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Stretching the Lead
June 21, 2007
Cable is in an enviable position. Few businesses in this country that are 60 years old can boast double-digit bottom and top-line full-year growth rates.
This is also a capital-intensive business. But that physical plant is one of the reasons cable is so enviable – and is seeing such growth.
Cable’s facilities are already built – and possess the flexibility and adaptability to provide for a host of new services well into the future. There is, pretty much, bandwidth on demand.
This advantageous platform, coupled with years of understanding customer needs, allows us to introduce new products and features, which build customer loyalty and serves to keep us ahead of the competition.
In just the last 10 years, cable has pioneered such new services as video-on-demand, digital phone service and high-speed, broadband service. Moreover, cable is the only broadly distributed video provider that is capable today of truly integrating these products in a way that maximizes consumer convenience and ease of use: One bill; one service call.
These new service innovations are paving the way for additional products and features, which are being introduced at an accelerated pace.
Video on demand technology, for example, has ushered in applications such as the Start-Over service at my company, Time Warner Cable, which allows viewers to immediately go back to the start of a program, if they walk in late. Or our Quick Clips product, which lets viewers see snippets of programs from channels such as CNN or CNBC shortly after they get posted to the Web. There are variations, such as “Catch-Up” and “Look Back,” on the way.
On-demand technology is also poised to help dramatically change TV advertising. Although digital video recorders are seen as a threat to the existing ad model, video-on-demand technology holds the key to greater targeting, improved audience measurement and more interaction with potential customers—the very things that have lured advertisers to the Web. Unlike the online experience however, video delivered on demand over cable carries the full power of television. And television’s impact is growing with the increase in large, flat-screen, HD TV set sales.
All of this innovation by cable has not gone unnoticed.
We have greater competition today than ever before. The satellite providers have adopted a more aggressive marketing and programming acquisition strategy and are trying to cobble together business partnerships that resemble the integration we can achieve on our advantaged platform. The two largest telephone companies—AT&T and Verizon—are adding video and wireless to their existing voice and DSL offerings and promising lots of services to compete with the cable “bundle.”
But satellite technology is not capable of replicating the cable network architecture. And the telephone companies will have to spend an enormous amount of capital to overbuild even a small part of the cable footprint. In the meantime, Time Warner Cable and other operators are not standing still. The rate of innovation is accelerating in terms of new products, features and services available to our customers resulting in stronger differentiation between cable and its competitors.
Of course, I take our competitors — including both the phone and satellite companies—seriously. But cable is intent on maintaining its lead.
For most consumers today, cable is still the provider of choice for video and high-speed data and more and more customers are turning to us for residential telephone service. Around 66 million American households subscribe to their local cable company.
Through constant innovation like this, cable can keep and even stretch the lead it enjoys today, over competing means of delivering TV and communication services.
Posted by Glenn Britt on June 21, 2007 | Comments (12)