The cable companies have been far more excited about selling broadband than selling video for a long time now. One cable exec, Cablevision CEO Jimmy Dolan, even suggested that his company might get out of the video business altogether. Why? Because while broadband is a high-margin, low-competition business for the cable guys, selling video is a pain in the ass. TV and movie rights holders like Viacom and Warner Brothers are very hard to deal with. The cost of video content continue rising, and cable companies are stuck trying to raise cable prices at acceptable rates to cover the costs.
You can now officially think of American cable companies as internet service providers with a declining side business in television. At the end of June, the number of people subscribing to broadband internet from the nine largest US cable companies (49,915,000) exceeded the number of television subscribers (49,910,000) for the first time. That’s according to a new tallyby Bruce Leichtman, president of Leichtman Research Group. The milestone is significant, if not surprising. Cable companies like Comcast have been losing TV subscribers for many years now, as people cut the cord or opt for service from telecoms like Verizon and satellite companies like DirecTV. However, the cable industry has remained strong as those companies supplant their lost business with new internet subscribers, who are paying more than ever. The average price of Time Warner Cable’s internet service is up 20% over the past two years, to $47 a month. And as more television watching moves to the internet, the distinction between the two will matter less. For cable companies, the data travels over the same pipes, and even cord cutters still tend to require internet service. Which is one reason internet bills are likely to keep rising.
