Time Warner Cable to increase broadband speeds by 50 percent

Time Warner Cable (NYSE: TWC) COO Rob Marcus said Monday that the MSO will increase the speed of its standard broadband Internet tier by about 50 percent over the next 60 days.

Rob Marcus, Time Warner Cable

Marcus (Image source: TWC)

Marcus told analysts on the MSO's third-quarter earnings call that the move to increase the speed of its standard tier to 15 Mbps will help Time Warner Cable compete with the faster broadband packages marketed by AT&T's (NYSE: T) U-verse Internet, Verizon's (NYSE: VZ) FiOS Internet and other rivals. Broadband remains the strongest product in Time Warner Cable's triple play, with the company picking up 85,000 high-speed Internet subscribers during the third quarter. It lost 140,000 basic video subscribers during the period, while its voice subscriber count remained flat, at 4.9 million. Time Warner Cable ended the quarter with 12.2 million video subscribers and 10.9 million cable modem customers.

Time Warner Cable announced in early October that it would charge subscribers $3.95 monthly to lease its cable modems. "Essentially this is a rate increase on our high-speed service, but customers have a choice," Marcus said, noting that about 3 percent of subscribers have chosen to purchase their own cable modem to avoid paying the fee.

CEO Glenn Britt told analysts Time Warner Cable will increase its investment in building WiFi access points, which he said is helping it retain subscribers. "We're seeing very promising reduction in churn – promising enough that we're encouraged to keep going in L.A. and other cities," Britt added.

Also worth noting from Time Warner Cable's third-quarter earnings report and investor call:

  • In terms of video subscriber losses, Marcus said Time Warner Cable's systems in New York City, Texas and the Midwest performed "somewhat less well" compared to its systems in the Carolinas, the Pacific West (which includes its Los Angeles division) and systems in the northeast (excluding New York).

  • Time Warner Cable saw its transactional VOD revenue drop by about $15 million during the third quarter compared to last year because of reduced sales of sporting events, movies and adult movies, Marcus said. Competition from NBC's coverage of the Summer Olympics and the lack of a marquis boxing event during the quarter contributed to the decrease, he added.

  • An additional 7,000 subscribers signed up for Time Warner Cable's high-end Signature Home service, growing its total to 67,000 subscribers, Marcus said.

  • Marcus said Time Warner Cable is integrating its billing system with joint venture partner Verizon Wireless. "By the end of the month we will be fully automated. A Verizon Wireless rep will be able to enter an order and it will automatically enter into our billing system," Marcus said.

  • AT&T's U-verse products are available in about 25 percent of Time Warner Cable's footprint, while Verizon's FiOS services reach about 12 percent of the homes passed by Time Warner Cable, Marcus said.

  • Time Warner Cable saw revenue from commercial services jump 27.4 percent to $493 million during the third quarter, while residential revenue increased 7 percent to $4.5 billion.

  • Time Warner Cable reported $808 million ($2.64 per share) in net income in the third quarter, a sharp increase compared to the $356 million ($1.09 per share) it reported this it reported this time last year.

For more:
- see the earnings release

Special Report: Cable in the third quarter of 2012

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