& cplSiteName &

Heavy Reading: Cable Biz Sales to Hit $8.5B

Carol Wilson
12/4/2013
50%
50%

NEW YORK -- Future of Cable Business Services -- Major US cable operators are on track to reach $8.5 billion in commercial service revenues this year, up more than 20% from nearly $7 billion a year ago, according to the latest research from Heavy Reading.

In his opening presentation here Wednesday, Light Reading Cable/Video Practice Leader Alan Breznick said US cable commercial revenues are still growing so strongly that they could hit $10 billion next year. Yet, even with that growth, there is still plenty of business opportunity left for cable, which today takes home just 6% of the annual US business telecom spend, he said.

Comcast Corp. (Nasdaq: CMCSA, CMCSK) continues to lead the pack with $2.4 billion in revenue through the third quarter of this year, nearly matching its full-year total of 2012. At this pace, Comcast will almost certainly become the first MSO to crack the $3 billion barrier for the full year, just a year after it became the first to reach $2 billion.

Time Warner Cable Inc. (NYSE: TWC) follows with $1.7 billion, close to its $1.9 billion for all of 2012. As a result, TW Cable will easily become the second MSO to cross the $2 billion line by year's end.

Privately owned Cox Communications Inc. , which was once the cable leader, is now well behind in third place with $1.2 billion, according to Heavy Reading estimates. But Cox, which took in an estimated $1.4 billion for all of 2012, is still well ahead of last year's pace.

Charter Communications Inc. has totaled $594 million through three quarters this year, also easily ahead of last year's performance. Cablevision Systems Corp. (NYSE: CVC)'s Lightpath unit has taken in $247.6 million so far this year while Suddenlink Communications has collected $229.2 million, rounding out the list. No figures or estimates are available for privately owned Bright House Networks .

"The only MSO not showing strong growth right now is Cablevision Systems' Lightpath unit, which focuses on mid-sized and larger firms," Breznick says. "That's why Cablevision execs said they would address the unit's laggard growth on the company's last earnings call."

For all that growth, however, cable is just beginning to tap its potential, Breznick notes. The US market of 27 million companies spends an estimated $130 billion to $140 billion on telecom services annually, meaning cable takes home only about 6% of that. Cable has particular opportunity in the very small and SMB market spaces, which represent the vast majority of the total number.

"Not only are these businesses that might feel neglected by their current service providers, but they commonly have access to cable hybrid fiber-coax (HFC) networks," Breznick notes. "The cable industry's HFC lines already pass more than three-quarters of the SMBs in the US."

The market opportunity in the very small/SMB market varies from about $50 billion for Comcast, to $21 billion for TWC, more than $10 billion for Cox, $9.5 billion for Charter, and up to $6 billion for Cablevision.

One thing cable must do to capture more of that opportunity, however, is to improve its business data satisfaction ratings, Breznick notes. Cable actually does well among very small businesses -- those with fewer than 20 employees. Four cable operators, led by Cox but including Cablevision, Charter, and Comcast, outranked Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T) and CenturyLink Inc. (NYSE: CTL) in the J.D. Power and Associates 2013 US Business Wireline Satisfaction Study. Only Time Warner Cable struggles with this market segment.

Yet, in the SMB segment, only Cox outlasted Verizon and Frontier Communications Corp. (NYSE: FTR) in the J.D. Power ratings. And in the enterprise segment, Time Warner Cable was the only MSO that scored well, beating Verizon and CenturyLink to top the list.

Breznick noted that cable still seems to be hurting from the persistent public perception that its services don't match the telecom players for quality and assurance. In a recent non-scientific poll on the Light Reading site, one third of respondents said cable's "poor reputation for service performance and reliability" was the industry's single biggest challenge. (See Cable Can't Shake Poor Reputation.)

— Carol Wilson, Editor-at-Large, Light Reading

(5)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
willtj3
50%
50%
willtj3,
User Rank: Light Beer
12/11/2013 | 10:10:28 AM
Re: Wow.... amazing growth!
I would agree, Alan.  They have been trying to combat this for a few years now.  They invested in increasing their FiOS/U-verse footprints, put together SMB specific bundles, targeted messaging and ads to this segment and most importantly upped their spend to get the word out. In other words they started paying attention to this base.  That being said, this is still a secondary market to them compared to the larger business segments so the level of their commitment is still somewhat of a question.

The SMB segment is still cable's primary focus so I would expect them to continue to take share, albeit at slower growth rates.  After all the pie is only so big and there is an inertia effect. Switching services is still viewed as a negative expereince so businesses need a compelling reason to make the move.  One theory for the large growth rates in this segment to date is that cable picked off the low hanging fruit that was already fed up with low performing telco services. Time will tell if the above changes made by the major telcos will help stem the tide or cable cos will continue to capitalize.
albreznick
50%
50%
albreznick,
User Rank: Blogger
12/10/2013 | 9:54:26 PM
Re: Wow.... amazing growth!
So how do you expect the telcos to respond to this invasion of their traditional turf? Will they continue to let cable cos pick away at their SMB customers and just defend their enterprise base? Or will they aggressively use FiOS, U-verse and the like to strike back? I'm betting on the latter right now. They can't possibly like what they're seeing in the marketplace right now.
willtj3
50%
50%
willtj3,
User Rank: Light Beer
12/4/2013 | 4:38:43 PM
Re: Wow.... amazing growth!
According to the article the $8.5B is 6% of the total opportunity. Having performed numerous marketing sizing studies in this industry the numbers are directionally correct. (All depends on what services you throw in the mix, whether or not you include home based businesses etc). Enterprise is a big ARPU business but decidedly much smaller on the whole than the v/SMB market. Setting aside the CTBH business, cable will continue to target this v/SMB market to meet its growth objectives (while picking off segments of the larger businesses). Telcos still don't pay as much attention as they should here and cable is actually developing credibility. Cable will continue to steal telco share while also layering in additional services (eg cloud) to their existing base. This segment is where "telcoland" is feeling the brunt of the pain. I see pain here as not just revenue lost now, which as mentioned earlier is probably on the margin for big business telcos, but the increasing YoY loss of business market share. For the smaller telcos loss of both revenue and businesses are major issues. Incidentally, while cable has started to have a little success in the Enterprise space the telcos own this market. To nobody's surprise at this point cable lacks the credibility and some of the operational capabilities needed to serve these businesses to consistently win.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
12/4/2013 | 12:37:40 PM
Re: Wow.... amazing growth!
 

Ray,

 

From the article:

"The market opportunity in the very small/SMB market varies from about $50 billion for Comcast, to $21 billion for TWC, more than $10 billion for Cox, $9.5 billion for Charter, and up to $6 billion for Cablevision. "

That says there is a TMO (Total Market Opportunity) $96.5B and that claim is JUST for the small to mid size businesses.  That $8.5B is less than 10% market share, if those numbers are accurate.

That would tell me that those numbers are in the chaff for any major business telco and would not be noticed.  Now I have to believe that you are more right with your comment and there must be some error in the numbers.

seven

 
Ray@LR
50%
50%
Ray@LR,
User Rank: Blogger
12/4/2013 | 10:05:58 AM
Wow.... amazing growth!
Someone in telcoland must be hurting, right?

Think what the MSOs could do if they upped their game on enterprise customer service!!
From The Founder
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
Masergy: It's Time for SD-WAN Options

6|28|17   |   03:09   |   (0) comments


Paul Ruelas, director of network products for Masergy, explains how adding SD-WAN has changed the service mix for his company's customers. In some cases, the change is incremental, enabling more granular customer control. Masergy's newest version, SD-WAN Go, gives up some of those controls for a streamlined version targeting mid-sized customers with the most ...
Women in Comms Introduction Videos
Intel Ushers in the Revolutionary 5G Era

6|28|17   |   5:00   |   (1) comment


5G will bring job opportunities for women in telco and IT, as well as a whole new era of communications for consumers and industries of all kinds, says Caroline Chan, vice president and general manager of the 5G Infrastructure Division at Intel.
LRTV Custom TV
VeEX at ANGA COM

6|27|17   |     |   (0) comments


At ANGA COM 2017, Cyrille Morelle, president and CEO of VeEX, updates Alan Breznick with VeEX's new products and technology. This includes VeSion cloud-based platform for network monitoring, AT2500-3G advanced spectrum analyzer and MTTplus-900 WiFi Air Expert module. He also comments on DOCSIS 3.1 deployment and Remote PHY technology.
LRTV Custom TV
The Overall Objective Is to Win the Game

6|26|17   |     |   (0) comments


SCTE•ISBE's Chris Bastian discusses Energy 2020's success to date and the importance of a flexible approach that allows for changes in specific strategies in order to reach significant milestones.
LRTV Interviews
CenturyLink: Let's Get Past SD-WAN Hype

6|23|17   |   04:02   |   (0) comments


Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment


Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments


Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments


At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments


ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments


A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments


As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments


IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Montcalm Marble Arch
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
No Imagination: UK Chip Biz Goes Up for Sale
Iain Morris, News Editor, 6/22/2017
Does AT&T Deserve Time Warner?
Mari Silbey, Senior Editor, Cable/Video, 6/23/2017
Verizon Takes 'One Fiber' to More Cities
Mari Silbey, Senior Editor, Cable/Video, 6/22/2017
AT&T Expects 5G in Late 2018 or Early '19
Dan Jones, Mobile Editor, 6/22/2017
European Broadcasters Team Up to Take Down Netflix
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 6/22/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.