• by David Goetzl  @dgoetzl, August 17, 2007

A top Wall Street analyst suggested Thursday that telco TV operators are slowly beginning to make headway in their battle with cable and satellite operators to win customers. Bear Stearns' Spencer Wang lowered estimates for subscriber growth for the traditional multichannel providers for the remainder of the year.

In the second quarter, Wang wrote that 95% of the industry's "net adds" of 215,000 came from the telcos, particularly Verizon's FiOS (167,000) and AT&T U-verse (38,000) to a lesser extent.

Still, Wang wrote that "telco video exaggerated what is traditionally a seasonally weak quarter for video net adds" and warned against overheated projections for telco growth, since it still accounts for less than 1% of the market.

However, the growth of the telcos is notable: Verizon's distribution climbed nearly 50% in 2Q to 515,000 total subscribers, while AT&T shot up 292%, although it's now in only 51,000 homes. The company's next step is a rollout of service in the Southeast.

Wang projects telco growth to continue, with combined Verizon/AT&T subscriber growth up 45% in the third quarter and another 38% in 4Q. He cut subscriber projections for the quarters for cable and satellite.

Based on that forecast, if telco subscribers from the two companies were added together, on Jan. 1 their combined subscriber total would be more than all but nine cable operators.

But even with all the additions and upheaval in the market, Wang called both Comcast and Time Warner Cable--No. 1 and No. 2 in MSO rankings--"top picks" for investors, largely due to their success with the triple-play bundle of TV, phone and Internet.