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Cable upgrade paying off

U.S. digital subs jump to 16.8 mil

NEW YORK — The $65 billion that cable operators have shelled out since 1996 to rebuild their cable systems may finally be paying off.

The National Cable & Telecommunications Assn., the industry’s D.C. lobbying arm, said in a report that the number of digital-cable subscribers in the U.S. has jumped to 16.8 million, growing in the second quarter by 890,000 customers — a 37% increase over the same period a year ago.

And 912,000 more subscribers in the second quarter have signed up for cable modems that deliver high-speed Internet service, pushing the total to 9.2 million customers overall.

Cable has not grown as fast on the third leg of the digital triad, telephone service through cable wires, as only a few operators, like Cox and AT&T, are offering it. But the number of cable phone customers still increased by 190,000 in the second quarter for a total of 2.1 million, and more operators are planning to add telephony to their menu of services over the next few years.

“We’re fulfilling the promise of cable broadband,” said NCTA veep Rob Stoddard. “But despite the robust growth of digital services, we’re frustrated that the marketplace seems to be taking an awfully long time to recognize it.”

Stoddard is referring to the battering that most cable-operator stocks have taken over the last few years by Wall Street. Investors have treated these stocks like underachievers, punishing cable ops for not luring subscribers to digital boxes fast enough to pay down the huge debt that’s crushing the operators.

Cable, of course, has suffered from the effects of a sluggish economy. If the economy engineers a double dip by falling back into the recession from which it just recovered, cable operators could lose some of the gains in the number of digital subscribers: Cash-strapped customers may be forced to drop their digital boxes, cutting back to the cheaper analog service.

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