TWC Moving Ahead With Switched Digital Despite FCC Attention
FCC scrutiny of cable operators’ switched digital video rollouts “is not having a big impact” on Time Warner Cable’s strategy to use that technology to add more HD programming to its lineups, CEO Glenn Britt told investors Wednesday. (See separate report in this issue.) TWC will be nearly done with its SDV rollout by Dec. 31, he said; early next year only a few major TWC systems won’t have the technology.
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Meanwhile the company is dealing with customers that have one-way plug and play devices that can’t receive the switched programming, he said. For TiVo subscribers, which make up the vast majority of those customers, the company is introducing a tuning resolver that allows the boxes to request the switched programming. For the few customers that use CableCARD-enabled TV sets, TWC will be giving them cable boxes, he said. “If you add up all the TiVo devices and all the other TVs that use these CableCARDs the numbers are very, very small compared to our total footprint,” he said.
TWC picked up some extra subscribers in Wilmington, N.C., as a result of the early DTV switch there, Chief Operating Officer Landel Hobbs said. TWC ran a special promotion there, offering free basic cable for a year to new customers who also bought either broadband or phone service from the company, he said. It also offered a low-cost basic package of $8 a month, he said.
TWC’s experience in Wilmington should be a guide for the country-wide switch in February, Hobbs said. The company saw an intermittent stream of new customers sign up, which picked up closer to the switchover date, he said. “We didn’t see some kind of big pop right at the date,” he said. “You saw DTV transitions come in over time.” Some of the customers signing up for TWC now are a result of the February DTV switch, he said. “You're seeing some of that in our numbers even now … you will probably see some acceleration as you get closer to the date, but it’s something that happens over time as people learn more about the transition.”
Cable operators probably won’t abandon their opposition to selling pay-TV channels on an al a carte basis, Hobbs said. He was asked if the company’s separation from Time Warner Entertainment and the increased competition from phone companies selling video service could lead to a shift in that regard. “A la carte would clearly result in higher costs in the system, which ultimately would result in higher cost to most consumers,” he said. “It would also result in less programming, most people think. That’s really why we've been against a la carte.”
TWC lost 31,000 basic video customers during the third quarter but added 214,000 residential broadband and 200,000 VoIP customers. About 65 percent of TWC video customers take digital cable service. TWC Q3 sales gained 8 percent from a year earlier to $4.3 billion. Profit increased 21 percent from a year earlier to $301 million. Sales at parent Time Warner Entertainment of $11.7 billion were about the same as a year earlier, as drops in revenue from AOL and its feature film business offset gains at its cable networks and TWC. Quarterly profit fell slightly from a year earlier to $1.07 billion.