Why is Time Warner Cable Losing Customers?

Time Warner Cable in the coming year that about 40 percent of the cable company’s service area will be overlapped by AT&T U-verse and Verizon FiOS.

In 2013, Time Warner Cable faced AT&T in about 27 percent of the Time Warner Cable service territory. Time Warner Cable likewise faced Verizon FiOS networks in about 13 percent of its coverage area. As the competition with video-capable networks grows to 40 percent, another one million homes also passed by the Time Warner Cable networks will face potential encroachment from either AT&T or Verizon.

That underscores a key background factor for telco TV success. Up to this point, few cable TV operators actually have had to face a telco TV competitor. In fact, cable TV operator market share losses to telco TV, which have been steady, if unspectacular, are mostly an artifact of low telco TV availability, not marketing prowess or consumer preferences.

Consider that Time Warner Cable, which has seen significant customer defections in video and voice take rates in its consumer customer segment, also seems to be facing escalating availability of rival services from both AT&T and Verizon communications. Though the company blames third quarter 2013 performance on a CBS contract dispute, others might doubt that is such a material factor.

Some would argue it is the growing availability of a product substitute (U-verse TV or FiOS TV) that explains the weakness.

Though high speed Internet access was a bright spot, at least 24,000 Time Warner Cable broadband customers also departed.

Analysts had expected the company to gain more than 46,000 broadband customers during the quarter.

To be sure, revenue grew, despite the subscriber losses.

Coverage is a major factor enhancing or limiting video service provider market share. Cable TV companies operate in virtually every city and town in the United States. Satellite providers likewise cover nearly 100 percent of the surface area of the entire country.

Because telco TV is not ubiquitously offered, U.S. phone companies have about 10 percent  market share, where cable TV companies have about 55 percent share, and satellite firms have close to 30 percent share.

The issue is coverage. By 2015, AT&T, for example, will be able to market to only about 33 million locations.

Verizon’s FiOS covers about 17.8 million homes, so the two telcos will pass about 51 million U.S. homes, by 2015, out of perhaps 145 million U.S. homes by 2015. That implies coverage of about 35 percent of U.S. homes. Other telcos will sell telco TV as well, but collectively could only theoretically reach about 14.5 million homes, or so, by 2015, best case.

Even under the best of circumstances, it is unlikely U.S. telcos will be able to pass even 45 percent of U.S. homes by 2015, using their own facilities.

That is one reason why over the top streaming appeals to telco TV executives: it could enable universal coverage without requiring huge capital investments in access networks “out of region.”
Post a Comment

Popular posts from this blog

Voice Usage and Texting Trends Headed in Opposite Directions

What to Do About Industry Challenges? "Take the Package," One Exec Quips

Verizon has a Brand Promise Problem