• by Wayne Friedman , October 3, 2006

The future of traditional big-screen video delivery isn't about cable or satellite distribution--it's about new telecommunications companies. And most are using IPTV technology.

By 2015, Kagan Research expects TV programming delivered by telcos to grow to a 9 percent market--from its 0.1 percent share today.

Cable networks will take the biggest hit if this happens--dropping to 61.1 percent from their current levels of 69.6 percent.

Video delivered by satellite is expected to grow, but at slower rates compared to previous years. Companies like DirecTV and EchoStar's Dish will combine to add 6 million new subscribers, climbing to 33.5 million homes by 2015.

Satellite's share of the market will inch up to 29.7 percent, from its current base of 29.0 percent. In previous years, it was satellite businesses--DirecTV and EchoStar's Dish--that inflicted the greatest pain on the cable industry.

In recent years, the satellite business has slowed as cable operators expanded their digital products: VOD, DVRs, high-definition, Internet, and long-distance service.

In 2005, satellite subscriber additions declined 29 percent from the previous year. First quarter 2006 continued the downward trend, with net gains in subscribers down 50 percent at DirecTV, and 31 percent at EchoStar's Dish. Kagan expects 2006 results to be down 22 percent off 2005 totals, with a net gain of 1.8 million satellite subscribers.

Still, Kagan believes that satellite businesses can adjust to the-burgeoning growth of new channels better than other video-delivered businesses. It says telecommunications' land-line business of delivering video is limited to sending digital information at 20 to 25 Mbps for video, data, and phone. In short, it can only distribute one HD stream, which means that IPTV-technology companies need bigger, faster fiber lines.

Kagan also says that cable is near capacity with added channels and services.