That's a pittance compared to leading MSOs, such as Cablevision or satellite operators, but over time, the telcos could present a differentiation point that could bring rapid growth: a quadruple-play.

While cable companies such as Comcast have posted significant growth via "a triple-play" bundle of TV, phone and Internet, Verizon and AT&T are moving to offer those three services along with wireless for one price. Cable operators are currently pondering how and when to strike back in the wireless area.

So far, they have dismissed any imminent threat from the telcos, arguing that it will take years for them to garner TV distribution anywhere close to cable numbers. Yet on Wednesday, Cablevision said that in two communities where Verizon has been a competitor for a full year (with a total of 16,000 homes), Cablevision's TV subscriber rolls have dropped by 5.5%.

But AT&T has hardly proven that it will take off at a rocket pace. It has grabbed 7,000 customers out of more than 2.2 million who could sign up. Still, it has pledged to offer service to 19 million homes by 2009, and a higher adoption rate could increase its competitive position. Verizon, similarly, has promised 18 million homes with potential access by 2010.

While consumers could warm to cheaper pricing, differentiated channel selection and perhaps better service to opt for telco TV, advertisers may also welcome the competition. Telco TV could offer them a third option--along with MSOs and DBS operators--to run local avails. AT&T and Verizon could look to attract them, at least initially, with more enticing pricing.

Verizon continues to expand to communities within Cablevision's New York-area footprint and mount an aggressive campaign including TV and marketing. The telco has also employed TV in the Los Angeles DMA, the country's No. 2 market.

AT&T U-verse's footprint, which began last year in San Antonio, Texas and then moved to Houston, also now covers two parts of the Bay Area in Northern California, the Hartford/New Haven/Stamford areas in Connecticut, a portion of Indiana and now Wisconsin's Milwaukee and Racine areas.

The U-verse package does offer customers access to a suite of HD channels and access to the NFL Network (though not on its basic tier), which some cable operators have balked at due to rights fees. A large portion of residents in Milwaukee and Racine likely root for either the Green Bay Packers or Chicago Bears.

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