Cablevision Begins Wideband Assault
"We haven't announced a marketing strategy... but [Docsis 3.0] will be operational this year," said Cablevision COO Tom Rutledge Thursday morning during the MSO's second quarter earnings call.
Docsis 3.0, also known as "Wideband," bonds together multiple 6 MHz channels to produce shared speeds in excess of 100 Mbit/s. So far, Comcast Corp. (Nasdaq: CMCSA, CMCSK) is the only U.S. MSO to make a significant commitment to the technology this year, planning to wire up to 20 percent of its platform for Docsis 3.0 by year's end, and across the board by mid-2010. (See Comcast Enters the Wideband Era .) Like Cablevision, Time Warner Cable Inc. (NYSE: TWC) is grappling with FiOS, and has announced plans to begin tests of Docsis 3.0 in New York later this year. (See Britt: Docsis 3.0 Coming to NYC.)
Today, Cablevision's fastest Docsis-based Internet service tier caps the upstream at 30 Mbit/s downstream and 5 Mbit/s upstream.
Rutledge said the capital spend for the Wideband project is connected with the MSO's plans to throw a WiFi canopy over its New York and Connecticut footprint.
Announced in May, Cablevision's WiFi plan, which will take more than two years to complete, will provide "free" access to the MSO's high-speed Internet subscribers. Cablevision may also offer access to the wireless network to non-subs for a fee. (See Cablevision High on WiFi.) The MSO has not announced any vendor partners, but there's been visual evidence suggesting that Cisco Systems Inc. (Nasdaq: CSCO) and BelAir Networks Inc. are in the mix, or at least involved in the MSO's technology bake-off.
"WiFi construction is progressing and you will be hearing from us soon about our launch plans," Rutledge said. "We think that will cement our relationship with our customers for the long haul."
He said Cablevision spent roughly $20 million in the second quarter on the WiFi and Docsis 3.0 buildout. "It's really two projects in one," Rutledge explained. "The total capital for that [combined project] over a three-year budget cycle is about $100 per customer or in the range of $315 million."
Cablevision's second quarter financials once again showed that the MSO is still growing amid the specter of FiOS.
Revenues for the MSO's cable unit jumped 9 percent, to $1.24 billion. Cablevision also managed to add 7,000 basic video subscribers on a sequential quarter basis, but lost 7,000 basics when compared to year-ago totals. It ended the period with 3.13 million basic subs. (See Cablevision Posts Q2.)
In terms of more advanced services, Cablevision added 120,000 digital video subs, extending that total to 2.78 million, and a penetration of almost 90 percent. The MSO also gained 52,000 high-speed Internet customers (2.39 million total) and 81,000 digital voice subs (1.76 million total). Overall, Cablevision added 260,000 revenue generating units (RGUs), up 2.6 percent from the previous quarter. Revenue per subscriber also rose 2.1 percent, to $132.29, versus the first quarter.
"Cablevision continues to write the playbook for the rest of the cable industry on how to compete with Verizon," said Sanford C. Bernstein & Co. Inc. analyst Craig Moffett in a note issued this morning. "In the two years since Verizon launched its FiOS TV service, Cablevision has actually gained net subscribers." Cablevision competes with Verizon FiOS in about one third of the cable MSO's footprint.
Rutledge said FiOS has been typical of other "overbuilds" Cablevision has dealt with in past years -- competitors are able to steal away customers in the "high single-digit" range in the first year, then reaches a "static point" after about two years. In markets where Cablevision has faced FiOS for two years, Cablevision's "losses have slowed to a trickle," Rutledge said.
— Jeff Baumgartner, Site Editor, Cable Digital News