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First Take: Time Warner Cable Adds Broadband Customers, Sees Higher Revenue, Costs Plummet in 2nd Quarter

Phillip Dampier July 29, 2009 Internet Overcharging, Time Warner Cable 1 Comment

High speed data revenue continued to be one of the few bright spots for Time Warner Cable in the second quarter of 2009.  Time Warner Cable’s broadband division increased revenues by 10% in the six months ending June 30, from $2,026,000,000 dollars  in 2008 to $2,224,000,000 dollars in 2009, (9% measuring last quarter only) as a result of continued subscriber growth and an increase in commercial networking and transport revenues.

At the same time, the company announced further declines in most capital expenses to administer that network.  Although the company increased spending on scalable infrastructure (improvements to the existing network) for the six months ending June 30th from $258 million in June 2008 to $334 million in June 2009, the majority of that expense was related to introducing Switched Digital Video (SDV), a method of allowing the cable company to deliver additional digital television channels to neighborhoods.

Upgrade costs plummeted in the six months ending June 30th, from $147 million in June 2008 to $86 million in June 2009.

The costs for Time Warner Cable’s broadband revenue continue their rapid decline, dropping by 14%, from $77 million dollars in the six months ending June 30th 2008 to just $66 million dollars in the six months ending June 30th, 2009.

Despite the increase in revenues and decrease in costs, Time Warner Cable is still committed to revisiting its Internet Overcharging schemes going forward, with company officials admitting on a conference call this morning they are going to take a look at broadband pricing going forward.

One potential reason is that broadband is a success while the company continues to battle with revenue challenges on the video side of the business.  Most of the increasing costs facing Time Warner Cable are from programming expenses, which continue to increase.  The company also continued to face challenges from subscribers dropping cable television service, which they attribute to the bad economy.  Investors were anxious about the challenging results and from competition from telephone and satellite.  AT&T continues to be the most formidable challenger for Time Warner Cable across its service area, with continued expansion of U-verse.  Company officials downplayed Verizon FiOS’ impact on Time Warner Cable, noting expansion of Verizon FiOS seems to have stalled due to economic challenges.

Nevertheless, the company is moving foward to expand DOCSIS 3 in just one city in 2009 – metropolitan New York.

We’ll have additional coverage, including soundbites and further details coming shortly.

Currently there is 1 comment on this Article:

  1. jr says:

    I expect more “brown out” talk as Time Warner’s expenses continue to fall

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