Recession Hasn’t Changed Broadband, Video Customer Behavior
A contracting U.S. economy and continued job losses haven’t changed how telecom services including broadband, phone and video are used by subscribers, said cable executives we surveyed. Operators have been cautious on spending and focused more on keeping existing customers (CD Feb 24 p5). But the behavior of their subscribers hasn’t changed in any discernable way this year versus last, said executives at four major operators and two significant vendors.
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Time spent online and the amount of bandwidth consumed continue to increase among cable subscribers, many said. Increasing amounts of video programming are viewed on-demand and customers haven’t been disconnecting video or cable phone service, they said. A silver lining of the recession for some operators is that fewer people are moving, said some officials. CSG Systems CEO Peter Kalan and others said the NCTA show reinforced for them that the cable industry is okay.
“Even though this is not recession proof, this is one of the best industries to be in,” said Kalan, whose company sends bills to customers and provides gear for call takers and cable technicians. “The capital structure is not something you worry about in the industry -- the consumers are still buying,” he added. “All the providers are very strong capital-wise.” Last month’s bankruptcy filing by Charter, a CSG customer, “has the potential to be a very crisp and clean process as it’s being laid out in court filings,” Kalan said.
Sandvine, a large provider of network management gear, hasn’t seen significant changes in 2009 versus last year in what types of online applications are popular and how much time is spent online. CEO Dave Caputo said the biggest categories of growth for Web traffic continue to be VoIP, online video and Web gaming. “If you look at all the numbers falling off the cliff, I don’t see that happening in the broadband and entertainment space,” he said. “Broadband is continuing to grow,” giving him “reason to be optimistic.”
At Insight Communications, broadband usage continues to increase, said CEO Michael Willner. “We haven’t seen an uptick, at least a noticeable uptick, in what we call voluntary disconnects because people can’t afford” broadband, phone or video service, he said. “There hasn’t been any wholesale downgrading of service. We continue to grow the business, virtually every metric.” Video and Web service “are essential and inexpensive time fillers for people in the 21st Century and [who] may be spending more time at home,” Willner said. But “if you're really tightening the belt and if you're out of work you may not want to pay for wireline and wireless” phone service, he added, though he hasn’t seen that trend yet at Insight. Growth of VoD use likely stems from availability of more on-demand content, rather than cable customers’ economic considerations, Willner said.
More RCN customers are using VoD and adding channels with an international theme, such as foreign-language networks, said executives at the cable overbuilder. “We are continuing to see a steady increase in our international premium take rates” after the company freed up capacity and added such channels by moving to all-digital channels, said Richard Ramlall, a senior vice president. “Despite these tough economic times, our international customers [numbers] are continuing to grow and the demand for more premium international content is stronger than ever.”
Fewer household moves among Cable One and Cox subscribers mean fewer disconnections, company officials said. “Overall transactional volumes are down due to less moves and transfers” as “people are staying in their current homes,” said a Cox spokesman. The cable operator continues “to see an increase” each month in VoD usage and DVR subscriptions, he added. At Cable One, a unit of Washington Post Co., “our numbers last month were really great and up in all product categories,” said a spokeswoman.