[qi:107] The cable industry, in an effort to boost sales, is looking to business customers. As broadband growth slows, revenue from consumer households is fairly flat, and as a new report out today shows, most consumers aren’t willing to pay more for their Internet service, which may bode ill for expensive speed boosts.
Only about 10 percent of 600 participants in a survey conducted by Pike & Fisher said they were willing to pay more than what they already spend for Internet service. This is despite a third of them ranking Internet access as the most important discretionary item in their budgets — and the service they’re least likely to cut. These results complement findings last year that price will be a big driver in winning over consumers to telco TV. So with residential markets apparently tapped out, most providers are looking at businesses.
Comcast (s CMSCA) is looking to generate some $2.5 billion annually from business services within a few years. During its first-quarter earnings call earlier this week, Comcast Executive Vice President and Chief Financial Officer Mike Angelakis said, “Revenue from our business services segment increased 47 percent in the quarter to $176 million, demonstrating that in a difficult environment our value-based strategy is gaining momentum. Business services is growing nicely… [and] we continue to expect business services to be a major contributor to our growth.”
In February, Cablevision (s CVC) COO Tom Rutledge told DSL Reports, “I don’t think ultra-wideband will have a significant impact in the second half. I think it’s a long-term strategy (and) I think the primary user is small business and not residential in the short run.” Cox indicated recently that it was targeting $1 billion of commercial revenue in 2010.
The cable companies are trying to worm their way into a market long dominated by the phone companies with faster speeds and cheaper prices. The country’s large telco providers, AT&T (s t) and Verizon (s VZ), sold $44.69 billion and $21.13 billion of business services respectively last year. Let the customer poaching begin.