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Summary:

With initiatives like TV Everywhere and broadband usage caps, is the cable industry biting the hands of the streaming video companies that are driving its most vibrant prospect for growth? Why the cable industry might consider enabling Netflix and YouTube, not hindering them.

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With initiatives like TV Everywhere and broadband usage caps, is the cable industry biting the hands of the streaming video companies that are driving its most vibrant prospect for growth?

Now that Time Warner Cable, AT&T and Verizon have kicked off  the latest round of quarterly earnings reports by multi-channel operators late last month — a series that continues Wednesday when Comcast releases its first-quarter numbers — a case can be made that the cable industry has a better future in providing broadband services rather than TV/video bundles. And they have Netflix and YouTube to thank for that.

This notion has picked up stream recently, with research company Sandvine releasing data last week showing that streaming on Netflix accounts for 29 percent of broadband usage over fixed networks during peak hours (8:15 p.m. – 10:45 p.m.), up 4 percent from last year. YouTube is second in line, accounting for 12.2 percent, up nearly 2.5 percent.

Overall, Sandvine found that “real-time entertainment” accounts for 58 percent of peak  fixed-network traffic, up from 49.2 percent a year ago (see chart). Overall, median U.S. broadband usage has more than doubled over the last year to more than 10 gigabytes per month per household.

“The faster bandwidth consumption escalates, the better the cable industry is positioned,” wrote BTIG Research’s noted media technology analyst, Richard Greenfield, on his blog Tuesday. “With an increasing number of IP-enabled devices ‘on net’ in the home all the time, consumers will demand increasingly robust bandwidth and be willing to pay for it.”

For the last several years, cable companies have been losing multi-channel video subscribers to telco-based service providers. But as Greenfield also pointed out, with 214,000 net subscriber additions for high-speed data services in the first quarter, Time Warner Cable had more broadband growth than Verizon and AT&T combined.

The latter two companies are experiencing subscriber losses in the increasingly uncompetitive DSL sector. And their wireless broadband products don’t offer enough bandwidth to keep up with demand, Greenfield added. Neither AT&T or Verizon offers a cap as big as 10 GB a month, for example.

“While the broadband speeds delivered by wireless companies have notably improved, bandwidth caps mitigate the risk of wireless devices replacing in-home fixed broadband connections,” he wrote.

With escalating programming costs and stagnant revenue growth limiting the margins of video services, the performance of Comcast’s broadband services will undoubtedly gather close scrutiny by investors Wednesday.

Time Warner Cable’s revenue for residential video services rose only 2 percent to $2.7 billion, for instance, while revenue for residential broadband was up nearly 10 percent to $1.2 billion.

  1. Logical. Right now I pay almost nothing for the pipe that delivers my tv. With broadband I pay for both the pipe and the content. Why are cable co.s so small-minded about this idea?

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  2. They who own the fiber command the bandwidth, they who just own the coax will fall by the wayside

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  3. This is a naive article. The MVPD component of cable service anchors their control of geographic areas under FCC regs. Without TV/Video services cable co’s are just another ISP. They have to stay in the TV game to maintain exclusivity in geographic markets. Also, giving-up TV invites competition into their territory. No cable CEO is going to be dumb enough to ratchet down control of established territory and invite competition. Talk about inviting scrutiny by investors, sheesh!

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    1. Sheesh right back at you — “naive” seems a little harsh. I’m not suggesting cable companies ditch the MVPD component of their models … just merely illustrating — with the help of a credible analyst — the point that the “competition” happens to be driving a burgeoning revenue stream.

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  4. For Time Warner Cable, Comcast, and other cable distributors, the value of the business is the pipeline. While it was initially built for cable subscription, it will one day be overtaken by high speed and telephone subscription. Taking advantage of the pipeline, cable companies must invest in other businesses that can take advantage of these connections between home and plant. And adding value by supporting home connections with WIFI mobile hotspots will only increase its demand.

    As cable subscription costs continue to rise, consumers will seek ways to lower their bills. It may be smaller packages of services; it may become a la carte. As programming license fees continue to rise, the old cable model is breaking apart. Subscribers will continue to flee the cable model as costs continue to rise. The future is the broadband pipe. for Time Warner Cable, Comcast, and other cable distributors, the value of the business is the pipeline. While it was initially built for cable subscription, it will one day be overtaken by high speed and telephone subscription. Taking advantage of the pipeline, cable companies must invest in other businesses that can take advantage of these connections between home and plant. And adding value by supporting home connections with WIFI mobile hotspots will only increase its demand.

    As cable subscription costs continue to rise, consumers will seek ways to lower their bills. It may be smaller packages of services; it may become a la carte. As programming license fees continue to rise, the old cable model is breaking apart. Subscribers will continue to flee the cable model as costs continue to rise. The future is the broadband pipe. for Time Warner Cable, Comcast, and other cable distributors, the value of the business is the pipeline. While it was initially built for cable subscription, it will one day be overtaken by high speed and telephone subscription. Taking advantage of the pipeline, cable companies must invest in other businesses that can take advantage of these connections between home and plant. And adding value by supporting home connections with WIFI mobile hotspots will only increase its demand.

    As cable subscription costs continue to rise, consumers will seek ways to lower their bills. It may be smaller packages of services; it may become a la carte. As programming license fees continue to rise, the old cable model is breaking apart. Subscribers will continue to flee the cable model as costs continue to rise. The future is the broadband pipe. for Time Warner Cable, Comcast, and other cable distributors, the value of the business is the pipeline. While it was initially built for cable subscription, it will one day be overtaken by high speed and telephone subscription. Taking advantage of the pipeline, cable companies must invest in other businesses that can take advantage of these connections between home and plant. And adding value by supporting home connections with WIFI mobile hotspots will only increase its demand.

    As cable subscription costs continue to rise, consumers will seek ways to lower their bills. It may be smaller packages of services; it may become a la carte. As programming license fees continue to rise, the old cable model is breaking apart. Subscribers will continue to flee the cable model as costs continue to rise. The future is the broadband pipe. http://goo.gl/fb/1ELgk

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    1. Bill in Houston Thursday, May 3, 2012

      Dude, we get it. Did you have to repeat yourself multiple times?

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  5. For Time Warner Cable, Comcast, and other cable distributors, the value of the business is the pipeline. While it was initially built for cable subscription, it will one day be overtaken by high speed and telephone subscription. Taking advantage of the pipeline, cable companies must invest in other businesses that can take advantage of these connections between home and plant. And adding value by supporting home connections with WIFI mobile hotspots will only increase its demand.

    As cable subscription costs continue to rise, consumers will seek ways to lower their bills. It may be smaller packages of services; it may become a la carte. As programming license fees continue to rise, the old cable model is breaking apart. Subscribers will continue to flee the cable model as costs continue to rise. The future is the broadband pipe. http://goo.gl/fb/1ELgk

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