Yankee Group: US Cable Operators Venture into the Mid-Tier Business Market

Picking Up the Crumbs Is Good Business, for Now

When Comcast, Cox and Time Warner Cable report their earnings for 2010, almost all will certainly announce they topped $1 billion in business services revenue. While that certainly is a big number, it’s a small percentage of each multiple system operator’s (MSO’s) overall revenue (see Exhibit 1). It also represents a mere pittance compared with the overall U.S. enterprise fixed-line voice and data market, which Yankee Group estimates to be more than $79 billion.

What makes the revenue perhaps more interesting is that over 75 percent of it is coming from what the MSOs have been calling small—and what telcos would likely classify as very small to almost insignificant—business. The strategy obviously has worked well for the MSOs, which are leveraging their existing hybrid fiber/coax (HFC) networks and concentrating on what incumbent telcos have considered the lowest tier of business customer—the crumbs that fall off the table.

Comcast, a late arriver to the cable business market, typically targets business customers with fewer than 20 employees, a market that many incumbent telcos pay lip service to but often shuffle off to distributors and other value-added resellers (VARs). Comcast, the first MSO to leverage its network for business and a traditional leader, likewise counts 80 percent of its business customer base and 65 percent of its business revenue from the sub-20-employee category.

Keywords

System, operator, cable, mid-tier

Pages
Publish Date & Author(s)

by Vince Vittore, Principal Analyst
4 pages
June 2010