Cable One is piloting a new prepaid option for Internet customers that starts at $35 for 30 days of access. The operator continues to study whether to add mobile to the broadband bundle.
Cable One is kicking the tires on a pay-as-you-go option for broadband services, but still isn't convinced it needs to add mobile to the services bundle.
Cable One is piloting the pay-as-you-go option as it explores new ways to support price-sensitive consumers that no longer have access to the financial benefits provided by the now-defunct Affordable Connectivity Program (ACP).
Cable One's prepaid Internet services trial, which does not require credit checks, starts at $35 for 30 days of access and download speeds of up to 1 Gbit/s and upstream speeds up to 50 Gbit/s, according to the operator's web site.
"This is a pilot program, and we are just starting to gather insights from it, which will inevitably lead to program evolution as we refine how to best serve this cohort of [price-sensitive] customers moving forward," Cable One CEO Julie Laulis said last Thursday (November 7) on the operator's Q3 2024 earnings call.
Reach is powering Cable One's pay-as-you-go product, a company official said. Reach's platform is also being used by several small and midsized cable operators that have launched or plan to launch mobile offerings.
If Cable One turns this into a permanent option, it would join a small group of US cable operators that have launched a prepaid Internet product. Comcast, which initially launched a prepaid Internet product back in 2012, has since extended the pay-as-you-go model to its mobile and video products under the "Now" brand.
Cable One's pilot emerges as the operator explores ways to return to broadband subscriber growth. The mid-sized operator shed 5,400 broadband customers in Q3. That loss would have been reduced to just 200 without the impact of the ACP, said the company.
"We believe there are early signs that competition is stabilizing," Laulis said. "Specifically, we have observed more rational pricing from some of our competitors reflecting the economic realities of our markets."
Cable One still has no immediate plans to add mobile to the broadband bundle, but continues to explore the idea. The operator examines mobile, including the financial impact of such an option, "on at least a biannual basis," Laulis said.
As a member of the National Content & Technology Cooperative (NCTC), Cable One does have access to the NCTC's mobile agreements with AT&T and Reach. Or it could travel the path of Mediacom Communications, an NCTC member that has opted to carve out its own MVNO agreement.
Mobile remains a glaring gap in Cable One's tool kit, but it could be a gap better filled by a potential M&A partner, according to MoffettNathanson analyst Craig Moffett.
"Adding mobile is something that would be much easier for someone else to fix; indeed, that's the biggest reason we believe Cable One is an attractive acquisition target," he explained in a research note (registration required) following Cable One's Q3 call.
Moffett views Cable One as a potential acquisition target, believing the operator could be had for less than the $3,500 per connected home – the amount currently being paid by others for fiber network overbuilders.
Financial snapshot
Cable One posted Q3 revenues of $394 million, down 6.4% versus the year-ago quarter.
Cable One's average revenue per user (ARPU) declined 7.1% to $79.61. That's still the highest in the cable industry, and remains nearly 15% higher than Charter's, according to Moffett.
The operator shed another 7,200 video subs in the quarter. While the Q3 video loss improved from a year-ago loss of 8,700, Cable One's video subscriber base is still declining by 20% year-over-year, Moffett noted.
Editor's note: The story has been corrected to note that Cable One's prepaid Internet product offers downstream speeds up to 1 Gbit/s rather than up to 50 Mbit/s, and that Reach is the platform provider for Cable One's new pay-as-you-go broadband product.
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