Cable to start moving in six months, Arris exec predicts

The cable industry will shake free of its doldrums and start moving forward again in about six months, said Robert Stanzione, president and CEO of cable equipment vendor Arris, speaking this morning at the Fifth Annual Needham Growth Conference in New York City.

The industry will need those six months to resolve a number of issues, including the restructuring of bankrupt MSO Adelphia Communications; the spin-off of Time Warner Cable from AOL Time Warner; an ongoing federal grand jury investigation of Charter Communications; Cablevision’s financial maneuverings and Comcast’s acquisition of AT&T Broadband.

“All those things are beginning to right themselves and I would expect that six months from now we’re going to be facing a much healthier market as these issues begin to be resolved,” Stanzione said.

In the meantime, he admitted, “the merger of Comcast-AT&T has affected our business negatively temporarily.” Comcast put the brakes on AT&T’s aggressive telephony rollout of constant bit rate [CBR], or circuit switched, telephone services and “that’s negatively affected our business,” Stanzione said.

On the other hand, he emphasized, Arris is continuing to succeed with its “cash cow business” of CBR cable telephony with 16 million lines installed in 101 cities in 13 countries through 42 customers. Since this consumes only about 20% to 25% of its capacity, “we’ll have an annuity-generating business for years to come,” he said.

Ubiquitous IP telephony looms as a near-term reality, Stanzione said, pointing out that industry-leader Comcast has selected Arris for a voice-over-IP rollout in Philadelphia and Charter is using Arris for VoIP in Wisconsin.

While that emerges, Arris has extended its relationship for another five years with Cox, the leading CBR provider.

“Cox really has its act together in terms of delivering video, voice and data,” he said.

That, he said, will ease the pain as the industry resolves its issues over the next six months.

“We’re not giving guidance for 2003, but we do expect to have steadily improving financial performance throughout the year,” he said.