TWC CEO: Cable Sub Growth Still Slowing
Britt, speaking at the UBS Global Media and Communications Conference in New York, reiterated that Time Warner Cable saw RGU (revenue-generating unit) growth slow dramatically in October versus the year before, as consumers started to close their pocketbooks. (See Time Warner Cable Braces for Bad Economy and Cable Crunch? )
"It has continued," Britt said. "Some weeks are certainly better than others, but it's certainly slower than it was a year ago." He noted that he couldn't "remember an [economic] environment like this during my career."
The good news, Britt said, is that cable offers "services that people are not going to disconnect easily or quickly."
If he had to size up the offerings, he expects video to "remain very strong," because "history would say people watch more TV during bad times."
But, Time Warner Cable, is seeing some "softness" in the premium video category. The MSO, Britt explained, has seen demand for DVRs drop 40 percent from last year, but couldn't pinpoint whether that's a reflection of the economy or the maturity of the technology.
Broadband, he stressed, "may be even more important than TV." Cable-fed voice services, he warned, may be the weakest of the three, noting that some customers are more than ever willing to cut the landline in favor of a wireless voice service.
Although Time Warner Cable is seeing "general weakness all over," it's more pronounced in areas like Ohio, which is heavily dependent on the auto industry and "in really bad shape," Britt said.
Time Warner Cable is not giving any specific guidance yet, but Britt said capital expenditures for 2009 will certainly drop from 2008 levels. The MSO's capex reached $2.6 billion through the first nine months of 2008, up $167 million compared to the first nine months of 2007.
Roughly 70 percent of the MSO's capex is "success-based" (i.e., tied to modems, set-tops, and other gear that's deployed and purchased as customers sign up for new services), so that figure will come down naturally as fewer customers sign up for new services. The one exception might be the addition of hi-def set-top boxes, Britt said.
Docsis 3.0 and WiMax
Britt also offered an update on Time Warner Cable's progress with Docsis 3.0 and its wireless venture with the new Clearwire LLC (Nasdaq: CLWR). (See Cable Plays Clearwire Card.)
Britt maintained the stance that the MSO still has no plans to deploy Docsis 3.0-based Internet services widely but will relegate launches only where it's needed from a competitive standpoint. Time Warner, he stressed, will be careful not to be dragged into a speed war that has "no consumer meaning." (See 'Surgical' Strikes .)
Although the capacity offered by Docsis 3.0 has significant benefits for subs who swap massive files, Britt suggested that the speeds created by wideband have as much to do with "bragging rights" among Internet users.
"To some extent the focus on speed is more about marketing that it is about reality," Britt said, suggesting that the speeds offered by Time Warner Cable today are fast enough to handle the needs of most consumers.
Britt, however, was fairly bullish on the prospects of extending services via WiMax and the MSO's investment in Clearwire, rather than providing the market with just another mobile voice service.
"I'm envisioning a world where there's a robust… 4G wireless network that can be fully integrated with our network and the products that we offer. The world has enough cellphone companies."
He said Time Warner Cable expects to offer WiMax services "in at least one market in this coming year."
— Jeff Baumgartner, Site Editor, Cable Digital News