More Proof That Cable's Dumb Pipes Are Smart, Very Smart

Seemingly forever, pundits have written that the brave new world of over-the-top premium motion picture and television video distribution eventually will scorch the business models of cable companies -- i.e., essentially consumers will by-pass paying expensive cable TV bills in favor of direct Internet viewing options. The ultimate end game here -- downright frightening to many -- is that the major cable companies will be rendered nothing more than "dumb pipes" (broadband) that carry that Internet-delivered video content.

But, so what? Apart from the pejorative name ("dumb pipes"), more and more evidence is supporting the notion that cable companies are expanding and monetizing their business more effectively than ever precisely because they provide the infrastructure necessary for the delivery of that premium video content. Case in point -- cable companies are winning the broadband war over their telco brethren, while the telcos are winning the IPTV war -- and ARPUs (average revenue per users) for broadband users is "more than double that of IPTV" according to a new report identified in Gigaom. That's right 2X!

I recently wrote more about this "dumb pipes not being so dumb" reality -- click here for my earlier post on this subject. In that post, I also discuss the reality that margins in the broadband game are significantly better than those in the IPTV game (and identify the reasons why -- a significant one of which is that IPTV faces extremely burdensome content licensing costs from major media companies).

So, on the one hand, the broadband biz has significantly higher ARPUs. And, on the other hand, the broadband biz has significantly higher margins. And, oh yes, one more critical thing -- the cable broadband biz is also expanding significantly, as more and more consumers need faster and faster connections to view their growing online video viewing habits and demands.

Win, win, win for cable -- even though many continue to believe the hype that cable companies are nothing but losers in this brave new world ....