Capital investment in local transmission infrastructure may help a cable-network operator to secure future Internet revenues
Internet provision via cable is carried in the channels not required for digital
(or analogue) TV, and is inevitably a shared resource between all the households
connected on a given segment. Unfortunately there is little or no brand loyalty
for what is typically regarded as a commodity service. A heavy user will always
prefer the fastest downlink and uplink speeds possible, and any moderately-active
customer will quickly consider any available alternatives if contended bandwidth
is too limited when they need it.
We have modelled the current infrastructure of a typical cable network operator,
including Internet CPE, set-top box, optical node, amplifier and head-end, together
with future options to address bandwidth limitations such as channel-bonding (if
not already implemented), enhanced video compression, RF extension, and segment
splitting. The specimen charts shown here illustrate the customer mix and dynamics
in relation to available capacity in the network. According to readily adaptable
estimates of the costs involved and the elasticity of relevant market segments (including
level of competition), the full model compares the cost implications of implementing
these upgrades with the potential revenue loss associated with not acting in a timely
manner to retain customers.
Figure 1: Live snapshot from the model
Implied Logic can work with you to customise this methodology to your individual
market and current network position in order to fast track a credible financial
assessment of your strategic options. Please access the full model and
download a detailed description of the methodology to review offline and share with
interested colleagues.