Cable Technology Feature Article
Big Gains for Broadband Mark Bright Spot for Investors in 2012
By Steve Anderson, Contributing TMCnet Writer
While cable television itself is having something of a mixed experience, cable companies themselves, having successfully diversified into broadband Internet and phone services, have managed to bring in some very big numbers. With 2012 on the way out and 2013 making a quick arrival, it's apparent that cable companies aren't going out without a fight, if at all, as shares of cable television companies are likely to beat those of their telecommunications rivals, according to reports from the Leichtman Research Group.
Perhaps the best indication of this trend in the making is the results of the first nine months of 2012. While phone companies added 250,000 broadband customers to their rosters in that time frame, cable television firms blew that number out of the water by adding 1.88 million customers. The third quarter alone shows what a spectacular gain cable had: while United States phone companies like Verizon (News - Alert), CenturyLink and AT&T, added just 4,739 new broadband subscribers, cable companies like Comcast, Time Warner Cable and the rest brought in 574,000.
The stock in cable companies is also doing well, despite uncertainty in the market thanks to the so-called "fiscal cliff" negotiations and the overall soft economy. Charter stock is up nearly a third at 30 percent, Time Warner Cable is up 50 percent and Comcast leads the field with 55 percent gains over 2012. AT&T (News - Alert) and Verizon, by way of comparison, could each only post 10-percent gains and CenturyLink a comparatively dismal six percent.
The question here, of course, is why. Why such a pronounced difference between the two fields? One potential explanation is that cable companies commonly operate in high-density areas. Their primary product is focused on large concentrations of people, so getting service to larger numbers isn't nearly as difficult. Phone (News - Alert) companies, meanwhile, are more geographically diffused, so they have fewer numbers to work with in the first place. Additionally, when it comes to broadband access, cable companies are again able to offer their services to large numbers of people in comparatively small geographic clusters. Phone companies do as well, but have to compete with larger numbers. Some moves have been made in bringing broadband by phone to more places geographically, but these often require new infrastructure, or at least specialized tools like Ethernet Extenders, to put extra range into current networks, and that takes a lot of investment over a long period of time.
Of course, AT&T and Verizon both have mobile interests worth keeping an eye on, and they certainly have powerful home-based Internet access in U-Verse and FiOS (News - Alert), but their reach is still somewhat limited. They'd have to put on a very big show to get interest going toward them--an elimination of bandwidth caps would be feted far and wide--but their mission is clear: to gain ground against clearly entrenched interests. That's a tall order for any company, and whether AT&T and Verizon and the like can pull it off remains to be seen.
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Edited by Rachel Ramsey