Cable Companies Becoming Dumb (Profitable) Pipes

Interesting article in Multichannel news about Charter Communications using Comcast’s Flex platform to deliver streaming media to customers. Charter CEO Rutledge believes most customers will end up cutting the TV cord and go IP only:

“I expect that incrementally most of our customer base will be all-IP,” Rutledge said after being asked about the JV on Charter’s Q1 earnings conference call with analysts. He added that unused video spectrum can be recaptured and used to increase broadband speeds or provide additional capacity over time.

Cable companies make far more money delivering dumb pipes vs. TV. The reason is that cable providers have to pay television networks and broadcasters per subscriber to carry the channel.

Streaming works the other way around: streamers like Netflix have to pay the cable provider for direct access to their network or face network congestion. Cable companies profit on both ends of that equation and in some cases get a portion of subscriber revenue too.