& cplSiteName &

Cablecos Gain From Era of Telco Transition

Mari Silbey
3/17/2017
50%
50%

US telecom companies are navigating a rough patch in the residential broadband and pay-TV sectors. The combined toll of transitioning customers to next-generation IP video services and managing broadband losses as legacy Internet subscribers defect to cable alternatives means telcos are seeing a dangerous slide in subscriber numbers.

In the latest findings from Leichtman Research Group (here and here), the top US telecom operators lost residential broadband customers nearly across the board in 2016. The sole exception was Cincinnati Bell Inc. (NYSE: CBB), which gained 15,800 broadband subs on the year. Pay-TV results were also broadly negative, with AT&T Inc. (NYSE: T)'s U-verse losses wiping out its DirecTV gains, and Frontier Communications Corp. (NYSE: FTR) dropping 255,000 video customers in 12 months.

Only Verizon Communications Inc. (NYSE: VZ) managed to gain pay-TV customers among the telcos in 2016, but the addition of 59,000 new subs may be at the expense of higher revenues as consumers move away from the company's high-end TV product tiers and toward cheaper Custom TV packages. (See Verizon Uses Fios as Shiny Object in Q4.)

Cable companies didn't exit 2016 unscathed, but they did fare better than their telco brethren. In particular, cable operators racked up broadband subscriber gains as both AT&T and Verizon found themselves weighed down with legacy DSL infrastructure. Even as AT&T presses the gas pedal on fiber-to-the-home deployments, those new builds haven't been enough to counter DSL declines. In total, cable companies gained nearly 3.3 million subscribers in 2016, while telcos lost nearly 600,000.


Want to learn more about cable's broadband future? Sign up now for Light Reading's Cable Next-Gen Technologies & Strategies event on March 21-22, at the Curtis Hotel in downtown Denver.


The pay-TV story is more complex. Only Comcast Corp. (Nasdaq: CMCSA, CMCSK) among the cable companies managed to gain subscribers, a major feat as more consumers look toward over-the-top video options. Both Charter Communications Inc. and Altice lost significant numbers (187,000 and 111,000 respectively), but did so as their telecom competitors also struggled.

One big question lies in how Charter and Altice plan to reverse recent declines. AT&T and Verizon are experimenting with new OTT video services in addition to offering TV over their legacy platforms. That's a strategy that may ultimately woo more customers, but could also hurt the bottom line.

Charter, in contrast, says it's focused on converting all of its systems to all-digital video delivery and unifying pricing and packing across a footprint that now includes former Time Warner Cable and Bright House Networks subs. It's not a sexy strategy, but Charter clearly thinks it will pay higher dividends. In addition, Charter recently released a new video app that makes a significant portion of its content available on phones, Rokus and smart TVs over a managed IP connection. (See Charter Launches 5G Field Trials and New Charter Spectrum App Goes Live.)

Altice is also avoiding the siren song of OTT delivery for now. Although details are scarce, the company instead says it's working on a new TV gateway, or "home entertainment hub," that it expects to roll out in the second quarter. (See Altice USA Sticks to High-Fiber Diet.)

All told, both cable and telecom companies are facing significant uncertainty in the pay-TV business. The difference between the two is that where broadband is concerned, it's the cable companies who are strengthening their grip on the market.

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

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
brooks7
50%
50%
brooks7,
User Rank: Light Sabre
3/27/2017 | 4:52:54 PM
Re: "transition"
Kb,

I have stated it for a long time.  Not suggest.  In fact, this is the reason that I considered Net Neutrality the worst thing for the consumer of all time.  It fixed a problem that didn't exist, while taking all the political capital and throwing it away.  Is NN wonderful?  Yes - great...but Cogent admitted PUBLICALLY that they were the ones slowing down Netflix NOT Comcast.  So, as far as I can tell other than some IOCs screwing up years ago, nobody ever degraded performance.  And yet, we have an antiquated model for investing in Broadband Infrastructure.  So either we turn them all back to Rate of Return carriers (which I think is practically impossible), go through Structural Separation (slghtly less impossible) or Turn Residential Broadband with escalating service requirements (call it 25M today 100M in 2020 and 1Gbps in 2030 as an example).  CAF and all its variants replace CAPEX that was going to be spent with government money.  It does NOT go into places that were not going to have it done anyway.  Now, I will get complaints by the odd overbuilder or CLEC...but the truth is that the work they do covers such a small part of the US population that it does not matter.  Local to me Sonic has fewer FTTH subscribers than we used to install with Verizon via FiOS EVERY DAY.

seven

 
KBode
50%
50%
KBode,
User Rank: Light Sabre
3/27/2017 | 12:04:33 PM
Re: "transition"
"There has not yet been a regulatory method to encourage the investment."

Are you daring to suggest that throwing billions at companies -- then failing utterly to track how this money was spent -- hasn't resulted in world-class telecom infrastructure? :)
brooks7
50%
50%
brooks7,
User Rank: Light Sabre
3/27/2017 | 11:14:05 AM
Re: "transition"
Verizon and AT&T have taken different paths to minimize their investment in Residential Broadband.  Given that this is not a mandatory investment, it makes business sense.  There has not yet been a regulatory method to encourage the investment.  My take is (and has been for some time) that the only way is to make residential broadband a universal service and manage it as a utility.

seven

 
karanbir.saluja
50%
50%
karanbir.saluja,
User Rank: Light Beer
3/27/2017 | 9:30:14 AM
Maybe Customer Satisfaction & Experience can Help
Digitization has given a major makeover to the communication services industry, leaving telcos & ISPs with the only option, to trasnform or to die. Being a service provider, if you know how to ensure customer satisfaction using the right technology evolution, you can easily ride over the digital transformation wave. At the other end, there will be a successful business value, which Gartner has predicted that only 30% of service providers are expected to crossover the digital transformation hurdle.
KBode
50%
50%
KBode,
User Rank: Light Sabre
3/24/2017 | 3:38:35 PM
"transition"
I think "transistion" is a nice way to put it.

Another way to put it is AT&T and Verizon don't want to spend money to upgrade massive swaths of their DSL networks. And that many second tier telcos (CenturyLink, Windstream, Frontier) are only modestly upgrading highly selective parts of their network because they A. don't see real competition and B. took on so much debt gobbling up AT&T and Verizon's unwanted POTS users that they lack the funds to engage in FTTN/FTTH at any real scale.
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
3/21/2017 | 3:32:05 PM
Re: Losing subscribers
I think OTT offerings are going to have to be part of the equation here. 

Yes, I know this does result in a bit of cannibalizing exiting services. But what choice do these companies have? Sell an internet package with a great content bundle. That's probably a great way to get customers onboard without totally losing them. 
FbytF
100%
0%
FbytF,
User Rank: Light Sabre
3/20/2017 | 4:38:14 PM
Losing subscribers
The question is how many lost subscribers are intentional?  It seems traditional telcos have little interest in wireline broadband customers and instead focus on wireless customers.  I live in a non FiOS Verizon territory and really only have one choice for Internet service, unfortunately its Comcast.  Verizon can only offer 1.5M DSL, seriously, who signs up for this.  So reluctantly every month I send those morons at Comcast $255 for TV and Internet. Where's the competition?  I could cut about $70 off my Comcast bill if I took their triple play offer but I need a reliable phone service. I know people who have FiOS and they have their complaints too but at least they have options.  My point is, Comcast is taking customers from VZ and AT&T in areas where they don't compete. In areas where they do compete it's probably a mixed bag split between Cableco and Telco's. All though I can't remember ever meeting anyone who loved Comcast service.
From The Founder
Either we perform a complete 'factory reset' on the way the telecom industry creates and deploys virtualization, or we face the consequences.
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 Custom TV
The Urgency of Commercial 5G Services

4|26|17   |     |   (1) comment


The progress of 5G has been closely monitored in the industry. At the 2017 Brooklyn 5G Summit, the sense of urgency for a commercial 5G launch had started to surface among operators.
Women in Comms Introduction Videos
How Diversity Helps Comcast Mirror Its Customer Base

4|26|17   |   2:55   |   (1) comment


Diversity brings innovation, creative ideas and a way to reflect the broad spectrum of your customer base, Comcast Director of Customer Experience Jenelle Champlin says.
LRTV Huawei Video Resource Center
Mobile Operators & Video

4|25|17   |     |   (1) comment


Ovum's Ed Barton discusses the latest mobile operator strategies for mobile video.
LRTV Custom TV
Infinera Introduces Instant Network

4|20|17   |     |   (1) comment


Mike Capuano, vice president of marketing at Infinera, discusses the advancement from Instant Bandwidth to new Instant Network capabilities, which include Bandwidth License Pools, Moveable Licenses and Automated Capacity Engineering (ACE).
Women in Comms Introduction Videos
Vodafone's Eubank on Sponsors, Mentors & Moving On Up

4|19|17   |   4:25   |   (1) comment


Vodafone America's Head of Operations Kimberly Eubank breaks down the difference between a sponsor and a mentor and shares why both made a big difference in her career.
LRTV Custom TV
NYC Auto Show: Are We Smart Yet?

4|18|17   |     |   (2) comments


The auto industry is facing some big transformations as electric vehicles, autonomous technology and connected cars are seen as the future of the industry. During the much-anticipated NY international auto show, there was an emergence of new technology and mobility service on the show floor. Aside from performance, brands like Lincoln, Hyundai, Honda, Mercedes and ...
LRTV Huawei Video Resource Center
The Impact of Video

4|18|17   |     |   (0) comments


David Mercer from Strategy Analytics discusses the impact of video on current strategies.
LRTV Custom TV
Pardeep Kohli Discusses Network Transformation & the Market Opportunity for the 'New' Mavenir Systems

4|13|17   |     |   (0) comments


In a brief discussion at MWC 2017, Heavy Reading analyst Adi Kishore talks to Pardeep Kohli, CEO, Mavenir Systems about the creation of the 'new Mavenir' and some of the key challenges facing operators in today's market. A key theme of the discussion centers around operator need for software-only, virtualized solutions and how they will need to adapt to ...
Women in Comms Introduction Videos
Tech Maverick Shares Her Tips for Gender Inclusivity

4|12|17   |   7:28   |   (0) comments


Wendy Hall Bohling, a corporate escapee, author and gender exclusivity consultant, tells her story of sexism, bias and progress along the road to gender equality in the workforce.
LRTV Huawei Video Resource Center
Huawei at MWC 2017

4|11|17   |     |   (0) comments


At Mobile World Congress 2017, the biggest mobile industry gathering of the year, Huawei showcased its new innovations and solutions with the theme "Open Road," which focuses on cloud, 5G, operation transformation, videos and consumer-oriented products. Its campaign has been recognized by three awards given by GSMA.
LRTV Custom TV
China Telecom NFV Infrastructure on RSD

4|6|17   |     |   (0) comments


Lynn Comp, senior director of market development of Intel, is joined by Chong Zhang, storage engineer at Inspur and Ou Li Yan, architect for technology strategies of China Telecom, for a discussion of what NFV brings.
LRTV Custom TV
Nokia's IMPACT Software Demo

4|6|17   |     |   (0) comments


Khamis Abulgubein of IoT market development at Nokia demonstrates IMPACT (intelligent management platform for all connected things), a software solution with a horizontal approach to managing any device on any application.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Brazos Hall - Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
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
Surprise! AT&T Markets 4G Advances as '5G Evolution'
Dan Jones, Mobile Editor, 4/25/2017
Did Verizon Outbid AT&T for Straight Path?
Dan Jones, Mobile Editor, 4/25/2017
First Year TIPs the Scale Toward Success
Denise Culver, 4/24/2017
Netflix Set to Enter China
Mari Silbey, Senior Editor, Cable/Video, 4/25/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
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 ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
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.