Fierce competition normally causes lower profit margins, and competition seems to be having that effect on video service providers. According to Strategy Analytics, profit margins on cable broadband services are 70 percent to 110 percent higher than those on video services (depending on whether or not advertising revenues are included in the calculation).
These days, overall video service profit margins for U.S. cable companies are likely in the 20-percent range, where once they routinely were in the 40-percent range. Profit margins for broadband access likely are closer to 60 percent.
It therefore is no surprise that a cable operator now can say that the anchor service is broadband, not video. It is not unreasonable to argue that, over time, video will be an application that is merchandised, in order to sell the access services to deliver the video.
That's a big change.
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