In the long run, cable TV operators will, for the most part, become simple ISPs. “The future value of the cable MSO home connection will be almost wholly tied to data bandwidth,” according to analysts at Fitch Ratings.
That might terrify most service providers, as it suggests cable companies, most telcos and others primarily will be suppliers of “dumb pipe” Internet access. But the prediction is a simple extrapolation from current trends.
Cable operator revenue and earnings growth has been “increasingly reliant” on high-speed data products, Fitch Ratings says. At the same time, cable operators continue to lose video customers, and video service margins are compressing as programming costs increase, which cannot be fully passed through to customers, Fitch Ratings maintains.
“Cable operators are now unable to pass through the full extent of programming price increases to subscribers due to competition from other operators along with substitution technology,” Fitch analysts say.
That likely will lead to an increased reliance on usage-based data services to support video delivery, whether or not those services are owned by the cable operator.
Ask yourself whether that increased reliance on broadband access will not also be a key feature of telco revenue as well.
Like it or not, telcos and cable will primarily be ISPs, in the future, selling access to the Internet (dumb pipe access) as their foundation product, no matter what else they do.
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