& 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
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    LRTV Documentaries
    LRTV Report: Mobile Core Innovation

    4|28|16   |   25:32   |   (0) comments


    Hear from multiple industry experts from Deutsche Telekom, SK Telecom, Heavy Reading, Huawei, Cisco, Ericsson, Nokia, NEC and many more about developments in the mobile core as operators virtualize their IMS and evolved packet core systems and prepare for a 5G world.
    LRTV Huawei Video Resource Center
    NFV World Congress Highlight

    4|26|16   |     |   (0) comments


    The highlight of the NFV World Congress contains exciting telecom news. Join us for an inside look at Huawei's ICT 2020 plan and its latest collaboration with industry leaders.
    LRTV Interviews
    Unified Comms Finds Its Voice

    4|25|16   |   03:44   |   (0) comments


    Peter Quinlan, VP of UCC Product Management at Tata Communications, talks about the evolution of the unified communications and collaboration services sector and how voice is now a big part of current developments.
    LRTV Documentaries
    So... What Do We Do Now?

    4|25|16   |   03:24   |   (0) comments


    After a long hiatus, Max Dingman, the CEO of a GeeGhiz, returns for a motivational board room pep talk.
    LRTV Documentaries
    NAB 2016 Highlights

    4|21|16   |     |   (0) comments


    Light Reading's Cable/Video Practice Leader Alan Breznick climbs down from the slots to tell us about the latest news in broadcast technology at NAB 2016 in Las Vegas.
    Between the CEOs
    CEO Chat: Deepfield's Craig Labovitz

    4|21|16   |     |   (0) comments


    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.
    Shades of Ray
    Leading Lights 2016: Shortlists Announced

    4|20|16   |   0:53   |   (0) comments


    The judging is over and the Leading Lights 2016 shortlists have been published -- you can see who made the cut by clicking on this link.
    LRTV Custom TV
    Introducing MulteFire – Qualcomm at MWC 2016

    4|18|16   |   3.29   |   (0) comments


    MulteFire is the latest option for using LTE in unlicensed spectrum. As oppose to its close 'siblings', LAA and LTE-U, MulteFire operates solely in unlicensed spectrum, which enables it to offer the best of two worlds – LTE-like performance with WiFi-like deployment simplicity. In this interview, Sanjeev Athalye, Sr. Director, Product Management at Qualcomm ...
    Between the CEOs
    CEO Chat: Grant Van Rooyen of Cologix

    4|18|16   |     |   (0) comments


    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.
    LRTV Huawei Video Resource Center
    ONS 2016 – Demonstration of Huawei's NetMatrix Multi-Vendor SDN Orchestrator

    4|15|16   |     |   (0) comments


    This demonstration shows how Huawei's NetMatrix SDN Orchestrator (SDN-O) addresses an operator's core service agility needs for services spanning multi-domain, multivendor networks: it includes a demonstration of:
    - Rapid New Service Design: using YANG to model a complex example of multi-domain, multivendor L3VPN network connectivity service that ...
    LRTV Custom TV
    AT&T Wants to Own North Carolina

    4|15|16   |     |   (1) comment


    Venessa Harrison, president of North Carolina for AT&T, tells how the company will expand its GigaPower service beyond the seven N.C. cities it already serves.

  • This blog, sponsored by AT&T, is the second part of a ten-part series examining next-generation broadband technologies titled "Behind the Speeds."
  • LRTV Interviews
    Will NC Be First Gigabit State?

    4|15|16   |     |   (1) comment


    Alan Fitzpatrick, co-founder of Charlotte Hearts Gigabit, spells out the state's progress in at least starting to wire nearly every major market for gigabit service.
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    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
    Ultra-Broadband Summit, Hong Kong
    Iain Morris, News Editor, 4/27/2016
    GoT Fans Curse HBO (Not Right) Now
    Mari Silbey, Senior Editor, Cable/Video, 4/25/2016
    Mitel Asks: What Time of Day Do You Shower?
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/25/2016
    Analysts More Than Bullish on Comcast MVNO
    Mari Silbey, Senior Editor, Cable/Video, 4/22/2016
    Charter Jumps Gun on TWC Restructuring
    Mari Silbey, Senior Editor, Cable/Video, 4/26/2016
    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

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.