& cplSiteName &

Moffett: Watch for Telco 'Wounded Animals'

Mari Silbey
12/4/2017
100%
0%

NEW YORK -- Future of Cable Business Services -- For all that Wall Street remains hyper-focused on the cable video market, financial analyst Craig Moffett says he rarely gets a question from investors about how cable operators are doing in the business services sector. That's no small oversight. The top four US cable companies will rake in more than $16 billion in commercial services revenue this year, according to Heavy Reading's latest projections.

And, according to Moffett, the business services sector is now virtually entirely responsible for offsetting cable's continuing residential video market declines.

Here's how the numbers break down. Using Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Charter Communications Inc. as proxies (largest cable companies, therefore largest impact), if you multiply the decline in the cable video business with its diminishing share of importance to the cable bottom line, the overall loss for cable companies amounts to about one percentage point of business per year. At the same time, if you combine the growth rate in business services with that sector's share of the total cable financial pie, that amounts to an increase of about one percentage point per year.

"They are like matter and anti-matter," says Moffett, "that will cancel each other out."

Craig Moffett, senior research analyst at MoffettNathanson, speaks at the Light Reading Future of Cable Business Services event
Craig Moffett, senior research analyst at MoffettNathanson, speaks at the Light Reading Future of Cable Business Services event

The good news is that since Moffett projected the importance of cable business services two years ago -- saying at the time "there will be more and more and more pressure going forward on business services to deliver the goods" -- the sector has held its own. (See Moffett: Business Services Critical to Cable Growth.)

The bad news is that as cable companies lean on telcos in the business market, there's an unintended negative consequence. Not only are cablecos eating away at telcos' market share, but they're also contributing to serious price deflation. Price declines are bad for cable companies, but they're far worse for telecom operators that have relied on steady business services revenue for years.

"[The] incumbents are increasingly wounded animals," says Moffett. "And that is a very dangerous position. It means that they will have to be much more aggressive in trying to moderate the rate of decline. It is ... less than a zero sum game now that the market has started to secularly decline."

In other words, cable companies may be rejoicing in their business services growth now. But with shrinking financials in the sector as a whole, there's likely to be all-out war as telcos grow desperate in the future to protect their profits.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Featured Video
From The Founder
Light Reading founder Steve Saunders grills Cisco's Roland Acra on how he's bringing automation to life inside the data center.
Flash Poll
Upcoming Live Events
February 26-28, 2018, Santa Clara Convention Center, CA
March 20-22, 2018, Denver Marriott Tech Center
April 4, 2018, The Westin Dallas Downtown, Dallas
May 14-17, 2018, Austin Convention Center
All Upcoming Live Events
Infographics
SmartNICs aren't just about achieving scale. They also have a major impact in reducing CAPEX and OPEX requirements.
Hot Topics
Here's Pai in Your Eye
Alan Breznick, Cable/Video Practice Leader, Light Reading, 12/11/2017
Verizon's New Fios TV Is No More
Mari Silbey, Senior Editor, Cable/Video, 12/12/2017
Ericsson & Samsung to Supply Verizon With Fixed 5G Gear
Dan Jones, Mobile Editor, 12/11/2017
Juniper Turns Contrail Into a Platform for Multicloud
Craig Matsumoto, Editor-in-Chief, Light Reading, 12/12/2017
The Anatomy of Automation: Q&A With Cisco's Roland Acra
Steve Saunders, Founder, Light Reading, 12/7/2017
Animals with Phones
Don't Fall Asleep on the Job! Click Here
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed