Business Services: A Boon for Cable MSOs

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The small and mid-sized business (SMB) segment has become a significant growth opportunity for the cable TV industry. Considerable improvement in the business data and video traffic is expected to act as a growth catalyst for the industry.

Furthermore, managing wireless backhaul traffic for mobile towers has also opened up a multi-billion dollar market opportunity. Cable operators are now gradually offering innovative wireless broadband services to their business customers.

The proposed merger between Comcast Corp. (CMCSA) and Time Warner Cable Inc. (TWC) may significantly change the internal dynamics of the SMB segment, if the deal gets regulatory approval.

These two large cable operators are immensely exploring this segment as a counter-strategy to protect their loss in the legacy video-offering market as telecom giants like AT&T Inc. (T) and Verizon Communications Inc. (VZ) are aggressively rolling out fiber-based video services. 

Currently, the market size of the U.S. Business Services segment stands at around $8 billion. Various industry researches estimate that the SMB segment will offer a market opportunity worth $20 billion - $30 billion. In 2013, Comcast and Time Warner Cable together generated $5.5 billion revenues from this segment.

Comcast is gradually shifting focus from the small-sized business segment to the mid-sized business segment. The combination of Comcast and Time Warner Cable is likely to achieve the necessary economies of scale to serve large business enterprises also.

Comcast can target large business establishments by offering VoIP services. Earlier, the company acquired privately held VoIP service provider New Global Telecom and privately held local exchange carrier Cimco Communications.

The advanced technologies of these companies together with Comcast’s high-speed Internet and Ethernet networks will enable it to offer industry leading VoIP services to large enterprises.

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