 2005 - Q3 2007
- Table 87 - National FTA broadcasters - 2007
- Table 88 - Digital TV sets sales and revenues - 2000 - 2008
- Table 89 - Major acquisition and merger agreements - 1998 - 2008
- Table 90 - Wireless subscribers, penetration and annual change - January 2008
- Table 91 - Wireless market ARPU, revenues, usage statistics and annual change - June 2007
- Table 92 - Wireless subscribers and annual change - 1995 - 2007
- Table 93 - Wireless revenues of major operators - 2000 - 2007
- Table 94 - Wireless subscribers of major operators - 2000 - 2007
- Table 95 - Wireless operator market share - September 2007
- Table 96 - Wireless market revenue, roamer revenue, ARPU and employees - 1994 - 2007
- Table 97 - Number of cell sites - 1995; 2000 - 2007
- Table 98 - Customer churn rate of national carriers - 2001 - 2007
- Table 99 - Average local monthly bill & average local call length - 1995 - 2007
- Table 100 - ARPU of major operators and annual change - September 2007
- Table 101 - AT&T Mobility financial summary - 2000 - 2007
- Table 102 - AT&T Mobility PoPs, subscribers, penetration, churn & ARPU - 2000 - 2007
- Table 103 - Verizon Communications financial summary - 2000 - 2007
- Table 104 - Verizon Wireless subscribers, churn & ARPU - 2001 - 2007
- Table 105 - Sprint Nextel consolidated financial summary - 2000 - 2007
- Table 106 - Sprint Nextel wireless subscribers, churn, ARPU and revenue - 2001 - 2007
- Table 107 - T-Mobile revenue - 2000 - 2007
- Table 108 - T-Mobile cell sites, subscribers, churn and ARPU - 2001 - 2007
- Table 109 - Alltel financial summary - 2000 - 2007
- Table 110 - Alltel wireless subscribers, churn & ARPU - 2001 - 2007
- Table 111 - US Cellular financial summary - 2000 - 2007
- Table 112 - US Cellular cell sites, subscribers, churn and ARPU - 2000 - 2007
- Table 113 - Prepaid subscriber growth - 2006 - 2007
- Table 114 - Forecast Internet user growth and penetration - 2008 - 2012
- Table 115 - Forecast online retail sales - 2008 - 2012
- Table 116 - Forecast online advertising - 2008 - 2012
- Table 117 - Forecast broadband subscribers and penetration - lower growth scenari- 2008 - 2013
- Table 118 - Forecast broadband subscribers and penetration - higher growth scenari- 2008 - 2013
- Table 119 - Forecast homes passed by fibre - higher growth scenari- 2007 - 2013
- Table 120 - Forecast homes passed by fibre - lower growth scenari- 2007 - 2013
- Table 121 - Forecast VoIP subscriber and revenue growth - lower growth scenari- 2008 - 2012
- Table 122 - Forecast VoIP subscriber and revenue growth - higher growth scenari- 2008 - 2012
- Table 123 - Forecast wireless subscribers, penetration and revenue growth - lower growth scenari- 2008 - 2013
- Table 124 - Forecast wireless subscribers, penetration and revenue growth - higher growth scenari- 2008 - 2013
- Exhibit 1 - Significant telecom de-regulation milestones - 1969 - 2007
- Exhibit 2 - Significant consolidations - 1998 - 2007
- Exhibit 3 - Implications of ending net neutrality
- Exhibit 4 - Definitions: DSL, cable and FttN/FttC broadband
- Exhibit 5 - Cable broadband drives cable VoIP
- Exhibit 6 - Status of RBOC fibre network build out - December 2007
- Exhibit 7 - Examples of non-RBOC FttH networks
- Exhibit 8 - BPL technology overview
- Exhibit 9 - Municipal WiFi case-study
- Exhibit 10 - IEEE WiFi standards - January 2008
- Exhibit 11 - Sprint Nextel and Clearwire WiMAX developments
- Exhibit 12 - VoIP pioneers - Net2Phone
- Exhibit 13 - Components of network convergence
- Exhibit 14 - Major cable VoIP operators - 2007
- Exhibit 15 - Major alternative VoIP developments - 2007
- Exhibit 16 - Major telcVoIP developments - 2007
- Exhibit 17 - Examples of non-cable VoD services
- Exhibit 18 - Major completed mergers and acquisitions - 2000 - 2007
- Exhibit 19 - Major developments in the US MVNmarket - 2007
- Exhibit 20 - Mobile TV developers