WHITEFISH, MT / ACCESSWIRE / January 13, 2015 / The television and Internet business is as competitive as ever, leading to proposed mega-mergers in 2014 as companies vie for market dominance. For instance, Comcast (NASDAQ: CMCSA), the largest cable provider in the U.S., is trying to fight through some resistance to garner regulatory approval of its $45 billion merger with Time Warner Cable (NYSE: TWC), the nation's second biggest cable operator. Also on the desks of the Federal Communications Commission is AT&T's (NYSE: T) $48.5 billion bid to buy DirecTV (NASDAQ: DTV), a merger that AT&T says will lower bills for consumers by amalgamating the number two multi-system operator (MSO) in the States (DirecTV) with the number seven.
These proposed deals have set the table for another dynamic year in the industry for providers of all sizes, as technology accelerates to deliver content faster and to even more remote locations. It also hearkens the question of what strategic moves will be made to overcome market erosion in areas becoming antiquated, such as phone line subscribers, as Digital Subscriber Line (DSL), fiber-optics, cable modems, wireless etc. spread deeper across the country. It may seem like ancient history for those who think of the long, squeaky dial-up connections used in the 1990's, but there are still plenty of people paying for dial-up today, creating a solid target demographic for providers. Estimates by Pew Research last year showed that about 2 percent of Americans are still on dial-up services, while about 70 percent had broadband.
According to Bloomberg, Verizon (NYSE: VZ) is seeing the opportunity, reportedly recently approaching AOL Inc. (NYSE: AOL) about a joint venture or acquisition. If a deal were ever to be struck - and none is even said to be offered at this point - Verizon would pick up not only AOL's advertising technology and online properties like the Huffington Post and TechCrunch, but also AOL's 2.3 million customers still paying for dial-up services. Verizon, the fifth largest MSO in the U.S. with about 4.75 million subscribers, could then look to expand its footprint by transitioning those customers to its FiOS fiber-optics network.
In the similar fold, for regional provider Cincinnati Bell (NYSE: CBB), a drop in access line subscribers is being counterbalanced by expanding fiber-optics connections, with a goal of having about 75 percent of Cincinnati covered with fiber by the end of next year. At the end of the third quarter, the company had about 40 percent of the Greater Cincinnati area covered, which helped boost "fioptics" video subscribers by 26% from the year earlier quarter to 87,800.
In many cases across the country, fiber-optic cable is replacing the copper wire technology in coaxial cables because of limitations of coax. In part because most of the current in copper cables is carried near the skin of the cable, and that current weakens with distance. This degradation of the signal gets even worse in the higher frequencies. Fiber-optic cable sends data via light pulses in durable glass wire, versus electrical pulses in coax, allowing for greater bandwidth, higher security and faster data speeds that can travel greater distances with less interference. Often, this can be achieved at the same or lower cost than copper lines, making it particularly attractive to operators.
Using fiber-optics to reach demographics stuck with arcane Internet connections or, worse yet, no Internet or cable services because of homes and businesses being situated at the "end of service" line of providers is a key part of the business of 4Cable TV International, Inc. (OTC: CATV). A manufacturer of outdoor transmission equipment for the cable and broadband industry, 4Cable has a portfolio of products, including its flagship patent-pending DSR No Diplexer Node, PowerMiser(TM) amplifier and provisional patent-pending RF2F(TM) (coaxial to fiber optic) Converter technology. All of the companies offerings are founded on the premise of delivering cost effective solutions to maximize bandwidth, save energy and extend system penetration, but for the intent of reaching customers at the end of the service run, 4Cable heralds its RF2F(TM) Converter as a first-in-class device.
As referenced, coax transmissions can only go so far, which means that a residence or business a short distance from the last customer in the line can be out of luck. That is, unless the provider will shoulder the expense of adding the infrastructure to extend service, which most times isn't economical and doesn't happen because it can entail building a new Hybrid Fiber Coaxial plant. 4Cable solves this problem with the RF2F(TM) Converter, a device that connects to the end of the coax and allows a reliable bi-directional signal to be transmitted by up to an additional 10,000 feet (nearly two miles). With an estimated two customers within 2,000 feet of the end of every single feeder line, extending the service area at a relatively low cost (an average of $500 per customer) is what 4Cable tells providers is "Gold at the end of your lines" that can deliver a return on investment in as little as six months.
The company spent the better part of the second half of 2014 demonstrating their new technology as the RF2F(TM) Converter was put through the rigors of lab and field testing by potential customers, including a "top-10 Cable MSO" approved the RF2F(TM) technology for purchase by their cable systems. As is typical, no names of the MSOs were disclosed and rankings can bounce around, but Wikipedia has the top 10 cable MSOs listed as Comcast, Time Warner, Cox Communications, Charter Communications (NASDAQ: CHTR), Cablevisions Systems (NYSE: CVC), Bright House Networks, Suddenlink Communications, Mediacom Communications, WideOpenWest and Cable One, so, regardless of which have approved the RF2F(TM), it looks like 4Cable is starting to keep good company. Further, 4Cable said last month that more MSOs and independent cable operators have approved the RF2F(TM) for purchase within their organizations, which widens the sales spectrum to a litany of smaller providers looking to expand their service areas.
Now it looks like the rubber is meeting the road with the first sales of 4Cable's RF2F(TM) into the major cable system market in mid-December. The company has been providing RF2F(TM) to the 2nd and 3rd tier cable companies for over 3 years. This could be a turning point for a company that generates nominal, but growing revenue. In the third quarter, sales were $332,067, compared to $274,722 in Q3 2013. Net loss in the recent quarter was $178,414, or nil per share, compared to a loss of $17,637 ($0.00 per share) for the quarter ended September 30, 2013. The company attributed the increased net loss to ramping up sales efforts and adjustments to inventory.
With regulatory approvals (or refusals) on the horizon for some of the biggest names in the cable/Internet business, 2015 should be an interesting one. There are plenty of factors ratcheting up competition in addition to the possible creation of monoliths. Over-the-top companies like Netflix (NASDAQ: NFLX) and Hulu are continuing to grow more prominent. Moreover, TV programmers HBO, Showtime and CBS Corp. (NYSE: CBS) have taking a new route to offer programs in an a la carte fashion to consumers on broadband. The government's position on Net Neutrality will certainly play a role to some degree in keeping things competitive as providers look to get the attention of as many people as possible while controlling cost, which should provide growth opportunities for firms like 4Cable TV by offering technology to help meet those goals.
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