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Convergence and the cable industry

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ICTs are not only changing the lives of people, they are also changing the way businesses operate. The transformation of the cable television industry is a good example.

In the late 1990s and early 2000s, the cable television industry invested heavily in ICTs to modernize its networks. These investments enabled the industry to offer Internet and telephone services and to provide digital television services comparable with those offered by satellite television operators. These investments drastically changed the industry.

Less than 10 years after introducing Internet services by cable in a few test markets, the cable television industry signed up its three-millionth Internet customer in 2005. At the end of August 2005, it had close to one Internet subscriber for every two television subscribers.

Cable companies were slower to launch telephone service, but a few major cable operators entered that market in 2005. Together they had slightly more than 200,000 clients as of August 31 of that year.

Consequently, the industry relies less and less on revenues from its traditional television services. Internet and telephony generated $1.4 billion in revenue in 2005, or just over 28% of the industry’s total subscription revenues. Five years earlier, non-traditional services accounted for less than 8% of their revenues.

Digital technology has also enabled traditional telephone companies to offer television services via telephone land lines, pushing convergence of the telephone and cable television industries to another level.