Thanks to Ann Higgins for sending me a couple of articles on small broadband providers. It’s interesting to see the impact of video on business. And it’s interesting to see shared problems between small telecommunications companies and cable companies. A sign of how similar the providers are – despite different modes of delivering services.
According to Telecompetitor…
The nation’s smallest telephone companies saw their operating margins increase by 5.3% in 2011 to an average of 10.3%, reversing a downward trend they experienced in 2009 and 2010, according to a comprehensive financial study of the small telco industry completed recently by the Telergee Alliance. …
On the non-regulated side, small telco operating margins increased 13% after increasing 4.9% the previous year. On the regulated side, operating margins were up 1.3% after dropping 15.4% the previous year. The reversal on the regulated side was particularly surprising considering that telcos continued to see declines in voice lines, which decreased an average of 3.7% and in inter-carrier compensation (ICC), where minutes declined an average of 8.9% on the interstate side and 12.1% on the intrastate side. …
Cost saving measures and better predicting of usage/budget seem to be key for improving margins on the regulated and non-regulated sides.
It does seem that video remains a tough nut to crack…
One area where small telcos continue to struggle to make a profit is video. Margins in that line of business dropped 6.8% in 2011.
“Content costs are constantly getting higher,” commented Skidmore.
Video is not just a challenge for small telcos. According to Multichannel News…
“The FCC has data showing that the number of cable systems has significantly decreased over the past five years,” said ACA President/CEO Matt Polka. “ACA believes that this trend reveals significant problems in the market for the delivery of video programming, particularly for smaller multichannel video programming distributors serving smaller markets and rural areas,” said Polka.
The FCC data, according to ACA, shows that since October 2005, the number of cable systems has declined 26% from 7,208 to 5,312, and that for the smallest systems — those under 10,000 subs — that percentage drop is even greater. …
Together, according to ACA, the numbers add up to a decrease in smaller cable operators that the FCC should break out from its report on the overall decrease in systems, saying it could be a an early warning sign, the canary in the headend, as it were, of problems for larger systems.
