Despite larger than expected losses on the video side, which helped trigger a minor sell-off in its stock on Thursday morning (Oct. 26), Charter Communications chairman and CEO Tom Rutledge stressed to analysts that the cable operator still has substantial room for growth.

Charter lost 104,000 video customers in the third quarter, more than twice the 47,000 it shed in the same period last year. The decline was in part responsible for a dip in Charter’s stock price early Thursday. The MSO has been one of the best performing stocks in the sector since it began its pursuit of Time Warner Cable in 2015, culminating in a purchase that transformed Charter into the second-largest cable operator in the country behind Comcast with about 16.5 million residential video customers.

Partly because of anticipation that it may buy more companies and partly because of the potential to grow subscribers inside its own footprint, Charter has been considered more of a growth stock than some of its larger peers. But some recent glitches around the integration of its Time Warner Cable and Bright House Networks systems over the past several months have cast some doubt on those growth prospects.

RELATED: Rutledge at Cable-Tex Expo extols platform, warns against 'poor service'

On a conference call with analysts Thursday to discuss third quarter results, Rutledge tried to ease any investor fears, stressing that Charter has plenty of mojo left.

“We still have a very rapidly growing good business,” Rutledge said on the call. “Yes, the video business has pressure in it and it has had pressure in it. We still think we can grow the video business going forward and expect to grow the video business going forward. And we expect to sell packaged products going forward including data, mobility, voice and video.”

Rutledge added that the pressures on the video business include pricing, and something he has spoken out against in the past – content providers that allow customers to share passwords for streaming services with non-subscribers.

“Many programmers now are distributors whether they know it or not,” Rutledge added, either through authenticated TV Everywhere platforms or streaming shows direct-to-consumer. But he stressed that allowing consumers to share passwords affects the price-value relationship of video.

“There is an enormous ability for people to receive free content because of the way content distributors are securing their product ineffectively,” Rutledge said. “As a result of that, I think you will see continued pressure on video. But we expect that we can still grow a rich video package inside our product bundles. We’ll think we’ll do that at the expense of our competitors and we think that the general category will continue to decline slightly.”

Rutledge continued that Charter is happy with the way it is pricing and packaging its products, adding that he believes the company has “an excellent growth trajectory based on our pricing structure.”

RELATED: Hurricanes drive Q3 video losses at Comcast

Charter lost about 90,000 video customers in the second quarter, an improvement over the prior year period and better than the 100,000 video customers it lost in Q1 2017. Rutledge has said in the past that he believed the company had turned the corner on subscriber defections as it has ironed out integration wrinkles in former Time Warner Cable systems. Despite what seems like an acceleration of those losses in Q3, Rutledge said he stands behind his words.

“We have turned the corner in terms of our operating strategy which will produce future revenue growth in excess of current revenue growth,” Rutledge said. “The way we know we turned the corner is we have more sales than we had year over year and we have less disconnects. That translates ultimately into more customers, higher quality customers, too, through time that produce revenue and produce net gains as well. Given the way we budgeted this business and the way we operate this business, it's almost exactly on the screws as to where we thought would be.”

Click here for more FCC set-top box news.

Even as the FCC was unveiling chairman Tom Wheeler's proposal to bring competition to the set-top market by "unlocking" cable boxes and making the information available to competitors who want to wed traditional and online video content (an AllVid-like proposal), the National Cable & Telecommunications Association, American Cable Association, Motion Picture Association of America, and a host of others were unveiling the Future of TV Coalition to beat the commission to the consumer video choice punch.

The coalition, co-chaired by Alfred Liggins of TV One and Nomi Bergman of Bright House, will celebrate and promote what its 47 members say is the already thriving innovation in video experience options to provide even more choices.

Look for it to be making that point loudly to the FCC as the commission collects comments on the chairman's proposal, which was premised on the assertion that the video access device market instead needed a competitive boost because choices were few and prices high, with consumers "chained to their set-top boxes because cable and satellite operators have locked up the market."

"The ‘AllVid’ proposal is a brazen money grab by Big Tech companies that would do severe damage to the programming ecosystem, and in particular, niche and minority-focused networks," said Liggins in a statement. "Everyone who cares about quality, diverse television should let the FCC know that AllVid is a harmful non-starter.”

As NCTA argued in comments warning the FCC off an AllVid approach, the coalition said Wednesday (Jan. 27) that such an approach would allow a handful of tech companies to "replace innovation with government regulation." It said that AllVid "would force programmers and TV providers to dismantle their shows and services for these companies to repackage, reuse, and exploit without negotiating for the rights like everybody else in the market does today. AllVid would not give viewers access to any new programming or content that isn’t already available in their homes and would not replace or lower their existing television bills."

FCC officials speaking on background say their proposal would not force the disaggregation of TV content, would respect existing MVPD contracts with programmers and their subs, and would not require anyone to get a competing device if they were satisfied with their current box.

But they also signaled that they think it is necessary to "unlock" the MVPD's hold on video access devices.

Other members of the new coalition include AT&T/DirecTV and DISH.

NCOMPAS, which represents competitive telecom carriers, has taken aim at Charter's claim that one benefit of the Time Warner Cable deal is the program costs savings that will result, savings some of which will be passed on to customers.

In an ex parte letter to the FCC on the proposed Charter/TWC/Bright House merger, INCOMPAS was offering up an economist, Dr. David Evans, to refute the an economist offered up by Charter, professor Michael Katz.

INCOMPAS (formerly Comptel) and Evans do not challenge Katz' contention of a programming price break, but say in the filing that the result of that price break is that that will disadvantage competitors because the programmers will compensate by charging more to those who do not have the same scale--like INCOMPAS members.

That, in turn, it says, would both raise prices and hurt deployment of broadband--the FCC's prime directive under chairman Tom Wheeler and President Barack Obama. "New Charter's increased market power over video programmers resulting from the merger would discourage entry and expansion by smaller broadband providers that would otherwise compete against Charter or Time Warner Cable for customers," INCOMPAS said.

That is because, they argue, the more they have to pay in video programming costs, they less they are going to put out in capital expenditures in new broadband plant.

INCOMPAS wants the FCC to deny the application of designate it for a hearing before an Administrative Law Judge, which would likely be as good as denying it--Comcast dropped its bid for TWC after the FCC signaled it would go to a hearing.

In a blog post on the INCOMPAS filing Tuesday (Jan. 19), Charter points out that the FCC in the AT&T/DirecTV merger approval found that lowering programming prices via that merger--which created an MVPD with more subs that would a Charter/TWC/Bright House deal--was a merger benefit.

Charter suggests INCOMPAS has it backwards. "INCOMPAS makes the classic merger analysis mistake of confusing harm to New Charter’s competitors with harm to competition," it said. "According to INCOMPAS, New Charter’s competitors will invest less in broadband deployment because New Charter can offer lower prices. But aren’t lower prices good for consumers and competition? By INCOMPAS’ logic, mergers would be good if they result in higher prices because that would encourage investment by new entrants. That kind of spin does not pass the laugh test."

WASHINGTON — Satellite-TV provider Dish Network — which is no fan of the proposed merger of Charter Communications, Time Warner Cable and Bright House Networks — took aim at the Bright House portion of the deal in an Federal Communications Commission filing, using information gleaned from highly confidential deal material the regulator made available to third parties.

Dish said in the filing that the benefits from the merger across all three MSOs are "either illusory" or not specific to the transaction. The Bright House connection is the most tenuous between the deal and its purported benefits, Dish, the No. 2 U.S. satellite-TV provider and operator of the Sling TV over-the-top subscription service, said.

Stephanie Roy, counsel for Dish, said in a Nov. 30 letter to the FCC that Bright House, through its existing partnership with Time Warner Cable, is already in a position to complete its deployment of next-generation services.

"Far from making those deployments possible, or even accelerating their deployment," said Dish, "it seems the proposed merger may have had the reverse effect," according to a redacted version of the document obtained by Multichannel News. Dish claims that Bright House has admitted something internally to that effect, but that portion is redacted.

Dish also challenged the claim that Bright House's plan to convert to all-digital months within 30 days is a deal benefit. It argued that the 30-month window appears to be slower than the plans Bright House already had, though those plans are also redacted.

Charter has also said the deal would mean broadband speed upgrades to 60 Megabits per second for TWC and Bright House high-speed Internet subscribers. But Dish said Bright House is already positioned to boost Internet speeds whether or not there is a merger, citing investments — also redacted — and similar existing plans to expand its Wi-Fi hotpots.

"Put simply, it is unclear what Charter's management of BHN will do to improve upon BHN's existing and ongoing network deployment plans," Dish said.

Charter had no comment on the specifics of the letter, though given that many of those were redacted it upped the difficulty factor in responding directly to them.

“New Charter’s many commitments, including to provide faster broadband service without data caps or modem fees, establish industry leading interconnection policies, offer advanced video services, increase competition in the SMB and enterprise business markets, and return thousands of overseas jobs to the U.S., puts this transaction squarely in the public interest," the company said of the deal commitments in general.

Fresh off of an expanded carriage agreement with Charter, rural lifestyle network RFD-TV has become a cheerleader for the cable operator's proposed merger with Time Warner Cable and Bright House.

Executives were in Washington this week to talk up the network's good relationship with Charter, which now carries the channel on all its systems. RFD-TV even took an ad out in The Washington Post to proclaim its support, which also included comments filed with the FCC earlier this month on why the deal would "expand opportunities for the distribution of independent rural programming."

At the time that agreement was struck late last month, RFD-TV founder Patrick Gottsch told Multichannel News that the deal does not automatically extend to Charter's new systems if the merger is approved, but said he was hopeful Charter would be amenable to doing so.

"Rural America recognizes that its best opportunity to reconnect city with country again is to have Charter Communications control access to the urban homes currently being served by Time Warner Cable and Bright House systems," Gottsch said this week in promoting the Charter deal.

Charter is currently trying to get its merger with Time Warner Cable approved by regulators, so expanding its carriage deal with a rural-targeted independent programmer couldn't hurt. And could actually help.

AT&T struck a deal with RFD-TV while it was trying to get its DirecTV deal approved, and after RFD-TV and its fans pushed the FCC to make carriage of the channel a condition of the merger.

RFD got some high-profile attention in Hill hearings on the AT&T/DirecTV and Comcast/Time Warner Cable deals from legislators concerned about large media companies' carriage of rural-themed programming.

Charter Communications CEO Tom Rutledge said cable operators should embrace over-the-top video services because they highlight the value of their broadband offerings.

“Netflix is our friend, they drive broadband,” Rutledge said at the Goldman Sachs Communacopia conference in New York Wednesday. “We embrace OTT television because it makes our broadband superiority more clear in the eyes of consumers.”

Charter has added about 1.2 million broadband customers since Rutledge came on board in 2012, raised its minimum data speeds to 60 Megabits per second and revamped its programming packages to better fit consumer needs. With the addition of Time Warner Cable and Bright House Networks – deals that Rutledge believes still have a chance of closing by the end of the year – Charter will have significantly increased its scale to about 17.4 million customers.

With that added heft, Rutledge said he expects to grow video customers this year, despite added competitive pressures. Rutledge added he believes the additional pressure from OTT video is more driven by income and security issues.

Lack of income has always been an issue in cable, and can be addressed in part by more innovative video packaging. Security, or customers letting their kids or friends use their authentication passwords to essentially get free content, is another drag on the business. Rutledge wouldn’t say if Charter would crack down on password sharing, but he said that it is becoming a growing problem.  

“I do think security of content is a real issue,” Rutledge said. “I think people who sell products in other [forms] need to understand that everything comes back to the home; there is no out of home marketplace. If you’re sitting on your couch looking at a phone, watching cable TV or watching something over WiFi or watching something over a cellular network, you may not know where it’s coming from. People who think they can sell things outside through mobile or something and it won’t come back to the home, they’re deluding themselves. We as network operators have to manage traffic, copyright in a way that is good for content companies. I do think they should re-affiliate with us in a positive way and there are opportunities there. One of the opportunities is making sure that when you sell a right, it goes where you sold it.”

As far as the trend toward offering skinny bundles, Rutledge said programming contracts offer some leeway to offer smaller content packages, but that for the most part Charter has held off from the practice.  

“We tend not to sell those lesser services because we believe people want a really rich video package, along with a very high quality data service and a quality voice service and that the overall value proposition of all three of those products matter,” Rutledge said. “But there is room inside the current margins of thresholds of distribution to play with additional products.”

But the Charter chief said the current model continues to be the most efficient way to sell television.

“We don’t see the whole system falling apart,” Rutledge said. “We think that most content companies will be smart about the way they sell their content into the marketplace ultimately. I think people have made mistakes, clearly, and I do think there is truly over-the-top substitution, but I think there are other forces that affect the overall subscription model. I think both systems will reside side by side for a longtime.”

Liberty Media CEO Greg Maffei said he didn’t believe that the regulatory concerns that helped kill Comcast’s merger with Time Warner Cable would apply to any future consolidation deals involving Charter Communications, particularly if you consider the Connecticut-based operator’s focus on high speed data service.

“If you’re looking at broadband as being the direction of the future and speeds over 25 Mbps as being the most appealing, the fact that Charter has the highest beginning packaging at 60-to-65 Mbps and has raised speeds faster than any other major cable company would hopefully make them be viewed favorably by any regulator,” Maffei said on a conference call to discuss Liberty Media’s quarterly results.

Liberty has been one of Charter’s biggest cheerleaders and owns about a 25% interest in the cable operator through Liberty Broadband, a separate entity it spun off last year to house its stake. Charter is widely expected to launch a bid for Time Warner Cable – it pursued the cable company for months before it was outbid by Comcast in February 2014 – but regulatory concerns have caused some observers to question the deal. Federal Communications Commission chairman Tom Wheeler said at the recent INTX: The Internet & Television Expo in Chicago that Comcast’s decision to terminate the TWC deal was “directionally correct”  but hinted that too much scale, particularly on the broadband front, would not be looked upon favorably.

Maffei said that while any deals would be up to Charter to pursue, he envisioned that any overtures by the Connecticut-based operator toward TWC would be cordial.

“I believe that any transaction that goes forward or if one were to occur would be a friendly transaction, looking for the best in breed for both management teams and trying to drive an improved experience both for consumers and shareholders going forward,” Maffei said.

Maffei would neither confirm nor deny reports that its deal to acquire Bright House Networks was dead. Reuters reported Thursday http://www.reuters.com/article/2015/05/07/us-brighthousenetworks-m-a-charter-commu-idUSKBN0NS2HU20150507 that Bright House had backed out of negotiations with Charter. Although the Bright House transaction was contingent on approval of the Comcast-TWC deal, Charter has an exclusive 30-day window to negotiate a new deal. Even though there are about two weeks left in that period, Bright House has reportedly said it is no longer interested.

But Maffei said that consolidation is critical for the industry if it is serious about moving further into the Internet age.

“The opportunity to build scale to combat not only the scale of the content companies but the scale of potential technology competitors is an attractive option both for shareholders and also for consumers,” Maffei said. “Because the need to make technology investments requires that scale, the need to make improvements in the user interface and to make improvements in the products and services delivered. I think there is every logic for consolidation to go forward. Obviously it has to be done in a way the regulators find workable, and hopefully we’ll be able to find a transaction that makes sense somewhere down the road.”

The press didn’t let the sweat dry off Comcast chairman and CEO Brian Roberts’ brow before they were breathlessly reporting that none other than Charter Communications was readying a bid for Time Warner Cable, shortly after he announced that he was terminating its $67 billion merger with TWC.

Like Gomer Pyle used to say: Surprise, surprise.

Anybody who has followed the Charter-Comcast-TWC saga at all over the past 14 months has expected  Charter to make another run at TWC after being trumped by Roberts and Comcast in February 2014. In fact, the real news here would be if Charter wasn’t considering a bid.

On several occasions, Charter CEO Tom Rutledge and Liberty Media chairman John Malone (who owns 26% of Charter stock) have said publicly and in no uncertain terms – no beating around the bush here – that Charter would make a bid for Time Warner Cable if the Comcast deal did not get approved. In November, at Liberty Media’s annual Investor Day meeting in New York, Malone answered with an enthusiastic “Hell, Yes” when asked by an analyst whether he would encourage Charter to make another bid for TWC should the Comcast deal fall through.

It has never been a question of if they would make a bid, but when and for how much.

Sources confirmed that Charter and TWC have been talking, but they also stressed that it is very early stages, no prices or structures have been discussed and, why is anyone surprised by this really?

“It shouldn’t be a surprise to anybody that they are talking,” said one source familiar with the companies’ thinking who asked not to be named. “These guys have known each other forever.”

Time Warner Cable stock, already up on the potential of a Charter deal, rose again after news broke.  TWC shares closed up 4.4% ($6.50) to $155.26 on April 24 and Charter stock rose 1.2% ($2.17) to close at $185.75 each on the news.

I understand that Charter may want to act quickly, and it has had more than a year to prepare a bid in the event the Comcast deal disintegrated, so it wouldn’t be a stretch to think that they have a price in mind. And it is not like the Comcast deal rejection comes as a total surprise – odds that the deal would pass regulatory muster have been dropping steadily since November, when President Obama called for stricter government oversight of the Internet.

The real questions surrounding the two companies have been how much would Charter pay and whether TWC would accept it. With a couple of quarters of strong growth under its belt, TWC has made a case for going it alone. One wildcard – TWC investors may want a quick payout and the stock is arguably trading where it is mainly on deal speculation.

One analyst, Needham & Co.’s Laura Martin estimates that TWC stock would drop to $130 to $135 per share if the M&A halo fades. Not surprisingly, that is the same price she believes Charter should bid for TWC, which on the surface would seem to give the company an excuse to reject it.

MoffettNathanson principal and senior analyst Craig Moffett estimated last week that Charter would have to pay at least $164 per share for TWC, and that was when the stock was trading at $148.76 per share. That price is likely much higher.

But other analysts are guessing that Time Warner Cable wants to move quickly too – Telsey Advisory Group media analyst Tom Eagan says the cable company should move fast and acquire Bright House Networks if it wants to fend off another Charter advance. Time Warner Cable and Bright House executives – CEO Steve Miron worked for TWC for several years in Syracuse, N.Y. – have known each other for years as well, so it is likely they are probably having conversations too.   

The American Cable Association has asked the FCC to impose what it calls "targeted" conditions on the proposed Comcast/time Warner Cable merger and associated Charter system spin-offs for at least nine years, perhaps more, to prevent potential anticompetitive harms.

That came in comments filed for the Dec. 23 reply comment deadline.

The FCC is maintaining the comment cycle, though it has stopped the informal clock on vetting the deal until Jan. 12 and a lawsuit filed by programmers challenging third-party access to deal contracts could delay a decision until the middle of 2015.

ACA is particularly concerned with the number of video subs the combined company and Charter would negotiate on behalf of, which ACA says would increase from 21 million to 31.4 million. Comcast is spinning off some systems to Charter to keep the total sub count below 30 million, but ACA is counting the subs negotiated for on behalf of Bright Nouse Networks and Midcontinent Communications.

ACA wants improved baseball style arbitration and nondiscriminatory access conditions. ACA says Comcast should be prohibited from negotiating programming agreements on behalf of Bright House or Midcontinent and that Charter and Comcast-affiliated programmers should "be prohibited from interfering with a third-party programmer’s ability to provide any prices, terms, or conditions to an MVPD."

The group says those and other conditions should last for nine years, and even then require Comcast and Charter to demonstrate that they are no longer needed.

“ACA’s chief goal is for the FCC to make clear that Comcast- and Charter-affiliated programmers are prohibited from demanding rates, terms, and conditions that are discriminatory or higher than fair-market value from Multichannel Video Programming Distributors (MVPDs), and that the enforcement mechanisms for these safeguards work, particularly for small and medium-sized MVPDs,” ACA President Matt Polka said in a statement.  “Such remedial conditions have, in the main, provided vital protections to MVPDs in the past, and, with ACA’s recommended improvements, must again be imposed by the FCC in this case.”

Consumers were generally more satisfied with wireline TV, broadband and phone services, according to in J.D. Powers’ latest annual regional report of the nation’s top service providers.  

With a few exceptions mixed in, incumbent cable operators tended to trail their telco and satellite competitors in each service category and region.

J.D. Powers said the study, based on a 1,000-point scale, factored in responses from 30,358 customers nationwide. J.D. Powers’  1,000-point scale bases scores on the following factors: performance and reliability; cost of service; programming (TV only); billing; communication; and customer service.

Comcast and Time Warner Cable, which are in the process of merging, posted below average scores across service categories and regions. Comcast, however, will be looking to improve those scores in the months and years ahead after recently naming company vet and X1 developer Charlie Herrin to senior vice president, consumer experience, a post that will span all of Comcast Cable’s business units.

By region and service type, here’s how all of the players stacked up:

Residential TV Service

Satisfaction with performance and reliability improved to 743 in 2014, up 17 points from 726 in 2013. Customers also experienced fewer TV service quality problems in 2014, with 31% saying they had experienced picture freezing in the past 3 months, versus 38% in 2013. About 46% reported experiencing a temporary loss of signal, a decrease from 51% in the year prior. Slightly fewer customers experienced a television outage in 2014, compared with 2013 (28% vs. 30%, respectively).

East Region

DirecTV--738

Verizon FiOS - 738

Dish Networks -- 735

East Region Average -- 706

Cox Communications 701

Cablevision Systems -- 693

Comcast -- 684

TWC -- 668

North Central Region

AT&T U-verse -- 750

WideOpenWest (WOW!) -- 728

Dish  -- 727

DirecTV -- 716

Bright House Networks - 713

North Central Average -- 710

Comcast 682

Charter Communications -- 678

TWC -- 668

South Region

Verizon FiOS -- 751

DirecTV -- 748

AT&T U-verse -- 743

Dish -- 735

Bright House -- 731

South Region Average -- 720

Suddenlink Communications - 710

Cox -- 694

Charter -- 688

Comcast -- 685

TWC -- 677

West Region

Dish -- 739

AT&T U-verse -- 738

DirecTV -- 736

Verizon FiOS -- 732

Cox -- 704

West Region Average -- 704

Charter -- 679

Comcast -- 670

TWC -- 658

Mediacom Communications -- 593

Residential Internet Service

J.D. Power said satisfaction with performance and reliability in the residential Internet service category improved to 700 in 2014, an increase of 37 points from 663 in 2011. ISPs reduced the average number of website connection errors experienced by customers in the past three  months to 2.9 from 4.4 in 2013, a 35% improvement. Providers also reduced general service outages by 31% year-over-year (1.1 vs. 1.6, respectively). Customers also experienced fewer Internet speed problems, with just 2.1 instances of excessively slow loading during the past 3 months, compared with 3.0 in 2013.

East Region

Verizon -- 712

AT&T -- 705

East Region Average -- 687

Cablevision Systems -- 686

Cox -- 685

Comcast --668

TWC --658

Frontier Communications -- 655

North Central Region

WOW! -- 728

AT&T -- 704

Cincinnati Bell -- 704

North Central Average -- 685

Charter -- 670

Comcast -- 670

TWC -- 659

Frontier -- 650

CenturyLink Communications -- 640

South Region

Verizon -- 725

Bright House – 718

Suddenlink -- 708

AT&T -- 707

South Region Average 692

Cox -- 690

Charter -- 689

CenturyLink -- 680

Comcast -- 676

TWC -- 666

Windstream Communications -- 623

West Region

AT&T -- 704

Cox -- 700

Verizon -- 692

Charter -- 678

West Region Average -- 671

CenturyLink -- 662

TWC -- 651

Comcast -- 650

Frontier -- 638

Mediacom – 595

Residential Phone Service

Overall satisfaction with performance and reliability is 754, up from 749 in 2013.The incidence of general outages with phone service declined, affecting 17% of households in 2014, compared with 21 percent in 2013.

East Region

AT&T -- 740

Verizon -- 725

Frontier -- 722

Cox -- 716

East Region Average -- 715

Cablevision -- 702

Comcast -- 696

TWC -- 679

North Central Region

WOW! -- 767

AT&T -- 730

Cincinnati Bell -- 721

North Central Average 716

Charter -- 703

Comcast -- 698

TWC -- 690

CenturyLink -- 683

Frontier -- 677

South Region

Bright House -- 751

Verizon -- 742

Cox -- 735

AT&T -- 730

South Average --725

Charter -- 724

CenturyLink -- 716

TWC -- 704

Comcast -- 696

Windstream -- 683

West Region

Cox -- 739

AT&T -- 732

Verizon -- 719

West Average -- 715

CenturyLink -- 709

Charter -- 706

Comcast -- 688

TWC -- 687

Frontier -- 681

“The ability to provide a high-quality experience with all wireline services is paramount as performance and reliability is the most critical driver of overall satisfaction,” said Kirk Parsons, senior director of telecommunications at J.D. Power, in a statement. “While customers may be leveraging the same network or connection across multiple services, their experience can be different given the equipment type, connection to the home, service plans used and the different activities performed on each.”

Cable operators are beginning to look to their WiFi networks as a source of future revenue growth, with two top executives in the space recently saying that monetizing those assets will be a key focus over the next three to five years.

WiFi, the cheap-to-build wireless data conduit that most cable operators deploy as a free add-on to their wired broadband service, has been a key retention tool for many cable operators over the past several years.

But as those networks are built out more extensively, operators are beginning to see them as a potential profit center.

Comcast chairman and CEO Brian Roberts recently compared the WiFi space to cable telephone service in its infancy. Comcast, he said, faced stiff criticism for not immediately deploying a circuit-switched telephone product as did some of its peers. It held back, he said, waiting for better economics and technology.

PHONE LESSON

The same might hold true for WiFi, he said. The economics might be coming soon, in the form of a dual-use phone (which utilizes both WiFi and cellular networks) or a standalone product.

“Those are things that clearly others are looking at, [and] we’re looking at,” Roberts said. “I think [this] is a place we should develop.”

Comcast has stepped up its WiFi footprint recently, and plans to have 8 million hotspots (including in-home customer routers) available in its service area by year-end.

Comcast also has a new partnership with Liberty Global that will let customers of both companies access their respective WiFi networks at home and abroad by 2015.

Pending acquisition target Time Warner Cable, which Comcast hopes to officially acquire early next year, also has been rapidly building out WiFi hotspots in such major cities as New York and Los Angeles.

At the end of the second quarter, TWC had about 46,000 WiFi hotspots in its 11 million-subscriber footprint.

Comcast also belongs to the CableWiFi roaming alliance — along with Bright House Networks, Cox Communications, Cablevision Systems and Time Warner Cable — which lets customers of member companies switch seamlessly between the member wireless networks. That alliance could become even more important as data traffic gets heavier and spectrum requirements increase.

While there has been some speculation that cable operators would need more spectrum to boost WiFi offerings significantly, most analysts believe cable operations are sufficient to meet near-term needs.

In March, the Federal Communications Commission doubled the amount of unlicensed spectrum in the 5-Gigahertz band available to cable for WiFi service.

Cablevision Systems was an early believer in Wifi, committing n 2008 to a $300 million buildout. Operating in the New York metropolitan area, Cablevision expects to end the year with 1 million WiFi hotspots, including in-home customer routers.

Cablevision vice chairman and chief financial officer Gregg Seibert has identified WiFi as the company’s “next big leg of growth,” and said Cablevision customers save as much as $30 per month on their cell phone bills by being able to access data over the WiFi network.

RAISING AWARENESS

“The challenge now is making sure our customers are aware of the great value that provides to them and ultimately we can get additional revenue out of that business in addition to just getting the benefit from a customer-retention standpoint,” Seibert said.

Pivotal Research Group principal and senior media & communications analyst Jeff Wlodarczak said monetizing the WiFi network makes sense, but that it is still probably a few years off.

He said cable operators could start the process by charging a nominal fee for WiFi access — say $5 to $10 per month, in lieu of modem-fee increases — and later expand offerings to include a dual-mode phone.

“If you could add a $40 phone product as an add-on — something that most of the time is over the WiFi network and outside that network utilizes their Verizon wholesale agreement — that’s not that far-fetched,” Wlodarczak said.

Time Warner Cable and Bright House Networks'  video subscribers will be gaining TV Everywhere access to NBCUniversal's portfolio of  cable and broadcast networks across various platforms in the weeks ahead.

Adding to TVE access already in place for Sprout, E! and Esquire Network, Time Warner Cable, which negotiates programming deals for Bright House, said subscribers to the two MSOs will have authenticated access to live and on-demand content from USA Network, Syfy, Telemundo, Bravo (pictured), Oxygen, CNBC, MSNBC, mun2, NBC Sports Network, and Golf Channel.

Over the next few days, the operators' video customers will have access to the NBC Sports Live Extra and Golf Live Extra services via apps on iOS and Android devices, as well as online.

Access to the remaining broadcast and cable networks will become available to authenticated Time Warner Cable and Bright House customers starting in September.