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Time Warner Cable (s TWC) continued to see a slide in its video subscribers, but it’s trying to make up for those losses by betting more heavily on broadband as its core service. On Thursday’s third-quarter earnings call, the cable provider’s executives continued to talk up its high-speed data service as a key differentiator, particularly when it goes up against telecom competitors mostly offering DSL services. But it’s also seeing huge amounts of growth for broadband subscribers who might not want to subscribe to its traditional video services.
“Broadband is a powerful service for which there appears to be unquestionable consumer thirst,” Time Warner Cable CEO Glenn Britt said on the investor call. “Over time, we will contribute more of our plant’s capacity to broadband.”
Time Warner Cable added 89,000 high-speed data subscribers in the quarter, but that’s only part of the story. While the company saw 128,000 video subscribers flee, it actually added single-play high-speed data subscribers. Time Warner Cable is focused both on winning over broadband users from both those who already subscribe to its video service, as well as those who aren’t already customers.
When talking about bringing existing video subscribers on-board with broadband, Time Warner Cable is most likely convincing users to upgrade from DSL services from a telco operator to cable broadband. “There’s no reason for a customer who does business with us to buy an inferior product from someone else,” COO Rob Marcus said on the call.
At the same time, Marcus said Time Warner Cable could be doing a better job of explaining the benefits that could come from cable high-speed data services to current DSL subscribers . The “naked speed message” doesn’t necessarily do the trick, Marcus said, so the company needs to better communicate the advantages that come from better speeds, such as no buffering for online video, and more devices connected within the home.
Time Warner Cable is also using broadband as a way to bring on new subscribers. Time Warner Cable CFO Irene Esteves said the cable company signed up 97,000 broadband-only subscribers during the quarter, due in part to students returning to college, as well as a single-play broadband promotion during the quarter.
More importantly, its broadband subscribers are not just signing up for basic high-speed data services, but opting for higher-speed — and therefore more expensive — tiers of service. Time Warner Cable’s “Turbo” and “Wideband” broadband services now make up nearly 20 percent of all high-speed data subscribers, and Wideband subscribers nearly doubled since last quarter.
As cord cutting in the traditional TV market continues, Time Warner Cable will continue to push its broadband service not only as a differentiating service, but as a way to keep and gain customers who might not want to pay for a broad pay TV package. While that might mean surrendering some video subscribers to over-the-top services like Netflix, (s NFLX) it also means higher margins, as it doesn’t have to share those revenues with programmers, as it does in its pay TV business.