Sachs: 2002 Was Year of Contrasts - Multichannel

Sachs: 2002 Was Year of Contrasts

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Washington— Despite turmoil on Wall Street, the cable-industry's investment in broadband paid off last year, as new product lines posted impressive gains, National Cable & Telecommunications Association president Robert Sachs said Thursday.

According to the industry group, cable operators ended 2002 with 19.2 million digital-TV subscribers, up 26 percent from 15.2 million in 2001. Cable also had 11.3 million high-speed data subscribers, a 57 percent increase from the prior year's 7.2 million.

Local phone penetration reached 2.5 million, up 47 percent from 1.7 million.

While new services continue to win over consumers, investors lost confidence in cable. Shares in MSOs on average lost more than 50 percent of their value.

"2002 was really a paradox," said Sachs, who added that publicly traded cable companies had adopted uniform reporting standards, in part to regain the trust of Wall Street investors.

Late last month, the Federal Communications Commission released a study based on June 30, 2002 data that speculated cable would lose basic subscribers by the end of the year for the first time in cable industry history.

According to the NCTA, basic-cable penetration last year grew by 0.7 percent, from 72.9 million subscribers to 73.5 million. The NCTA obtained its data from Nielsen Media Research, while the FCC relied on Kagan World Media for its estimates.

Over the next 12 months, the industry's focus will center on adding two new services to the digital mix: video-on-demand and subscription VOD, Sachs said.

The NCTA also said FCC adoption of last month's digital-TV compatibility agreement with the consumer-electronics industry would be a priority.

Sachs said the NCTA would support passage of legislation if the FCC determined that it lacked authority to codify parts of the agreement into its rules.

Following last year's merger of Comcast Corp. and AT&T Broadband and this year's projected spin-off of Time Warner Cable from parent AOL Time Warner Inc., Sachs said he did not expect further consolidation.

"I think we are going to see a settling down of the industry," said Sachs, adding that cable was "still a place for medium-size and smaller companies."

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