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The "Sweet Spot" Of The Telecommunication Industry

1820 words - 7 pages

Main Product/Service Cable Systems are companies that provide the service of sending cable television signals through a closed channel, a coaxial or fiber-optic cable, into the homes of its subscribers (#1, p. 117). This signal provides television programming, much like that of broadcasting companies, to viewers across its service area. More recent expanded areas of cable systems include high-speed internet connection, digital cable service, and its most recent development of video-on-demand (VOD).Producing Income The main way in which cable systems generate their revenue is through subscription fees paid by viewers to receive their services (#1, p.174-176). These fees can run anywhere from $30.00 - $100.00 per month depending on the extent of the services received. Additional income is also provided through expanded services such as cable modem service (approx. $50.00 per month) and one-time purchases such as VOD and pay-per-view features. Some revenue is also generated through advertising on cable networks, although this is a much less profitable form of generating revenue. This lean toward not relying on cable advertising is due much to diverse advertising restrictions among networks and a lack of statistical information about cable audiences, compared to that of broadcast (#1, p. 184).Profitability Revenues for the two major cable systems, AOL Time Warner Cable and AT&T Broadband don't seemed to be hindered by the recent threats to profits posed by the quickly emerging satellite industry. At the close of 2001, both this giants showed revenues well over the $9 billion mark, and don't show any signs of slowing down (#7 & #8). In actuality, further expansion and profits seem inevitable as business ventures, such as the recent announcement of a merger between AT&T Broadband and Comcast. Other operators in the industry are doing well also, with revenues averaging $3 "“ 5 billion in 2001 (#9).Key Players The two major players controlling the market: "¢ AT&T (http://www.attbroadband.com/services/) "¢ AOL Time Warner (http://www.aoltimewarner.com/about/companies/twcable.html) Other players: "¢ Cablevision (http://www.cablevision.com/company/index.html) "¢ Cox Communications (http://www.cox.com/Corp/FYH_CorpBase1.asp) "¢ Comcast (http://www.comcast.com/) Recent Developments In the recent months there have been several key developments in the cable industry. New feature to cable television service include "Smart Boxes" and...

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