-Lack of competition for fixed consumer is the profitability driver of US cable companies.
-Wireless woes are endemic to the industry, not a result of company performance.
-IP video delivery will not change producer pricing.
-Near term ROIC trajectory can only be changed by creating content or software.
-Regulatory, competition, technology and scale will not dramatically change ROIC.
Scale will not fix symptoms of problematic business model. Comcast, supposedly the greatest cable monopolist, has averaged just a 4.5% ROIC over the last five years.Time Warner Cable’s 5-year average is -1.3%.
Compare that to Google 16% or Apple 32%
-Dependence on managed service subscriptions
-Reach focused on physical footprint
-Products focused on consumer (wallet share peaked) and some smb
-Economics dependent on repackaging software, hardware and content
-Poor historical ROIC & declining margins indicate slow to adapt and change
-MSO consolidation will happen but it accelerates business model problems
-Vertical integration of content production businesses will follow
-Uncertain if cable or telcos can reinvent themselves as software companies or content creators to create and sustain better value.