Charter and Comcast’s ongoing movement into larger business accounts – one that will require additional fiber deployments – represents a large opportunity for network construction companies like Dycom.
Steven Nielsen, CEO of Dycom, told investors during this week’s DA Davidson 15th Annual Engineering & Construction Conference that he expects cable’s ongoing fiber investments to businesses to rise.
Dycom noted Comcast and Charter’s combined business services revenue totaled $10 billion of an addressable $70 billion market.
“Fiber for cable operators going to small and medium enterprises has been a huge opportunity,” Nielsen said. “It’s something that started six-seven years ago so you see with Comcast and the Charter/Time Warner merger we have two growing customers in this area.”
Evidence of Charter and Comcast’s business service power were seen in the second quarter as both reported gains in their units.
Charter reported that SMB primary service units (PSUs) increased by 82,000, compared to 69,000 during the second quarter of 2015. As of June 30, 2016, Charter had 1.3 million SMB customer relationships and 2.3 million SMB PSUs. The cable MSO saw its enterprise PSU amount rise 22 percent, ending the quarter with a total of 90 customers.
No less compelling was Comcast Business. Driven by continued SMB and medium-sized business sales, the MSO reported that the unit’s second quarter revenue rose 17 percent to $1.4 billion.
Supporting this growth is an ongoing fiber network expansion program into more business districts.
In June, Comcast Business announced plans to invest over $9 million over the next 12 months to expand its fiber network in Virginia, enabling it to reach over 3,000 businesses with Ethernet services, for example.
It’s hard not to notice the effect the recent swath of cable competition is having on the business market, particularly for Ethernet services. Interestingly, Charter took over the third place in the U.S. Ethernet race, edging out Verizon in terms of port share, according to Vertical System Group’s Ethernet mid-year Leaderboard.
A key part of Charter’s Ethernet standing was fueled by a larger swath of HFC and fiber network capabilities.
Through the Time Warner Cable acquisition, Charter gained 150,000 miles of fiber and 75,000 on-net buildings. In addition to its own network, TWC has established 130 E-NNI (external network-to-network interface) agreements with 25 other service providers. This allows Charter to potentially reach into larger business accounts in more U.S. markets.
Meanwhile, the Bright House acquisition gave Charter greater scale across number of key vertical industry segments such as healthcare, hospitality, government and education and a broader Ethernet footprint with an additional 18,000 miles of fiber.
But business services is only one leg of cable’s pending growth.
Dycom expects Charter to become a larger customer, particularly given its recent fiber commitment to the FCC to build out fiber to 2 million homes.
- listen to the webcast (reg. req.)
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