Median Broadband Consumption on TWC Network Near 7 Gigabytes Per Month
Broadband is increasingly the operational and capital focus at Time Warner Cable, executives said during the company’s Q3 earnings teleconference Thursday. There’s still opportunity in that line of business to add more subscribers and take market share from telephone companies, they said. Usage of broadband is skyrocketing and has been for some time,” said CEO Glenn Britt. “That means we will need to spend more money on it and we already have been, both in capital and operating expenses,” he said. Meanwhile, the traditional cable video business is maturing, executives said.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The median monthly data consumption by a TWC broadband customer is about 7 gigabytes, said Rob Marcus, TWC chief operating officer. That average consumption figure is much higher because some ultra-high bandwidth users skew the data, he said. TWC plans to create more broadband capacity by gradually reducing the amount of analog TV programming it carries on the network before eventually moving to an all-digital system, Britt said. Those changes probably won’t affect the company’s total capital spending budget, just the mix of items it invests in, Britt said. “The video spending is going down and over time the business spending is going to go up,” he said, referring to products TWC sells to small and medium-sized companies.
TWC will also improve its marketing efforts to households that don’t buy its broadband product, Marcus said. “Why a TWC cable video customer would take high speed data from the phone company … is a question I ask myself every day,” Marcus said. “I find it inexplicable and unacceptable.” To woo those customers and other new customers, TWC will tweak its broadband marketing message, he said. “The naked speed message has been insufficient to win those DSL customers over and we need to do a better job explaining what speed translates to in terms of the user experience,” he said. Touting the higher quality of streaming video and the ability to simultaneously use more IP-devices in the home without affecting service will be components of the new message, Marcus said.
TWC is also beginning to upgrade its on-screen programming guide, Britt said. As a result of investments in newer set-top boxes with broadband and home-networking connections, the company has introduced some cloud-based program guide features in parts of its Syracuse, N.Y., Los Angeles and Dallas systems, Britt said. “It provides advanced search and box art for on demand content,” he said. “We expect to roll it out more broadly in the next several quarters."
TWC lost about 128,000 video subscribers during the quarter, the company said. About 65,000 of those were digital cable subscribers, and of those, about half also were DVR customers, Marcus said. TWC added 89,000 broadband subscribers and lost 8,000 phone customers, it said. Its business services unit added 2,000 video customers, 16,000 broadband customers and 13,000 phone customers, it said. Total Q3 sales gained 3.7 percent from a year earlier to $4.9 billion while net income fell 1.2 percent to $356 million. Those results were slightly below expectations in some areas, and in line with expectations in others, Credit Suisse analyst Stefan Anninger wrote in a note to investors. “While capex is trending nicely, overall the results are slightly disappointing,” he said pointing to the phone subscriber losses and fewer than expected new broadband subscribers. TWC shares fell 7.7 percent Thursday.