While the story of the second quarter has focused on how the pay TV industry got gashed by an accelerating cord-cutting trend (cable actually fared well amid the carnage), perhaps lost in the mix was cable’s continued dominance of the broadband sector.
U.S. cable added about 608,000 residential and commercial high-speed Internet subs in Q2, “trouncing the declining telco total,” SNL Kagan found in its analysis of the period. “The 146,000-customer decline for the telcos helped boost cable’s share. It also kept a lid on the combined net adds, illustrating that cable’s continued strengh should not gloss over the inevitibek maturing of the HSD category with increased penetrations.”
MoffettNathanson also issued its broadband take for Q2 in a research note with the headline: “Cable’s Advantage Turns into a Route.”
In MoffettNathanson’s estimates, cable raked in 612,000 broadband net adds in Q2 (cable’s highest share of broadband net adds ever in Q2). That enabled U.S. cable to grow its sub base by 6.1%. The last time cable broadband growth broke the 6% mark was Q3 2012, the report added. The telcos “had a terrible quarter,” losing 146,000 broadband subs – a figure that factors in fiber gains and copper losses.
Telco broadband sub growth has slowed to 0.5%, but cable’s success has helped the overall sector to hold steady, with growth of 3.9%, MoffettNathanson noted.
But cable operators might want to hold off popping the campaign.
“The strength in Cable broadband is a double-edged sword,” MoffettNathanson analyst Craig Moffett wrote. “Generally speaking, taking share is good. But in an industry where regulatory concerns are now front and center, and where a major merger just got rejected because Cable’s broadband share is too high, there is always the risk of ‘too much of a good thing.’”
He also addressed the competitive impact expected from AT&T, which has pledged (as part of its merger with DirecTV) to deploy its fiber-based GigaPower platform to at least 12.5 million customer locations within four years.
“The expanded deployment could help AT&T take back share, but it won’t be competing against Cable’s current broadband product,” he said, noting that cable’s gearing up to deploy DOCSIS 3.1, a multi-gigabit platform for HFC with “with relatively low cost to deploy.”
How low? Liberty Global CEO Mike Fries shed some light on that last week, estimating that the cost to deploy D3.1 will run about €20 (US $21.89) per home (not counting the CPE).