Cable Companies Shifting Emphasis From TV

The two largest cable operators are looking to an unlikely source of inspiration: Google Fiber, their newest formidable competitor.

Time Warner Cable Chief Executive Glenn Britt and Comcast Chief Executive Brian Roberts separately said this week they see Google's nascent one-gigabit communications network in Kansas City as a "laboratory" for encouraging new Internet services that will drive the adoption of faster broadband tiers -- ultimately benefiting their own businesses too. Britt described Google's service as exploring "what we could do as a society with more bandwidth," which is "a good thing, not a bad thing" for business. "We are constantly hoping that new applications and needs develop" for broadband, Roberts said as the largest cable operator reported higher second-quarter profits, also driven by broadband adoption. It will be a "positive development if we can help that happen and if Google can be part of making that happen," he said.

At a time of slowing growth in the video business due to a mature pay-TV market and fierce competition from phone and satellite companies, broadband has become the main engine of growth for cable companies. Broadband is a high-margin business compared to video, where profits are squeezed by the ever-increasing programming costs cable operators must pay entertainment companies in order to carry their TV channels.