December 2, 2014
NEW YORK -- Future of Cable Business Services -- Time Warner Cable has skyrocketed past $3 billion in revenue in 2014 for business services contracts, up from the $900 million it made in 2009.
Even more impressive, profitability is growing faster than top-line revenue, with Time Warner Cable Inc. (NYSE: TWC) enjoying margins of up to 61% in the business services sector, according to the company's Chief Operating Officer of Business Services Phil Meeks. Demonstrating his optimism for the future, Meeks also said Tuesday that he believes TWC can continue to harvest profitability while simultaneously taking market share away from incumbent providers.
And that's without even taking into account a potential merger with Comcast Corp. (Nasdaq: CMCSA, CMCSK).
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Today, Time Warner Cable is listed as the fifth-largest provider of Carrier Ethernet services in North America, but by Meeks' calculations, it will jump to number two in the market if and when the Comcast acquisition goes through. And he projects the new cable entity could overtake AT&T Inc. (NYSE: T) to grab the number-one spot within months of a merger deal closing.
Meeks' bold predictions are not without merit. In addition to significantly improving its business services run rate over the last year, Time Warner Cable has put several processes in place that should keep the momentum rolling. For one thing, the company has invested heavily in its physical infrastructure. Among other initiatives, TWC has created a new category of "platinum nodes" that are specifically deployed in regions with a heavy concentration of commercial services customers. These carrier-class nodes offer greater redundancy, highly proactive service monitoring, and more. By the end of the year, Time Warner Cable will have more than 3,000 platinum nodes in place.
Meeks has also introduced more standardization and automation into the business services organization. He noted that Time Warner Cable was able to reduce the number of days required to install a new service even as order volume increased 30% in 2014. "The way you do it," said Meeks, "is build a standard operating model where the work flows through the business the same way everywhere."
Traditionally, cable has been very decentralized, but creating different processes to accomplish the same result in different regions, or with different customers, isn't an efficient way to scale. "You can't automate things 18 different ways," quipped Meeks.
To put TWC's success in context, it has been surpassed in business services revenue among cable operators only by Comcast. The two companies together account for roughly $7 billion of the nearly $10 billion in revenue the cable industry is on track to earn this year. Cox Communications Inc. is nearing the $2 billion mark, and Charter Communications Inc. is closing in on $1 billion. (See US Cable Nears $10B in Business Service Revenues.)
— Mari Silbey, special to Light Reading
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