Per a recent report by, Leichtman Research Group Inc. (LRG), the cable multi-service operators (MSOs) in the U.S. have successfully maintained their lead over telecom operators in the high-speed broadband (internet) market. This comes as a respite, especially at a time when cable TV operators have been losing their foothold in the core video market to fiber-based telecom operators and online video streaming service providers.
According to data compiled by LRG, 14 prime cable TV and telecom operators jointly had approximately 94.1 million high-speed internet subscribers at the end of the second quarter of 2017, representing more than 95% of the country’s total broadband market. Of the count cited, cable MSOs commanded nearly 59.91 million subscribers (63.6%) while the remaining 34.24 million customers (36.8%) were serviced by telecom operators.
Nevertheless, the LRG report also stated that despite strong showing, the growth rate of residential high-speed internet for the cable TV industry has actually declined significantly year over year in the second quarter of 2017. Per LRG, the top seven U.S. cable MSOs added a net 461,997 high-speed broadband customers in the second quarter of 2017, a significant deceleration of 16.5% year over year.
In the second quarter of 2017, the top two cable MSOs, namely, Charter Communications Inc.
CHTR and Comcast Corp. CMCSA added 267,000 and 175,000 high-speed broadband subscribers, respectively. On the other hand, telecom behemoths Verizon Communications Inc. VZ and AT&T Inc. ( T Quick Quote T - Free Report) , lost 23,000 and 9,000 customers, respectively. Frontier Communications Corp. FTR lost a mammoth 101,000 high-speed internet users followed by 77,000 by CenturyLink Inc. CTL. All the above mentioned stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
In the last 10 years, the internal dynamics of the pay-TV market have been gradually shifting from cable TV offerings to fiber-based video services of large telecom operators. Moreover, the strong presence of online video streaming providers is posing a significant threat to the existing pay-TV business model. Video offering, which represented the core business function of cable TV operators, seems to be slipping out of their hands fast.
However, of late, with the deployment of the next-generation DOCSIS 3.0 and DOCSIS 3.1 technologies, cable TV operators have extensively penetrated into the high-speed internet market. In an attempt to capitalize on this technology, leading cable TV operators are increasingly emphasizing on the broadband market. At this juncture, a strong momentum in the high-speed data (Internet) market bodes well for cable MSOs.
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