Pages

Friday, December 7, 2007

Will Cable Cos. Ever Enjoy Their ROI

It seems every time cable companies have invested lots of money into their plant, it is because of the expected windfall of revenue they will receive. But they never seem to get the chance to rest as new technology and new uses continue to require them to continue to invest in more bandwidth. Just 15 years ago, cable companies were happy to offer 30 channels, then just 10 years ago, "digital" tiers were built and 8 analog channels could fit into one digital spot. And more usage was found with hi speed. New cable boxes emerged and more investment. Just 5 years ago that same pipe saw more usage from telephony and VOD and again more capacity was needed to satisfy the increased volume on the pipe. Today, the talk is about Hi Def and again the cable pipeline is showing signs of cracking. Talk of "switched digital" has become more necessary so that the pipeline can be more efficient, allowing only one stream at a time to go down the pipe as opposed to all pushing down to the TV simultaneously. But investment is still required on cable plant to handle more streaming of larger files of internet activity at the same time.

And now competition from telcos and satellite even more threaten cable's ROI by taking away large chunks of customers. Can cable succeed on smaller profit margins? Who gets hurt as they try to squeeze down costs and raise prices? And what is the next application after HD to require more bandwidth on the pipe? Stay tuned.