It is no longer a secret that broadband, not video, is cable’s primary business, according to Craig Moffett of MoffettNathanson. Indeed, investors might almost be forgiven for thinking of broadband as cable’s only business. The stocks certainly behave as though it is, Moffett said.
“Two factors drive broadband growth rates,” he said, “market growth and market share. In the past, we’ve focused intensely on the two drivers of industry growth: new household formation and incremental penetration. It has been a while, however, since we’ve taken a deep dive into the drivers of market share. Or, in particular, the drivers of differences in market share among operators.”
Moffett said cable’s broadband product is reasonably homogeneous. Different operators offer different speed tiers for different prices, but the technological capability of cable’s physical plant doesn’t vary much from one operator to another.
“The capability of the TelCo plant against which cable competes, however, varies widely,” he said. “In some areas, DSL offers speeds no higher than 1 to 10 Mbps. In others, fully upgraded fiber to the home can easily eclipse 1 Gbps.”
December 19, 2019