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Cablevision Looks to Data as Great Savior

Alan Breznick
8/7/2014
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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

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KBode
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KBode,
User Rank: Light Sabre
8/7/2014 | 4:47:39 PM
Re: Competition
..."they must have some secret customer strategy they hope surely will keep them going."

I think it's probably called "Dolan waits for a sale to Comcast, Cox or Charter in a few years." 
kq4ym
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kq4ym,
User Rank: Light Sabre
8/7/2014 | 4:34:43 PM
Re: Competition
One wonders what the magic bullet might be for Cablevision. As pointed out, "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."

If they're not chasing the competition, they must have some secret customer strategy they hope surely will keep them going.
KBode
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KBode,
User Rank: Light Sabre
8/7/2014 | 3:04:14 PM
Re: Competition
Yes, I thought that was curious as well.

They've historically steered clear of data caps, but this executive team seems like the sorts that would be very interested in monetizing usage once cord cutting accelerates and people inevitably begin trimming digital voice products in broader scale as wireless call quality improves with VoLTE.
cnwedit
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cnwedit,
User Rank: Light Beer
8/7/2014 | 3:01:34 PM
Re: Competition
Cablevision was a pioneer on many fronts -- they fought the network DVR battle, for instance. It's both puzzling and sad now that they seem to be still saying the right things but not backing up the big talk. 

And hearing anyone talk about monetizing WiFi without saying EXACTLY how is always a red flag for me. 
KBode
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KBode,
User Rank: Light Sabre
8/7/2014 | 2:48:59 PM
Re: Competition
It's unfortunate to see, because Cablevision used to lead the market in terms of pushing the speed and service envelope. Early on they were a real innovation pioneer, and I saw customers reward them for it. They've made it very clear in recent years they're simply not competitively pressured (or interested) to move on speed or price.
MordyK
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MordyK,
User Rank: Light Sabre
8/7/2014 | 2:44:19 PM
Re: Me 'n Guitar Jimmy
Big talk about broadbands potential from Cablevision, but as a Brooklyn resident in their territory I still see that all their promotions are for triple play and zero effort targeting broadband only or broadband+voice.
Liz Greenberg
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Liz Greenberg,
User Rank: Light Sabre
8/7/2014 | 2:44:11 PM
Re: Me 'n Guitar Jimmy
Given that internet access drives almost everything now, it seems like a better measurement as well.  Another thought is to list internet only, video only, and combined thereby being able to get a true picture of total subscribers.  To be extremely accurate add those who also get voice services to the mix. The world is certainly not just video subs any more.
Liz Greenberg
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Liz Greenberg,
User Rank: Light Sabre
8/7/2014 | 2:42:22 PM
Re: Competition
@kbode I think that your last sentence is the true summary...not much in the way of true competition.  To look at the Optimum website they seem convinced that they are not only competitive for features, including speed, but also price.  Hmmm...I wonder how their customers feel?
mendyk
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mendyk,
User Rank: Light Sabre
8/7/2014 | 11:26:23 AM
Me 'n Guitar Jimmy
I don't like admitting this, but I agree completely with James Dolan on the need for a massive shift in emphasis from video subs to broadband. The irony though is that it's content owners like Cablevision (through MSG and other properties) that are making video service less and less attractive for operators. And that's not even factoring in the damage inflicted on the Knicks and Rangers over the past 15 or so years.
KBode
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KBode,
User Rank: Light Sabre
8/7/2014 | 10:32:09 AM
Competition
They won't boost speeds to match their primary competitor. They're also now refusing to seriously compete on price with their primary competitor.

Ah, U.S. broadband competition, where you get to have that choice (aka not very much actual competition at all).
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