Cablevision Systems issued its Q1 08 earnings report this morning showing a solid return to basic cable subscriber gains and continued, albeit declining, growth in its digital, high-speed and telco customer counts. During the company's earnings call, the Long Island-based operator implied that the worst impact of stiff competition from Verizon is over. Still, to spur continued broadband growth, the company announced a new mesh Wi-Fi offering for its broadband customers.
During the quarter, Cablevision added 3,000 basic customers, compared to a basic sub. count gain of only 1,000 during Q4 07 and a loss of 17,000 customers during Q3 07. By quarter's end, Cablevision served 3.125 million core video customers, reflecting a 66.7% penetration of homes passed rate, the highest in the cable industry.
Cablevision also lays claim to the highest broadband and telephony penetration rates in the industry. (Download our spreadsheet for more detailed data on Cablevision.)
Yesterday was chock full of interesting news and developments but the necessity of actually doing real work got in the way of my blogging. I'm a day late here but a couple of key earnings reports issued yesterday are worth flagging today.
First, global entertainment, TV, publishing and now Internet giant News Corp. issued its fiscal Q3 08 results yesterday (PDF), showing strong performance, as usual, in its cable network division. (For more detailed News Corp. financial data download our spreadsheet.)
In a first for the U.S. cable industry, a cable company CEO is blogging. Michael Willner, CEO of Insight Communications, has launched a pretty well-written blog called Michael's Insight.
Although Insight Communications is a tiny cable company in comparison to giants Comcast and Time Warner, Willner is an industry pioneer who garners a lot of respect, having twice been Chairman of NCTA, the industry's trade association. Insight just finished unwinding a partnership with Comcast, Insight Midwest, which left the company with around 700,000 basic customers in Indiana, Kentucky and Ohio.
Not only is Willner blogging, but he also claims to get most of his news from blogs these days. In today's post he says he reads Broadband Reports, an online community that I guess is technically a blog, before he even reads the New York Times. Willner's goal is to suss out customer service problems before they hit the mainstream media and to identify potential service improvements.
We institutionalized monitoring the blogs and now regularly reach out to customers who post if we think we can help them with their issue. Indeed, we often discuss service changes and improvements that were thought of simply by reading blogs.
In response to Google's petition to the FCC asking that further conditions be placed on Verizon Wireless to ensure that it follow the open access rules for the C Block spectrum it won in the 700 Mhz auction, Verizon Wireless has posted a statement. Spokesperson Jim Gerace says that despite Google's contention that Verizon might wiggle out of those rules for the handsets it provides to customers, it is Google itself that is trying to play games.
It's really no surprise that despite not winning spectrum, they continue to try to change the rules and further their own business interests through the regulatory process. We expect to file at the Federal Communications Commission within the next several days on this matter.
Now that Qwest has weighed in with its Q1 08 earnings results, it's time to once again take a broader look at how well the incumbent telcos are doing in the video business. Based on our analysis, the top four incumbent telcos (AT&T, Verizon, Qwest and Embarq) accelerated their growth in the multichannel video business during the quarter, adding a collective net new 651,000 video customers during the quarter, up 31% over the net adds for Q1 07 and up 19% over the net adds for Q4 07.
At the end of the quarter the telcos served a combined total of 5.7 million video customers (either through fiber-based service such as AT&T's Uverse or Verizon's FiOS or through DBS partnerships), 70% more than they served at the end of Q1 07.
The WSJ is reporting that the much-rumored monster WiMax venture with U.S. cable operators will be announced tomorrow. Breathing much life into the almost-dead broadband WiMax technology, the venture calls for Sprint to merge its broadband wireless unit with Kirkland, WA-based broadband wireless pioneer Clearwire.
The U.S. cable industry has been behind this new venture for a while and is backing it up with a lot of bucks -- $1.05 billion from Comcast, $550 million from Time Warner and $100 million from Brighthouse Networks. WiMax proponent Intel is putting in another $1 billion and, very interestingly, Google is slugging in $500 million of its cash. At one point, Best Buy was a party to the venture, until the negotiations among the mighty communications titans got too complex. The WSJ says that the venture is worth $12 billion altogether.
Scott Karp has this excellent post today in which he highlights an overwhelming problem plaguing the Internet: news overkill. He uses as a case in point the recent, insane and largely redundant flood of news about Microsoft's decision to abandon its buyout bid for Yahoo.
Google News is tracking 2,000 stories about the high-profile tent-folding and that, presumably, doesn't even include the thousands of bloggers who felt obligated to cover this (fundamentally predictable -- more on that below) development. Scott sums it up: "So while there's more content on the web, there may be less news."
The House Subcommittee on Telecommunications and the Internet will hold a hearing tomorrow on H.R. 5353, the Internet Freedom Preservation Act of 2008, also known as the Markey-Pickering net neutrality bill. In looking over the written testimony of the witnesses (not yet posted online), the most intriguing is the written statement of RIAA CEO Mitch Bainwol (PDF.)
First, the RIAA seems to be wavering in its traditional opposition to network neutrality regulations. Even though the record industry still doesn't like net neutrality regulations, Bainwol seemed to leave open the idea that if ISPs won't do something about music piracy, the RIAA might switch sides.
We continue to believe, at least right now, [italics added] that a marketplace solution with the ISPs to the piracy problem is viable, and certainly such a solution could be devised and implemented far more quickly than a regulatory proceeding. As the numbers tell you, however, the state of our industry requires action. If we cannot resolve this problem quickly in the private sector, regulation may be a necessary alternative.
(Update: Reaction from Verizon Wireless at end of post.)
On Friday, Google urged the FCC to block Verizon Wireless' $4.7 bil. successful bid for the C Block band of spectrum in the recently completed 700 MHz auction unless Verizon is forced to agree that open access rules apply to handsets it provides its own customers. Specifically, Google claims that Verizon Wireless has no intention of abiding by the open access rules governing the C block spectrum for devices it gives to its own customers and that the FCC should condition Verizon's grant upon a clear commitment that Verizon will not exclude these handsets from the requirement.
In a petition filed at the Commission (PDF) -- technically a petition to deny Verizon Wireless' winning bid for the spectrum -- Google said
Verizon has taken the public position that it may exclude its handsets from the open access condition. Verizon believes it may force customers who want to access the open platform using a device not purchased from Verizon to go through “Door No. 1,” while allowing customers who obtain their device from Verizon access through “Door No. 2.” As Google previously made clear, Verizon’s position would completely reverse the meaning of the rule such that the open access condition would apply to none of Verizon’s customers, and thereby render the condition a nullity. Because this “two-door” position espoused by Verizon is contrary to the plain meaning of the rule, as well as the Commission’s public interest findings and policy objectives set forth in the 700 MHz Second R&O, it must be rejected.
Viacom issued its Q1 08 earnings results this morning and the global entertainment giant showed healthy revenue and profit growth during the quarter, thanks almost entirely to its media networks division and despite weakness in its entertainment or film division. (Download our Viacom historical and current financial data here.)
When it comes to communications policy in the U.S., there are two major goals -- either regulate in the absence of competition or spur more competition in order to obviate the need for regulation. That's the main reason why the FCC, led down the primrose path by proponents, glommed onto broadband-over-powerline (BPL) several years back.
But BPL, a kludgy technology aimed at squeezing communications-strength capacity out of power lines, is almost DOA in the USA. First, the U.S. Court of Appeals for the District of Columbia last week rapped the FCC on the knuckles for failing to take a look at studies that deal with BPL's propensity for interference as it rushed to adopt new rules promoting the competitive alternative.
So far, the seemingly recession-resistant cable (and phone) industries are living up to their reputations. The latest evidence: top cable operator Comcast issued its Q1 08 earnings results this morning showing continued healthy grow in new, high-margin add-on services even if it continues to lose basic cable subscribers. (Download our spreadsheet detailing Comcast's financial and operational data.)
Blogs We Read
