How Cable Means Business About Business

LightReading By Mark Chinn

Over the last ten years, commercial services (a.k.a. business services) have grown to fill a critical revenue growth need for cable operators. We will be taking a closer look at multiple system operator (MSO) performance and opportunities in commercial services in this four-part series over the next few days. In the first part today, we’ll look at what’s happened since the early 2000s, when many operators organized formal commercial services teams. Since then, subscriber growth and small business demand have fueled double-digit revenue growth.

Cable’s commercial services initially met a key area of demand for small businesses. Cable operators successfully challenged the national telcos by providing high-speed data (HSD) services at a better price and at higher speeds than telco DSL services. Although the telcos have responded with their own high-speed options (e.g., Verizon Fios and AT&T U-Verse), these services cover a fraction of the footprint of cable’s hybrid fiber-coax (HFC) DOCSIS infrastructure. Other new entrants, like Google (Nasdaq: GOOG)’s Google Fiber initiative, will face similar cost and deployment challenges to achieve the geographic scale of the MSOs’.

As a case in point, the map below compares the franchise areas of Verizon Communications Inc. (NYSE: VZ)’s Fios service with the three dominant cable operators in the mid-Atlantic. Like AT&T Inc. (NYSE: T)’s U-Verse product, Fios is only deployed in the largest metros that the cable operators cover. Furthermore, even where they do provide these fiber services, AT&T’s and Verizon’s serviceable areas are typically just a fraction of the MSOs.

Small businesses, defined as one to 20 employees, have caused a surge in demand for data capacity and throughput at an affordable price. These needs align well with cable’s capabilities in both product and service, given that the MSOs’ existing HFC networks have the ability to deliver faster data speeds over a large geographic footprint.

Read more at LightReading…

investinbbandHow Cable Means Business About Business