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TWC Pinpoints Two WiMax Markets

Jeff Baumgartner
7/29/2009

Time Warner Cable Inc. (NYSE: TWC) expects to launch WiMax services in four markets before the end of the year, starting this fall in Charlotte, N.C., and Dallas.

"You will hear a lot more about this as we build up to the launch this fall," said TWC president and CEO Glenn Britt, who revealed the news this morning during the MSO's second-quarter earnings call. He didn't name the other two markets being planned.

As one of the MSOs investing in Clearwire LLC (Nasdaq: CLWR), Time Warner Cable can piggyback its own mobile WiMax service on Clearwire's network. Fellow investor Comcast Corp. (Nasdaq: CMCSA, CMCSK) is doing just that with High Speed 2Go, which has launched in Portland and, just yesterday, in Atlanta. (See Comcast's All Clear in Atlanta and Comcast Maxes Out in Portland.)

ClearWire's other cable investor is Bright House Networks . (See Cable Plays Clearwire Card.)

Britt didn't offer up any product names or pricing details, but suggested that TWC, like Comcast, will integrate the WiMax offering with its Docsis cable modem product, giving subscribers multiple options for receiving content.

"We see wireless as complementing wireline," Britt said.

TWC, which has mothballed a metered broadband test amid protests, is also closing in on its first deployment of Docsis 3.0 in New York City. (See TWC Mothballs New Metering Trials .)

Britt said TWC is "close" to that launch and that the MSO "will ramp up our investment in this technology in coming quarters." Earlier, the operator suggested its first wideband tier would offer downstream speeds of up to 50 Mbit/s at $99 per month. (See TWC Dons Larger Consumption Caps.)

Running the numbers
As expected, subscriber growth slowed for new services, but TWC appears to have weathered a second quarter marked by the ongoing rough economy.

Revenues rose 4 percent to $4.47 billion, while net income increased to $316 million (89 cents per share), versus $277 million (85 cents per share) a year ago. (See TWC Posts Q2 Returns.)

Shares were down almost 4 percent today, to $32.59.

As expected, TWC bled some basic video subscribers -- 57,000 of them -- in the second quarter. But that was a tad better than the 62,000 analysts were expecting, helped in part by a gain from the digital TV transition (the MSO thinks it got 60,000 new video subscribers as a result).

Still, TWC managed to grow overall video average revenue per user (ARPU) 4.4 percent (to $68.98), 1 percentage point higher than expectations.

TWC added 94,000 high-speed data customers, slower than before but in line with expectations. The story was similar for phone customers, with TWC adding 113,000 in the quarter, giving it a total of 4.1 million.

"Cord cutting is real," TWC chief operating officer Landel Hobbs said, wondering if that would change once the economy improves. But the trend puts credence in the company's decision to pursue a wireless strategy, he said.

A bright spot for TWC is in the area of business services, with second-quarter revenues up 16 percent from the previous year, to $223 million. That segment represents just 5 percent of total revenues, but accounted for about 18 percent of total revenue growth in the period, TWC said.

— Jeff Baumgartner, Site Editor, Cable Digital News

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