Cable Operators Will Consolidate To Grab Commercial Customers: Moody’s

Over the next five years or so the cable industry “will consolidate to around 3-4 dominant cable operators, which will have sizeable footprints,” Moody’s Investors Service SVP Neil Begley said.

The big guys will start to snap up smaller operators, and swap systems, because it will help them compete with phone companies to attract business customers. “Business services, primarily including voice and data, will be the largest single growth driver for cable over the next decade as residential services growth stagnates,” Begley says. Commercial customers soon will spend about $80 billion per year for voice, video, and Internet, and cable operators just collected $7.5 billion from them last year. But cable has a problem because operators’ systems “are like a jigsaw puzzle of efficiency customized to serve the residential customer” but are “inefficient or insufficient to serve multi-location commercial customers compared to most telecom competitors.” The problem is especially acute for mid-sized companies including Cox, Charter, and Cequel Communications, forcing them to choose to be either buyers or sellers.