According to an updated forecast from SNL Kagan, the cable industry is positioned to continue market share growth in the residential phone business, but the gains could prove tenuous. The study, titled "Cable Looks for Phone Share Gains Amid Change," explores the competitive telephony landscape, projecting the continued decline of traditional wireline services provided by telcos and the ensuing battle for market share between cable and wireless providers.

The analysis illustrates the telcos’ loosening grip on the market and the opportunity created for alternative services. In the past two years, the telcos’ share has dwindled from 90 percent to 74 percent of total connections, with the five-year outlook estimating another 23 percent drop. The main competition in the space has come from the increased availability of IP voice services from cable operators coinciding with the phase-out of older switched-circuit technology. SNL Kagan projects a steady increase in IP voice subscribers, reaching 31.4 million in 2012, putting cable’s market share at 26 percent. The 10-year forecast indicates cable penetration of homes passed stabilizing at 27 percent.

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The FCC’s Universal Service Fund survived a legal challenge that claimed the $8 billion subsidy program is unconstitutional as currently constructed.

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