Charter Communications’ purchase of Time Warner Cable (TWC), announced on Tuesday, has yet to be approved, but industry watchers give it better odds than the aborted Comcast bid of February, as it will not increase the market dominance of a cable company that already occupies the No. 1 spot.
Two master agents we reached for the channel’s reaction welcomed the move. One suggested another, less obvious long-term motive than simple consolidation: access to the hot-spot spectrum needed for a “Wi-Fi First” model.
Trish Kapos, senior VP, marketing, at Telarus, described both cable companies’ channel programs as “phenomenal.”
“We know their operation teams work well together,” Kapos said. “So a merger like that puts us in a real manageable situation with end-user customers and how we help our partners as the transition happens.”
Alan Sandler, managing partner of Sandler Communications, described channel managers Jim Delis of Time Warner Cable and Mike Fair of Charter as longtime friends of the channel.
“Jim used to run the channel for XO and understands that there’s a certain share of the market that will only buy from trusted advisors. Michael Fair consulted for Charter on building agent channels. Both have provided a reasonable and fair program and good payments to the agents.”
Hoping Charter’s Spiffs Survive
Sandler says that historically, Charter – whose business offering is now sold as Spectrum Business – has paid a little more in spiffs.
“If you’re an agent, you’re probably hoping that Charter will continue to influence the amount of up-front money paid to acquire new customers,” he said.
But Sandler expects things to remain essentially unchanged for the first 18 months. If the past is any guide, integration will present “some bumps,” he predicts, due to personnel reassignments and different provisioning, escalation processes and rules of engagement. But he sees the merger as working out to partners’ benefit, at least for the first five years.
“We tend to like a little bit less consolidation,” he says, “because part of our strength in front of customers is the ability to decipher the choices, but in the case of the cable companies, their territories do not overlap. So the consolidation will be beneficial.”
Like Sandler, Kapos notes that the larger footprint of a combined cable company makes life simpler for agents selling more complex, multi-site services — “a direction we’re clearly seeing many of our partners taking. Negotiations become simpler when there’s multiple sites but one carrier, one project manager on the sale, and a single implementation process.”
Wi-Fi Competition With Telcos
Three to five years into the merger, Sandler sees exciting potential in bundling …
… “Wi-Fi First,” the all-Wi-Fi-based voice and data service now popular in Europe, and now showing up in North America through such offerings as Cablevision’s $10-per-month Freewheel. He explains that back in 2011 TWC sold its cellular spectrum rights to Verizon, on the condition that Verizon share it back to use for their business services.
“Everyone thought that was a great deal for Verizon,” says Sandler. But the WiFi-first model hadn’t emerged yet, he notes, and the purchase of TWC now puts access to that hot-spot spectrum in the hands of Charter Communications.
“Charter CEO Tom Rutledge already has identified mobile-only customers as a significant long-term opportunity that is enhanced by the Charter-TWC combination,” he explains. “Perhaps more importantly, cable pioneer and media mogul John Malone is chairman of both Liberty Broadband, which is Charter’s largest shareholder, and Liberty Global, which owns Belgium-based Telenet — a Belgium-based company that has experienced significant success with the Wi-Fi First model.
A Nice New Bundle to Sell SMBs?
“This sets up a really interesting fight that may benefit agents selling cable services to SMBs,” says Sandler. “The cable companies have taken on the LECs (local exchange carriers) with their Internet, cable against DSL, fiber against fiber, content against content, and now they’ll be able to offer the Wi-Fi First product, which will be a nice offer for the SMB customer. If you’re an agent, this could be a very nice upsell opportunity while having to check availability in only one place.”
Another merger advantage that Sandler sees for agents: “If it doesn’t have too much debt, and the combined company can continue to build out serviceable addresses, you have more and more customers who qualify for services. You just hope that they can continue to build out.”
And a Side Order of Cloud
And then there’s cloud: Kapos says she will be closely following the future developments with NaviSite, TWC’s cloud hosting and application management subsidiary.
“Navisite is there to round out Time Warner [Cable]’s service offering, and with that, as we’re trying to grow with them, we’re very interested in finding out what will happen there.”