Intriguing quote from Forrester Research analyst Maribel Lopez in an Associated Press article today about the major RBOCs' TV strategies: "Telcos expect to grab 20 percent-30 percent of the market just by showing up. We think acquiring TV subs in a three-way battle will be much tougher than that.... Assuming telcos execute flawlessly, they still have to steal customers in a saturated market whose growth is largely tied to population growth." The article reports that the major telcos are seeing higher stock values following a tough 2005, citing wireless growth and cost-cutting, but noting that the rise in stock price comes as the telcos suffer continued loss of phone customers to VoIP providers, including Cable. In fact, as of the end of the second quarter, the number of Internet-based phone customers had risen 150% from a year earlier, to 7 million. As we all know by now, the loss of phone customers is driving Verizon and AT&T's push to upgrade their networks with fiber. Speaking of which, Verizon says its $20 billion fiber-to-the-home project had helped garner 110,000 FiOS customers at the end of the second quarter—“a level the company said represented an average market penetration of 15 percent,” according to the AP.

But some analysts aren't sure that early success can be seen as indicative of how the battle will play out. Already, Verizon's FiOS rollout has sparked a nasty arms race in the Long Island region of New York, where cable provider Cablevision Systems Corp. has been boosting its Internet speeds in retaliation. Meanwhile, in a possible sign of the technological challenges phone companies face with their foray into cable, the new AT&T has fallen well behind with its original timetable for U-verse. That service, which uses Internet technologies to deliver TV over a copper phone line, costs only a fraction of the investment of FiOS, but the company has yet to show enough confidence for a full-scale market launch.