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Cable MSO Revenue Benefits from Bundles

Kagan Research reports that cable system operators with more mature "triple play" bundles posted solid revenue and cash flow gains in 2005, and their operating results bode well for holding their turf against the emerging media rivals.

The number six operator (by subscriber count)� Cablevision � generated a lofty $100.46 average revenue per subscriber per month for the fourth quarter of 2005, marking the first time a cabler cracked the $100 ARPU benchmark.

"Cable is poised to have another good year in 2006," notes Renee Shaening, analyst with Kagan Research. "Cable bundling of voice, high speed data and enhanced services such as VOD are proving to be a magnet to hold customers."

The third leg of cable's triple play strategy, telephony, is on the edge of a steep growth curve. According to Kagan the cable industry ended 2005 with 5.67 million voice subs (including customers on both circuit switched and IP based infrastructures).

Cablevision's voice service, which launched in late 2003, has already reached a 16.3 percent penetration of homes passed, up significantly from 13.4 percent last quarter and 6.1 percent a year earlier. Many had expected cable voice to top out at 20 percent of enabled homes, but Cablevision's torrid rate of growth has indeed challenged that notion. Cablevision's annual basic sub growth of 2.2 percent, attributable to the "halo" effect of VoIP, bodes well for an industry plagued by net losses for the past three years.

The number two MSO Time Warner Cable added 246,000 voice subs in the fourth quarter alone to end 2005 with 1.1 million total voice subs for a solid 7 percent penetration of marketable homes passed. Time Warner also finished 2005 with a net basic subscriber gain (73,000) for the year, bringing its count to nearly 11 million.

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