Time Warner Cable Inc. ( TWC ) has initiated a strategy to deliver Ethernet services to its business services customers over the company's existing DOCSIS 3.0 network. Major Cable operators in the U.S. are aggressively deploying high-speed Wideband network based on DCOSIS 3.0 technology as a cost effective bandwidth enhancing solution. The combined DOCSIS 3.0-Ethernet solution sets a terget of achieving 320 Mbps downstreame and 120 Mbps upstreame speed for business enterprises.
In fact, DOCSIS 3.0 is helping the cable MSOs to explore some new markets which were hitherto unexplored by them. The loss in the basic video market are now getting more than recovered in the broadband services segment especially in the high-speed Internet access market. The business services segment is gradually becoming a major source of revenue. In the third quarter of 2012, this segment generated revenue of $493 million, up 27.4% year over year. Beside, year-to-date revenue of the business services segment was $1,386 million, showing an improvement of 30.8% year over year. We expect this segment to contribute almost $2 billion to the top line of Time Warner Cable in 2012.
Like its closest peer Comcast Corp. ( CMCSA ) and Cablevision Systems Corp. ( CVC ), Time Warner Cable continues to lose residential video subscribers year after year. Massive competition from fiber-based TV services of telecom operators and much cheaper online streaming services provided by some companies are the primary reasons for this pathetic condition of the cable TV operators.
The deployment of DOCSIS 3.0 becomes essential for cable MSOs since preference for video-on-demand (watching movie on the Internet) has increased significantly among customers. Another potential future growth area for cable MSOs is the small & medium sized business segment. Various industry researches estimate that the SMB segment is a $30 billion market opportunity.