Will broadband turn cable companies into content creators?

Will broadband turn cable companies into content creators?
March 1, 2018  |  BY

Technology trends may come and go, but few things remain as consistent as the growth of broadband. It’s an objective fact that broadband consumption keeps rising, which is a driving force for the overall success of the telecommunications industry. If you look at mobile traffic across the globe, it’s been increasing by nearly 50% each year, with wireless traffic seeing approximately a 20% annual boost. 

What accounts for this seemingly endless growth? Sure, there are more and more people using digital devices each day, along with the increased amount of time devoted to using those devices. But the ongoing surge has to do with one irresistible force: Internet video. People would rather watch than read, which is why Verizon Wireless now supports as much traffic in one hour as they did in a seven-day period in 2008.

Interestingly, however, despite broadband growing like a runaway train, many firms have been challenged with transforming this opportunity into real profits. But one sector that has capitalized is the cable area. Cable companies have greatly benefited from the constant increase of broadband usage. Of course, some cable companies have been more successful with broadband because there’s not much competition. In fact, in the majority of cities, some cable operators may not have a single competitor, allowing them to literally own the entire market.

From a consumer standpoint, this isn’t as much of a problem as it may appear to those who believe in the benefits of healthy competition. As people spend more time on their smart phones, tablets and laptops, they inherently want an improved experience that can only be produced by higher speeds. That’s why many have made the switch to cable and are more than happy to write checks for the highest speed possible. 

On the other hand, it’s puzzling why cable companies have captured less than 50% of potential customers. They have an open door to win market share and retain pricing dominance, especially considering the near-impossible ability for others to enter the market and actually compete for customer loyalty.

In addition to gains in capturing more of the broadband market, cable companies can also take advantage of the exponential growth of online video with usage-based pricing. When executed and managed correctly, usage-based pricing could negate any ramifications from those who decided that cable just isn’t worth the expense anymore. This is an ongoing trend where consumers decide that streaming services like Netflix, Amazon Prime, Hulu and others can more than meet their needs for online entertainment.

The catch is that online streaming services need the high-speed broadband supplied by cable companies. This is the big opportunity for cable companies: they cannot only supply the broadband, they can become video content aggregators and even eventually video creators themselves, taking away market share from some of the aforementioned content suppliers. 

This future scenario isn’t so much about cable companies having another way to differentiate themselves; it’s about being able to own the entire consumer broadband experience, from how the content gets delivered to creating the content itself. And like any prediction of the future, it will be interesting to see how it all actually plays out.