Cable Business Services

TWC Rakes In $3B for Business Services

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).

Want to read more on this topic? Check out our cable business services channel here on Light Reading.

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

VictorRBlake 12/4/2014 | 5:42:15 PM
Re: TWC and Comcast combined Ethernet services There are varying approaches to CTBH even within any one MSO because of the various needs of wireless operators (T1/T3 -> PWE -> IP/Ethernet today). So it depends on when a particular installation happened and who the operator was. They will all converge to IP/Ethernet -- albeit transport can be over PON, POTS, DWDM, or even baseband or broadband Ethernet.

What's more important is Ethernet between business locations. It's one thing for a wireless operator like VZW to go around to each MSO and buy CTBH. It's another to expect a Fortune 500 company to go to each MSO to piece together the parts it needs for a national footprint MEF service. Today the choices are to do that (piece together) or go to a large national footprint like VZ or AT&T. Adding Comcast/TWC to the mix would increase the competition for most locations (although still not 100% of the country obviously).
jbtombes 12/4/2014 | 5:09:00 PM
Re: TWC and Comcast combined Ethernet services Wonder if the regulators and others who object to this merger would consider the market efficiencies of more competition in carrier-grade Ethernet. The combined footprint should be impressive and largely compatible. Though as far as divergence goes, I do recall TWC and Comcast taking different approaches on using Ethernet for cell backhaul.  
VictorRBlake 12/3/2014 | 8:34:28 AM
TWC and Comcast combined Ethernet services When Comcast and TWC complete their merger, they will be better able to offer competitive Carrier Ethernet and Metro Ethernet Services to businesses to compete with Verizon and AT&T. Because each of Comcast and TWC's operations do not currently overlap with each other at all, today -- business customers that want Ethernet services from one location to another don't have a single solution. This offers literally the first opportunity for considerably large scale Ethernet services for large business customers. It is likely to be a huge savings for businesses that are both transitioning from private line to Ethernet services and at the same time, moving at least some if not all IT services to the cloud -- thus needing higher capacity Ethernet services.
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