Report: Digital Growth Slowed in 2002


Digital-cable penetration will rise to 39 million homes by the end of 2007,
but the pace of growth did slow in 2002, according to a new report from The
Yankee Group.

The telecommunications-analysis firm found that digital-cable subscribers
totaled 18.9 million by the end of 2002. But new subscriber numbers totaled 4
million, down from the 5 million- to 6 million-subscriber pace in the two
previous years, according to the report.

While new services such as video-on-demand, personal video recorders and
high-definition TV will drive digital-subscriber numbers higher, the industry
faces three key hurdles, according to Aditya Kishore, Yankee's media and
entertainment analyst.

"First, digital penetration is leveling off at 35 [percent] to 40 percent of
subscribers," he said. "Second, high churn rates continue to plague the
industry. Third, debt-burdened MSOs are under pressure to generate free cash
flow, hampering their ability to rapidly conduct capital-intensive plant