Superfast Broadband Not Needed, Says Time Warner Cable CEO
Superfast broadband isn’t needed by most Web applications and is too fast for most computers and home networks, CEO Glenn Britt of Time Warner Cable told investors Friday. Cable and telco executives have said very high-speed service, by which they usually mean faster than 50 Mbps, will become increasingly important as more people use video streaming, content uploading, multiplayer gaming and social networking applications (CD Oct 6 p3). Speaking at the Sanford Bernstein conference, Britt did say demand for bandwidth is increasing.
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Britt pointed to increasing consumption of bandwidth to make a case that metered broadband service, which the cable operator put off under heavy criticism (CD April 17 p9), still makes sense. Speaking later at the New York conference, Comcast CEO Brian Roberts agreed with Britt’s earlier remarks that the recession is making this quarter worse than Q1.
Calling TWC’s experience with plans to expand metered broadband billing “a bit of a debacle,” Britt said, “Clearly we did not handle the public relations very well” and so “pulled back from that for now.” He added, “I still think some notion of you use less and you pay less, you use more and pay more will ultimately be what happens. But we'll see.” Charging subscribers by the amount of usage is “actually going to be more of an important dimension over time,” Britt said. “As we have more and more heavy-use applications, we felt that the business ought to work like everything else in life.”
Comcast will spend $400-500 million this year and again next to move almost all the cable networks besides public access channels it carries to digital tiers to get room to add HD programming and offer superfast Web service, Roberts said. He pointed to the cable operator’s rollout of DOCSIS 3.0 service, which bonds four cable channels together for ultrafast broadband. “We'll have spare capacity to grow that,” Roberts said. “It is critical to get out of the analog business and to be all digital and eventually to be all IP.”
The company is paying less than $30 for digital converter boxes made by multiple manufacturers to let cable customers get all-digital service, Roberts said. “We've seen the customer issues installing these little boxes,” so Comcast is trying to go cable system node-by-node “so it’s not super disruptive,” he said. He still hopes Comcast will be mostly finished with its digital transition before 2011, though “it’s one thing to have an engineer draw it up” and another to carry out the plans. “There is a little bit of wait-and-see going on with some of our brethren” who aren’t embarking on such ambitious digital plans, Roberts said.
Roberts said that for his company, like TWC, this quarter is more like Q4 than last quarter as the recession wears on. “We're really not seeing a surging of disconnects,” he said. “We're just not seeing a surging of orders.” Roberts said, “People are not adding services the way they were” and “we have to hope that won’t go on forever, and it won’t.” The worst may be over for banks, but “we're not out of the woods,” Roberts said. “It’s just still a scary time” though eventually “there will be opportunity out of the wreckage.”
The recession’s effect is “pretty widespread” geographically and for TWC is “pretty much across the board” with its products, Britt said. “I do have a theory that it has to do with vacant houses,” he said. “We have seen the growth of DVR penetration slow a bit,” and growth in the number of digital subscribers, too, Britt said.