the Annual Opportunity for the Triple-Play Market.

Broadband Spending of 32 Million Households Will Be in Play in 2006 Yankee: 32 to 35 million households will make a broadband service decision every year for the next 3 years; that is, they will decide to subscribe to a voice, video or data service from a cable, satellite or phone company. These households constitute the annual opportunity market for broadband service providers because they are the total number of households that are actually in play every year. This number is composed of households changing their current providers, households adding new services and new households attributable to population growth.

The average spending during the subscription lifetime of each of these households will vary between $3,854 and $4,481 in the next 3 years. Consequently, the annual revenue opportunity for the US triple-play market for service providers will grow from $137.5 billion in 2006 to $145.3 billion by 2009.

Developing an effective bundling strategy will be critical to influence customer acquisition and retention as traditional voice and cable providers encroach on each other’s territory. As more households adopt bundles, the number of households in play each year will decline. By reducing churn, bundles lower the number of households that are up for grabs annually, but they also increase the ARPU and therefore the opportunity value of each household.

Bundling is increasingly critical in influencing the adoption of service providers’ broadband services. Given consumers’ growing interest in bundles and the increasing parity of provider preferences, the provider that can up-sell more services first will be best positioned. High-speed data will be the linchpin for the bundle and is the most important product up-sell for service providers. :

A Study of the Annual Revenue Opportunity for Residential Broadband Service Providers Publ 20060807