Last week I attended Metro Connect down in Miami, which I found to be every bit as interesting as it seemed from afar in the past. The biggest thing I took home (or will have when I get there) came from the conference's new arrivals, namely the cable MSOs.
I know the business divisions of the cable MSOs have been making big inroads into the SME space for some time. But I hadn't fully comprehended just how big. TWC Business Class, for instance, now has fiber into 58,000 buildings, of which there are 14,000 on-net cell sites. They have $2.5B in revenue (much of which is HFC rather than all fiber, but still), and despite that scale they still manage a growth rate north of 20% annually. Each of the others is at a different stage, but the overall story seems consistent with a strong base in the SMB market and aspirations to move on to larger opportunities.
That puts the proposed Comcast/TWC deal in a new light for me. On the enterprise side, the combined entity would boast business revenues of $5.5B. But more importantly, it would be nearly fully national. One thing holding back the cable MSOs from moving up more swiftly into the larger, multisite enterprise opportunity has been the limitations of the footprint they can reach. Combining the business Ethernet reach of Comcast and TWC would go a long way to eliminating reach as an issue.
That being said, my other impression is that the cable MSOs are still very much focused on depth within their existing footprints. The DukeNet deal may have taken TWCBC into a few new territories, but it doesn't look like that is the start of any sort of widespread expansion beyond the franchise territories. Further M&A interest does seem to continue to revolve around the overlap, making the likelihood that a cable operator could buy a national fiber/clec player still rather remote.
Of course, if you've got a 20% growth rate and a lot of marketshare left to take, there's not exactly a driving need to change the game.
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