& cplSiteName &

Cable Broadband Surpassing Video: Moody's

Alan Breznick
7/28/2014
50%
50%

In a potentially game-changing shift for the cable industry, US MSOs will soon have more broadband subscribers than video subscribers for the first time in the industry's 65-year history.

In a new report issued last week, Moody's Investors Service predicts that US cable operators will amass more high-speed data customers than pay TV customers by next year, as they keep gaining more broadband users and shedding video viewers. In fact, the debt-rating agency calculates that the crossover point is already occurring, with both services now boasting about 50 million subscribers.

Several major US MSOs already have more broadband customers than video customers, or are closing in on the crossover point. Both Time Warner Cable Inc. (NYSE: TWC) and Charter Communications Inc. -- the second- and fourth-largest US MSOs, respectively -- now have more broadband than video customers, while Cablevision Systems Corp. (NYSE: CVC) may well have reached the crossover point at the end of the second quarter. (See Cable Leaves Telcos in Broadband Dust.)

Broadband replacing video as the anchor product for the industry could have both positive and negative effects for cable companies, according to Moody's. On the positive side, the rating agency notes, fewer video customers will lower cable operators' programming costs, which have been sharply rising for years. In turn, operators' profit margins should improve, because high-speed data is a higher-margin product than TV.

On the other hand, the Moody's report points out, "an eroding subscriber base for video also poses risks" for cable providers. That's because their economies of scale may suffer for such areas as technical and customer service, driving up costs per customer. In addition, cable operators that seem to be giving up their video base easily may see their brands suffer, as well.

Given these factors, the report suggests that it may make sense for some cable providers to unbundle their broadband and video offerings, and put greater emphasis on broadband, especially in less-competitive markets. The report stresses that such small and midsized cable operators and overbuilders as RCN Corp. , Grande Communications , and Wave Broadband have all built "sustainable" businesses with relatively low video penetration rates but much higher broadband adoption rates.

However, Moody's contends that cable operators in more competitive markets will likely need to maintain strong video offerings because of the danger of losing double-play and triple-play subscribers to telcos. In particular, the agency warns that such MSOs as TW Cable, Cablevision, and Cox Communications Inc. could struggle because their regions have significant overlap with the fiber buildouts of Verizon Communications Inc. (NYSE: VZ)'s FiOS and AT&T Inc. (NYSE: T)'s U-verse networks.


If you want to keep up with all the latest developments on the cable/telco broadband wars, keep your eyes glued to Light Reading's cable modem/CMTS channel.


"Cable providers' largely upgraded networks and high-speed capabilities can make them the first call for consumers seeking fast Internet connections," said Karen Berckmann, vice president and senior analyst for Moody's. "But if cable companies want to sell their video product as well, the onus is on them to provide a compelling video experience at an attractive price."

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

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/29/2014 | 8:57:28 AM
Re: Caps?
Putting in restrictions on broadband use to preserve video revenues would be a bad move. Cable operators clearly understand their future is in providing broadband service. That's the asset that needs cultivating. Video services aren't going away, but they aren't the growth part of the business.
KBode
50%
50%
KBode,
User Rank: Light Sabre
7/28/2014 | 6:20:29 PM
Caps?
"On the other hand, the Moody's report points out, "an eroding subscriber base for video also poses risks" for cable providers."

 

It makes one wonder if 2015 won't see a greater push toward usage caps as companies try to counter the potential lost TV revenues as broadband increasingly becomes more important?
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/28/2014 | 3:24:38 PM
Re: Let's not forget customer support/experience
Quality of customer care would definitely be an issue if there were a discernible difference among providers. In general, that's not the case with telecom or video services. A happy customer tends to be one who hasn't had to deal with customer service for a while.
Ray@LR
50%
50%
Ray@LR,
User Rank: Blogger
7/28/2014 | 12:27:00 PM
Let's not forget customer support/experience
In terms of the triple play/broadband battle in general.... 

I think it's key to remember that the quality of customer support and service also comes into play -- it can be just as important a criterion whne deciding to stay/leave/join a service provider as broadband speed, TV channel choice etc

For example, there are some people, I'm sure, who will certainly think twice about signing up with Comcast after the recent high-profile customer service meltdown that went viral on social media....

What Can We Learn From Comcast's Customer Service Nightmare?

http://www.serviceprovideritreport.com/author.asp?section_id=3234&doc_id=563289

 

 
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
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 Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
LRTV Huawei Video Resource Center
UBBS 2016 Highlights

5|12|16   |     |   (0) comments


Highlights of Huawei's UBBS event in Hong Kong.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
December 6-8, 2016,
June 16-18, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
WiCipedia: Short Skirts & Back-Up Plans
Eryn Leavens, Special Features & Copy Editor, 5/20/2016
Google Doubles Down on Machine Learning, AI
Mitch Wagner, West Coast Bureau Chief, Light Reading, 5/19/2016
Eurobites: Be More European, EU Tells Streaming Services
Paul Rainford, Assistant Editor, Europe, 5/20/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.