Cable Gives Thanks for Business Services
Alan Breznick, Cable/Video Practice Leader, Light Reading
If there's one thing that cable operators can be thankful for this holiday season, it's business services.
That's because commercial services is truly the gift that keeps on giving for US cable providers. According to the latest MSO figures compiled by Heavy Reading, business services will end up generating more than $12 billion for American cablers this year, up a hefty 20% or so from their milestone total of $10 billion last year. (See How Cable Biz Services Hit $10B Mark .)
In fact, as we'll detail in our ninth annual Future of Cable Business Services conference in New York on Tuesday, December 1, Comcast Corp. (Nasdaq: CMCSA, CMCSK) alone is on track to achieve $4.7 billion in commercial revenues this year. That's up about 20% from a record $3.9 billion last year. Similarly, Time Warner Cable Inc. (NYSE: TWC) is homing in on $3.3 billion in business revenues for the full year, up markedly from about $2.8 billion in 2014.
Moreover, business services has developed into a critical growth driver for the cable industry. As Craig Moffett, a partner and senior analyst at MoffettNathanson LLC , will spell out in his late-morning keynote presentation at our conference, cable operators are increasingly relying on commercial services for revenue growth as their residential video revenues flatten out and their residential broadband business faces fresh competitive and regulatory challenges.
Top Charter Communications Inc. executives certainly see it that way. The potential for much higher commercial revenues is one of the key factors behind Charter's plans to acquire both Time Warner Cable and Bright House Networks . Phil Meeks, EVP & COO of Business Services for TWC, will undoubtedly delve into that subject in his morning conference keynote as he prepares to take charge of the proposed new Charter's enterprise efforts.
Plus, cable providers still have plenty of runway left in the commercial market, particularly with midsized and larger companies. With MSOs increasingly seeking to go upmarket and play a bigger role in the enterprise space, such senior executives as Craig Cowden, chief network officer & SVP, enterprise solutions, for Bright House and Dan Templin, SVP of Business Solutions for Mediacom Communications Corp. will address the market opportunities and challenges in our opening morning panel. Glenn Katz, VP and GM of Enterprise Services for Comcast Business, will do the same in his afternoon keynote presentation as his company gears up to target the Fortune 1000 sector. (See Comcast Business Targets Fortune 1000 and Bright House Takes Enterprise to the Cloud.)
Likewise, cable still has room to grow in the ever-expanding Ethernet services market. In a late-morning panel moderated by Erin Dunne, Director of Research Services for Vertical Systems Group , such key speakers as Scott Fairchild, Senior Director of Network Products for Charter and long-time Heavy Reading Senior Analyst Stan Hubbard, now Director of Communications & Research for MEF , will scope out the continuing possibilities there.
Of course, it's not quite all blue skies for cable. As cable operators push upmarket, there are also some dark clouds looming in the form of greater competition from the big incumbent telcos, such as AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ) and CenturyLink Inc. (NYSE: CTL), that are already well entrenched in the enterprise space. Like the big telcos, cable operators will also find themselves increasingly competing against such cloud-savvy, web-scale players as Google (Nasdaq: GOOG), Amazon Web Services Inc. and Microsoft Corp. (Nasdaq: MSFT). (See Verizon Enterprise Sale Would Signal Big Shift and Verizon CFO Dismisses Enterprise Sale Rumors.)
And cable operators still must quell lingering concerns among many businesses that they can't deliver bandwidth-rich, mission-critical data, voice and video services as well as the telcos. In the latest J.D. Power and Associates rankings published in July, for instance, cable companies generally fared poor to mediocre, coming in below the segment average in both the large enterprise and small/medium business spaces. Cable providers only scored reasonably high in their bread-and-butter market -- small firms with fewer than 20 employees.
But, as the conference's afternoon panels will bring out, some new and not-so-new technologies and services -- virtualization, WiFi and security -- offer promise for more commercial growth for cable. With Comcast now prepping a managed WiFi product for businesses and such leading MSOs as Comcast, Cox Communications Inc. and Charter now testing virtualized services and equipment, we may start to see early returns in those areas as soon as next year. (See Why NFV Makes Sense for Cable Business Services and Telcos Beware: New Comcast WiFi Product Close to Launch.)
That's enough for now. If you want to find out more, the action all starts bright and early at the Westin Times Square Hotel in New York on Tuesday morning. So bring your questions and discussion points and join us there. We'll leave a light on for you.
— Alan Breznick, Cable/Video Practice Leader, Light Reading