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July 17, 2009
Cable Companies to Generate $16 Billion in Revenue from Business Customers: Report
By Erin Harrison, Senior Editor
U.S. cable companies historically have focused on serving up primarily TV and other communications services for residential consumption. But within the next five years, they will generate annual revenue of nearly $16 billion by serving businesses, according to a new forecast from Pike & Fischer.
The bulk of that revenue, Pike & Fischer analysts predict, will be going to the nation’s three top cable operators – Comcast, Time Warner Cable and Cox (News - Alert) Communications. But smaller cable companies will also generate increasing amounts of revenue from business customers, the Silver Spring, Md.-based market research provider concludes.
According to Tim McElgunn, chief analyst of broadband advisory services for Pike & Fischer (News - Alert) and author of the report, cable operators must create a more cohesive relationship between sales and operations in order to position themselves well.
“Promises made by sales staff typically must be fulfilled by engineering staff,” he said. “Without a well thought out set of processes in place and adhered to, recent high customer satisfaction ratings will be endangered.”
To maximize the potential revenue stream from small- and medium-sized businesses, he also believes that cable operators will need to step it up by offering converged services and a higher level of service.
“A major reason the operations support systems infrastructure is so critical is that, while the cable ops have proven they can provide the individual services capably, long-term success requires a portfolio of full-featured, competitive converged service offerings, likely including managed services and mobile wireless, and the ability to offer and support rock solid performance guarantees,” McElgunn said.
While some larger cable companies have developed sophisticated data service offerings aimed at larger enterprises, most cable companies are finding success delivering basic services such as broadband data and voice plans to small and mid-sized companies.
Today, cable commercial services revenue makes up approximately four percent of total cable revenue in the United States as of 2008. By 2013, that should rise to about 10 percent of total cable revenue, according to the Pike & Fischer report.
McElgunn said that, to some degree, all the cable operators are building their ships while under sail, which is always a very tough proposition.
“Nonetheless, the opportunity is very real and we believe the best-managed cable operators will take a very significant share of the market over the next five years,” he said.
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Erin Harrison is a Senior Editor with TMC. To read more of her articles, please visit her columnist page.
Edited by Erin Harrison
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