Despite losing broadband customers in the second quarter, Cablevision views data services and 'connectivity' as the key to future growth.

Alan Breznick, Cable/Video Practice Leader, Light Reading

August 7, 2014

3 Min Read
Cablevision Looks to Data as Great Savior

Battered by intense competition from Verizon FiOS, Cablevision Systems is increasingly viewing broadband and WiFi services as its great savior.

On their second-quarter earnings call Tuesday, Cablevision Systems Corp. (NYSE: CVC) executives spoke extensively about their plans to refashion the fifth-largest US cable operator as a "connectivity" company. With the MSO continuing to shed video subscribers to Verizon Communications Inc. (NYSE: VZ)'s FiOS and other rivals, they emphasized that broadband services, not video services, offer the true promise for future growth.

"We see the data product as more important than the video product to the customer right now," Cablevision CEO James Dolan proclaimed. "It's connectivity that the consumer really wants."

Consequently, Cablevision officials are focusing on boosting broadband speeds, improving service quality and rapidly expanding their WiFi network throughout the greater New York metro area. Just last week the company announced that it had expanded its Optimum WiFi network to more than 1 million hotspots, largely through the deployment of new, dual-band "smart WiFi" routers in residential broadband customers' homes.

As he has before, Dolan said that Cablevision plans to leverage its blossoming WiFi network to deliver new revenue-generating products and services to customers. But, as on past earnings calls, he declined to disclose what the MSO will offer and when it will start doing so. Instead, he indicated that the eventual offerings will encompass both fast transmission speeds and high quality-of-service.

"We have a strategic advantage there, one we have not gone out and exploited," he said. "But I think you can anticipate that we will… I think you should look for Cablevision to actually lead the way."

For more of Light Reading's coverage of cable WiFi services, visit our cable WiFi content channel.

But, if Cablevision is counting on broadband to save the day, it will need to do better than it did in the second quarter. In contrast with most major US MSOs, the company reported losing 9,000 high-speed data subscribers, after adding 8,000 in the first quarter. As a result, the company closed June 30 with 2.779 million broadband subs, down slightly from a year ago.

Cablevision actually suffered subscriber losses across the board in the spring quarter, which is traditionally the worst for most cable operators because of seasonal moves. Besides the 9,000 lost broadband customers, it shed 21,000 video customers and 7,000 voice customers, pushing its total residential customers down 21,000 to 3.165 million, as FiOS aggressively promoted triple-play packages for about $70 a month.

Notably, even with the broadband sub loss, Cablevision now has more data customers than video customers, due to its heavier losses on the video side. It thus joins New York neighbor Time Warner Cable Inc. (NYSE: TWC) and Charter Communications Inc. as the major US MSOs with more broadband subs than video subs. (See Cable Broadband Surpassing Video: Moody's.)

Despite the latest damage wrought by FiOS, Cablevision officials vowed to maintain their relatively new "disciplined pricing" strategy and not match FiOS discounts. They also vowed not to engage in an upstream speed war with Verizon, which just began rolling out symmetrical download and upload speeds for all of FiOS's speed tiers. Instead, they said, they will keep their maximum upload speed at its current 35Mbit/s level, at least for now.

"I have no interest in chasing that dog down the track," said Wilt Hildenbrand, senior advisor, customer care, technology and networks for Cablevision. But, he noted, "we have some bullets left in the gun."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

About the Author(s)

Alan Breznick

Cable/Video Practice Leader, Light Reading

Alan Breznick is a business editor and research analyst who has tracked the cable, broadband and video markets like an over-bred bloodhound for more than 20 years.

As a senior analyst at Light Reading's research arm, Heavy Reading, for six years, Alan authored numerous reports, columns, white papers and case studies, moderated dozens of webinars, and organized and hosted more than 15 -- count 'em --regional conferences on cable, broadband and IPTV technology topics. And all this while maintaining a summer job as an ostrich wrangler.

Before that, he was the founding editor of Light Reading Cable, transforming a monthly newsletter into a daily website. Prior to joining Light Reading, Alan was a broadband analyst for Kinetic Strategies and a contributing analyst for One Touch Intelligence.

He is based in the Toronto area, though is New York born and bred. Just ask, and he will take you on a power-walking tour of Manhattan, pointing out the tourist hotspots and the places that make up his personal timeline: The bench where he smoked his first pipe; the alley where he won his first fist fight. That kind of thing.

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