Cable: Telcos no threat
Cable executives don't fear competition from the telcos, but they are worried that Wall Street is too concerned about the potential loss of video revenues.
Throughout the annual National Cable & Telecommunications Association get-together known as The National Show this month, cable TV executives exhibited a confidence bordering on swagger, taking repeated potshots at their telco competitors, frequently labeling their video networks as more hype than substance. Verizon, which is investing $2 billion to build a fiber-to-the-premises network, came in for particular derision.
“Verizon isn't doing fiber to the home, they are doing fiber to the side of the house, and then they are using coax,” said Michael LaJoie, chief technology officer of Time Warner Cable. “IPTV is a buzzword; it's like talking about freaking fiber. Consumers want to watch the programming; they don't care how it is delivered.”
Tom Rutledge, chief operating officer of Cablevision, which has aggressively fought Verizon's efforts to win video franchises in New York, claimed his telco rival has only 2% penetration of its data services in areas where it has built its FiOS network in competition with Cablevision.
“We think that's about their employee count,” he joked. By contrast, Rutledge said, Cablevision is increasing its voice-over-IP sales by 10% monthly.
Verizon contested the penetration number. A spokeswoman said it is “highly inaccurate” but added that Verizon has not publicly released its penetration numbers.
“I think you have to look at what they are doing rather than what they are saying,” she said. “If they are not afraid of us as competitors, why are they fighting so hard to keep us out? They don't want competition.”
Comcast CEO Brian Roberts said his company is having its best year yet and has many new products yet to come in the delivery pipe. By contrast, he said, the telcos are consolidating but not developing new services yet.
“If you took out their wireless growth, they are down,” he said of the telcos. “There isn't a cable operator that doesn't have double-digit growth.”
However, the cable executives' bluster didn't cover their concern that Wall Street isn't catching cable fever. And they largely attributed that to investor fears that the video services revenue is going to be poached by telcos, the Internet and the wireless industry.
“The market can't deal with uncertainty,” said Richard Parsons, Time Warner Chairman and CEO. “We have to provide answers to our investors. No one's business is going to be disintermediated.”
Time Warner Cable has seen 20 quarters in a row of double-digit growth in average revenue per user (ARPU), Parsons said, and will see even greater ARPU this year.
“We will take a bigger slice of a growing pie,” he said. And investors will come around when they see that continued growth.
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