Time Warner Cable shifts away from "triple play"

Thu Apr 25, 2013 1:36pm EDT
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By Liana B. Baker

(Reuters) - Time Warner Cable Inc, the second-largest U.S. cable provider, will no longer push "triple play" packages of Internet, video and voice on its customers, a departure from the long-held industry practice of bundling the services together.

Time Warner Cable is the first cable company to acknowledge that customers would prefer to pay for television and Internet, as opposed to phone services where demand has been dwindling as people use their cellphones at home.

"In many cases we caused customers who didn't need or want phone to take a triple play offer just to get the triple play rates," Chief Operating Officer Rob Marcus told a conference call with investors on Thursday.

The cable industry faces a challenge from customers who consume an increasing amount of Internet video and subscribe to lower cost alternatives such as Netflix. Time Warner Cable issued earnings on Thursday that showed it lost a worse-than-expected 119,000 video customers in the first quarter.

It said the new strategy, which was rolled out in the first quarter, drove more customers to sign up for single or double play packages than before, while fewer people signed up for triple play than in the past.

Part of the rationale for the change is that customers will spend more when they feel they are using all their services, Marcus said.

"Many customers choose not to take phone but instead spent their money on incremental speeds and other ancillaries. That's good for us and good for our customers," Marcus said.

He said it would take time for the new pricing and packaging to deliver results but said that, so far, new customers were spending more than a year ago. Average revenue per subscriber was $104.84, up by $1.27 from the fourth quarter of last year.   Continued...

The Time Warner Cable office is shown in Carlsbad, California November 5, 2012. REUTERS/Mike Blake