While the leveling off of basic cable subscribers is attracting media attention these days, the flattening of growth comes as no surprise to the cable industry. MSOs have been planning ? and spending ? to get ready for this eventuality for years, so the Kagan projection model has long accounted for it. We assume basic subs will remain level over the next ten years as MSOs roll out new services like data, telephony and VOD to capture more revenue from existing customers; revenue-per-sub is projected to double over the same period. The premise here is if cable is unable to win back market share from competitors such as DBS, the only way for the industry to grow is to aggressively roll out new bundled services in areas where satellite cannot ? namely symmetrical services like data and telephony.

For further explanation of subscriber projections, see ?Kagan Media Money? at www.kagan.com.

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