Cable One is progressing with its DOCSIS 4.0 and 10G migrations that focus on leveraging and extending its sizeable hybrid fiber coax (HFC) network infrastructure to deliver symmetrical, multi-gigabit speed broadband services.
As part of Cable One’s network evolution, it recently activated high split technology in two markets, creating the capacity to offer 1 Gbps symmetrical service over HFC and multi-gigabit download speeds.
Julia M. Laulis, chairwoman, president, and CEO of Cable One, told investors during its second-quarter call that the cable MSO is taking a prudent approach that balances the services customers desire today and future.
“Ongoing capital-efficient investment in our network enables us to compete aggressively for market share as we engineer a network that meets our customers' current needs and pushes beyond them as we lay the groundwork for DOCSIS 4.0 and 10G,” she said.
A key focus for Cable One is continuing to find ways to get more life out of its HFC network. While Laulis did not provide specific details, Cable One has developed a device configuration using DOCSIS 3.1 that has created 20% to 30% more upstream capacity than previously available on traditional low-split HFC.
“We are not aware of anyone in the industry currently optimizing upstream capacity in this way,” she said. “This is yet another example of how we are improving and extending the life of existing HFC facilities while also creating additional capacity for HSD customers with minimal additional Capex investment.”
Balancing broadband declines, churn
While Cable One has set a path to enhance broadband speeds, the service provider saw seasonal challenges during the second quarter.
Laulis cited a slower housing market and typical second-quarter rates as the reason it lost broadband subscribers. “The second quarter is historically our toughest of the year due to seasonality,” she said. “Coupled with depressed home move activity, a slowdown in some new builds and market competition, we continue to experience a low transaction environment, ending the quarter with a decrease of approximately 5,900 customers on a sequential basis.”
However, Laulis emphasized that the cable MSO’s broadband churn rates remained low. “While the current environment has slowed gross connects, our churn rates remain below pre-pandemic levels,” she said. “These low churn levels include the impact of the attrition from our current rate adjustments and are a clear indication of our customers' appreciation of our consistent reliability and the value we provide to them.”
Driven by internet rate adjustments and speed upgrades, Cable One reported that broadband ARPU rose 5.9% year-over-year. During the second quarter, a subset of customers across several rate plans in Cable One’s Sparklight markets saw a $5 increase.
The cable MSO also rewarded its high-speed data customers by increasing download speeds across most of its broadband plans in two market segments: the Sparklight markets in mid-May and a portion of its Fidelity markets in the quarter.
Cable One is finding that customer adoption of higher speeds is growing. It reported that sales of 500 Mbps or higher were nearly 65%, increasing 755 basis points sequentially and gig sales were at an all-time high of almost 40% in the quarter, an increase of 229 basis points sequentially.
“While these adoption levels demonstrate many of our customers are willing to pay for faster and more reliable products, we are modeling and testing new pricing and packaging to strike the right balance between subscriber growth and long-term profitability across all demographics within our towns and communities,” Laulis said.
Wireline, wireless competitive pressures
Like other cable providers, Cable One faces competitive pressures from emerging fiber overbuilders and wireless operators offering new Fixed Wireless Access (FWA) plans in parts of its markets.
Laulis said that while Cable One is seeing new competitors, the provider’s focus on enhancing its network will keep churn at bay. “Overall, wired competition in our markets continues to increase and may create some pressure in a subset of our markets,” she said. “Our customers know they have a choice and are choosing us for reliability and speed, which has been demonstrated quarter-over-quarter in our low churn rates.”
Regarding FWA competition, Cable One said a third-party research company revealed that the unlimited data plan offered by mobile service providers like T-Mobile and Verizon is available in approximately 40% of its markets. Still, higher speeds provided on a cable network will continue to be a draw.
“We anticipated that a portion of our historic win share from DSL customers would be willing to test out mobile fixed wireless,” Laulis said. “But ultimately, those customers would gravitate to wired broadband service as they recognize the need for greater speed and reliability.”
Cable One’s total second-quarter revenues were $424 million, down 1.2% from $429.1 million in the second quarter of 2022. The service provider said the decrease was due to a continued decline in low-margin residential video and voice revenues and the impact of the divestiture of noncore operations during the second quarter of last year, which contributed $1.1 million of business services revenue in the second quarter of 2022.
