I’ve spent a lot of my career in and around cable operations and it might come as surprise to you but there is not very much profit in the video side of their businesses anymore. The programmers have eaten it up with rising rates and bundling. The Broadcaster have received their share through retrains fee's and the spiraling cost of Sports content… let’s not even bother to start that discussion. So where are the profits? Well for the past 7-8 years it’s been from voice and data services.
So it’s become obvious to cable operators that internet access bandwidth increasingly is more valuable than video entertainment bandwidth. That is reflected in the growing recognition that it is broadband access which is becoming the foundation service for cable operators, gradually replacing television revenues. Eventually, as linear TV is viewed less, the spectrum it now uses on cable and fiber will be reallocated to expanding data transmission. Netflix and other streaming video services now are driving bandwidth consumption in the U.S. ISP business. Since at least 2011, real time entertainment content has represented at least 49 percent of peak hour traffic in North America. Industry statistics reflect that by the end of last year, video had grown to represent as much as 75 percent of peak hour broadband traffic. With gradual attrition of video revenues, it will at some point make sense to allocate more cable bandwidth for Internet access, and less for linear TV.
This kind of evolution to the cable business is not new. Operators in past decades had prioritized analog signal delivery over digital. As the need to support Internet access grew, operators gradually shifted to “more digital” in the mix, and finally to “all digital,” as doing so freed up additional bandwidth for use for Internet access. The future is yet to be determined but the signs are strong. MSO's have always fought with the "dumb pipe" label but now it is exactly that pipe that holds the keys to power over the consumer's household.