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Cable Technology Feature Article

April 27, 2012

20 Percent of Time Warner Cable Subs Buy 30 Mbps or 50 Mbps Service

By Gary Kim, Contributing Editor

Purchases of 30-Mbps and 50-Mbps high-speed access connections by Time Warner (News - Alert) Cable customers has been growing. “Residential Wideband” customers increased 50 percent on a sequential basis to 218,000, the company said.

Almost 66 percent of Time Warner Cable net new customers signed up for service operating at speeds up to 30 Mbps or 50 Mbps. Those tiers now represent about 20 percent of the residential customer base, according to Robert Marcus, Time Warner Cable President and Chief Operating Officer.

Time Warner Cable has about 10.7 million high-speed access customers. So there are about 2.1 million customers buying service at either 30 Mbps or 50 Mbps.  That had not been the case when service providers started offering speeds of 50 Mbps some years ago, when take rates were so low no service provider would talk about how many customers actually were buying the services.

Since price will continue to be an objection to buying these services, one suspects a number of customers are receiving substantial discounts as part of their triple-play or promotional packages.

While next-generation fixed-line broadband speeds will at some point increase dramatically to 50 Mbps, 100 Mbps or higher, just seven percent of European online households often pay more for higher speed, according to Forrester (News - Alert) Research analyst Ian Fogg.

Up to this point, most consumers seem to have been satisfied with their existing speeds. More than 70 percent of U.S. broadband customers are happy with their overall service, ranking it between an 8-10 on a 10-point scale, according to Leichtman Research Group.

About 26 percent said they’re “very interested” in receiving faster speeds.

And it is not as though the communications industry has no experience with the dangers. An overly-enthusiastic approach to mobile 3G services nearly bankrupted many mobile providers across Europe in the first decade of the 21st century. All of that should suggest the wisdom of matching broadband supply to demand, when the transition from 3G to 4G or 10 Mbps to 50 Mbps, does not necessarily provide an obvious end user value as great as the transition from dial-up to broadband access.

None of that necessarily informs the issue of how much demand there might be for faster services, though. About 26 percent of broadband subscribers are "very interested" in receiving faster Internet access at home than they currently receive, while 44 percent are rather disinterested.

What is not clear, though, is how much of that potential interest can be converted to actual buying of higher-speed tiers, and if so, how fast those tiers would need to be and how they would have to be priced to move consumers to act.

Many consumers might be happy enough to migrate from tiers operating in the 3 Mbps to 5 Mbps range up to 8 Mbps to 10 Mbps, particularly when there still is no compelling new application that requires such bandwidth.

"Next-gen broadband will not be such an easy sell, as there's little pent-up speed dissatisfaction," at least not yet, says Fogg. 

Edited by Braden Becker

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