Vertical Systems Group: TWC, Cox, Comcast grow Ethernet service presence

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Cable operators continue to gain ground in the ever evolving Ethernet services market as they aggressively build out their own fiber networks and service sets, according to Vertical Systems Group's latest Ethernet Leaderboard.

According to the research group, the six leading cable MSOs in the U.S. carrier Ethernet services market are Time Warner Cable (NYSE: TWC), Cox, Comcast (Nasdaq: CMCSA), Charter Business (Nasdaq: CHTR), Cablevision's (NYSE: CVC) Lightpath and Bright House Networks.

During the past year, these six service providers saw what Rick Malone, principal at Vertical Systems Group, calls "meteoric growth." Time Warner Cable and Cox saw the biggest port share gains, while Comcast led in overall growth.

"The cable segment is really the growth area," added Rosemary Cochran, Principal of Vertical Systems Group, in an interview with FierceTelecom. "Cable, although it's the smallest in terms of total U.S. installations, it's the fastest growing segment."

What's helped cable achieve their growth are three factors: their focus on the small to medium sized businesses (SMB) that have been largely ignored by large incumbent telcos, installation times, and aggressive pricing.  

"They start to put into gear how to capitalize on the opportunities targeting the small business market in region, which falls in between some things where the larger carriers aren't really looking at those companies," Cochran said. "Certainly, the aggressive pricing was a factor and installation times."

Ethernet sales and business services growth overall was on display in the fourth-quarter earnings reports of a number of the top cable MSOs. Time Warner Cable, which plans to be acquired by Comcast, reported that rising 20 percent in the fourth quarter to $616 million.

Likewise, Comcast reported strong business revenue gains in its fourth-quarter 2013 earnings, which rose 25.3 percent for the quarter to $876 million and 26.4 percent for the year at $3.24 billion. Charter also saw notable business services growth during the period as revenues rose year-over-year to $228 million.

Despite their gains, cable operators aren't without their challenges. Due to their regional basis, it is difficult for them to serve customers in multiple markets.

"The focus part of the cable story is they know their territory, but the flip side of that is if you have a customer that has maybe two regions or a location on the East Coast and on the West Coast you're not able to serve them as easily because that's not the way those networks are set up," Cochran said. "The network could work technically, but from a sales organization that's not the way are set up."

For more:
- see the release

Related articles:
VSG: AT&T, Verizon retain Ethernet lead, but cable becomes a bigger factor
The Ethernet services pricing conundrum
Ethernet will contribute over 75% of business bandwidth by 2017, VSG says
VSG: AT&T remains the dominant Ethernet player, but cable MSOs, CLECs gaining ground

Updated article on March 21 with quotes from Rosemary Cochran of Vertical Systems Group.