Cable companies need to provide compelling video experience along

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MUMBAI:A new report by Moody’s Investors Service claims that value propositions for cable providers are changing as broadband becomes even
more necessary than TV. The report titled ‘Couch potatoes are switching screens as high-speed data cable subscribers overtake
video’ states that most companies in the US
are well positioned to reap the benefits and
manage the risks of transition.
"Cable providers' largely upgraded networks
and high-speed capabilities can make them the
first call for consumers seeking fast internet
connection. But if cable companies want to sell
their video product as well, the onus is on
them to provide a compelling video experience
at an attractive price,” says Moody’s Investors
Service vice president senior analyst Karen
Berckmann.
High speed data subscriber numbers will
overtake video subscribers for Moody’s- rated
cable companies in the next year, she adds.
Fewer video customers means lower
programming costs that are paid on a per
subscriber basis and servicing the video
product tends to be the most challenging and
costly part of the business, so margins could
benefit from the mix shift.
However, the report also warns that a
magnifying customer base for video also has
risks. Companies that have declining number of
video subscribers lose economies of scale when
it comes to technicians and customer service,
driving up costs per customer. At the same
time the brand may be affected if it gives up
on video in favour of broadband.
The report states, “Companies with significant
overlap with Verizon's FiOS and AT&T's uVerse,
such as Cablevision Systems and Time Warner
Cable, will need to invest in a competitive
video product to survive while those with a less
intense competitive footprint will find it easier
to thrive as primarily broadband companies.
An operator that loses a customer to FiOS or
uVerse is likely to lose that customer entirely,
whereas one losing a customer to Dish
Network or DirecTV could still maintain a
broadband relationship.”
Moody’s says that Comcast is one company
that is both large as well as diverse enough to
invest in video as well as showing that it can
sustain its video position. Cox Communications
and Cablevision could struggle to grow while
Grande Communications Networks and RCN
Telecommunciations Services have shown that
cable ops can build sustainable business on
video penetration of about 20 per cent. For
smaller operators, partnering with Tivo would
be ideal for the next couple of years. http://www.indiantelevision.com/iworld/broadband/cable-companies-need-to-provide-compelling-video-experience-along-with-broadband-moody-s-140729
 
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