Cable One said it has launched a new managed WiFi service for small and medium-sized business that offers expanded coverage and can be self-managed by customers.

The new Managed WiFi service, called “ONE Gateway,” covers up to 10,000 square feet when deployed and allows business customers to manage their own WiFi settings through a mobile application.

The “ONE Gateway” app is available at no charge from Apple and Android mobile app stores. Through the app, business customers will be able to manage their WiFi network settings, including the SSID name, password, security settings and channel settings.

“Our new Managed WiFi service offers the added features and easy-to-use functionality our customers have been asking for,” said Cable One vice president of business services Chris Boone in a statement. “In addition to enhanced security, business customers now have access to popular features such as self-management, a guest network and multiple SSIDs.”

Cable ONE Business customers can add the managed WiFi service to any business internet plan for $9.95 per month. Up to five coverage extenders can be added for $5.95 each per month. 

Cable ONE’s business unit said it’s considering Mississippi as a contender for its next launch of Piranha Fiber, a PON-based platform that currently delivers symmetrical speeds up to 2 Gbps.

Cable ONE Business currently offers Piranha Fiber in select markets, including Fargo, N.D.; and Norfolk, Neb.  Piranha Fiber supports several speed tiers, including an entry level service that offers 50 Mbps down by 5 Mbps. Cable ONE said pricing starts at $99.95 per month when bundled with its business phone service along with a three-year commitment.

RELATED: MCTV Pushes Fiber-to-the-Premises Overlay with ‘Excellerate’ Initiative

“Cable ONE has invested more than $75 million in Mississippi over the past five years on network upgrades and enhancements in order to bring the latest technology and fastest speeds to our customers, Chris Boone, VP of business services for Cable ONE, said in a statement. “This makes Mississippi an ideal fit for our next launch. As part of our ongoing investment and with the launch of this new service, we would be extending our plant to previously unserviceable areas in Mississippi while contributing to the economic development of the state.”

Several cable operators offer multi-gig speeds to businesses using fiber.  On the residential end,  Comcast sells Gigabit Pro, an FTTP-based, symmetrical 2 Gbps service, in several markets.

WideOpenWest is inching closer to a planned initial public offering, setting a price range for the stock that potentially could raise nearly $500 million to help pare down debt.

While the overbuilder has stressed it is focused on organic growth, it also points to a string of successful purchases over the past 15 years and is keeping its deal options open while moving deeper into a strategy that favors broadband over video.

Related: WOW Sporting New Logo

WideOpenWest was formed in 2001 and made its mark that same year when it bought SBC Communications’s Ameritech New Media, a state-of-the-art overbuild in Illinois and Michigan and Ohio that gave the upstart company instant credibility. WOW paid between $200 million and $300 million for the assets, which added about 300,000 subscribers. Using a popular metric from the period, the Ameritech deal was valued at about $1,000 per subscriber, or about one-quarter of SBC’s original asking price for the assets, according to reports.

From there, WOW set off on a string of acquisitions that beefed up subscriber rolls. Buying Sigecom in 2006 gave the company an inroad in the Indiana market, followed by five other deals that added 330,000 customers for a combined $1.6 billion.

New Organic Approach
WOW has focused on organic growth lately. Chairman Jeffrey Marcus, who joined the company after private-equity player Crestview Partners purchased a 35% interest in WOW in 2015, has said it will emphasize broadband rather than video going forward. But it also wants to take advantage of smaller tuck-in acquisitions.

Related: Marcus Helps Set WOW's Winning Strategy [subscription required]

Tuck-ins may be the only deals left to pursue. Altice USA, the domestic cable arm of European telecom company Altice N.V., is expected to unveil its IPO later this year and could be an aggressive buyer in the future. While Altice has said it is focused on integrating its past purchases of Cablevision Systems (2016) and Suddenlink Communications (2015), many expect it to at least kick the tires on midsized operators such as Cox Communications (which says it isn’t for sale) and others once it has a public deal currency.

Related: Testing Cable's Value Proposition

In the meantime, WOW will focus on growing the high-speed data business. That’s a tack many small operators have taken over the years in the wake of rising programming costs, most notably Cable One, the Phoenix-based cable operator that was the top-performing stock in the sector in 2016.

But that approach has pitfalls. While Cable One stock rose more than 40% in 2016, due largely to takeover speculation, its metrics have declined. Video subscribers have plunged from 436,370 to 293,726 between 2014 and March 2017. Broadband revenue increases have largely been the result of steep price hikes for service.

According to MoffettNathanson principal and senior analyst Craig Moffett, Cable One broadband subscribers increased by about 2.9% in the first quarter, above the 2.5% growth of the previous quarter, but still about half the growth rate for its peers. Video customers declined at about a 12.4% clip.

The big difference is that Cable One has little competition in its markets: customers who want high-speed internet either have to pay the increases or opt for inferior digital subscriber line service. According to its prospectus, 53% and 39% of WOW’s footprint is overlapped by Comcast and Charter, respectively.

The competitive dynamic with phone companies is a bit better. AT&T’s U-verse (a mixture of fiber and DSL) is available in about 63% of WOW’s footprint based on homes passed. Verizon Fios is in about 3.5% of the footprint and Frontier Communications operates in about 2.7% of WOW’s territory, according to the prospectus.

Allure of High Margins
The allure of high broadband margins — in excess of 95%, according to the prospectus — is strong, though, and led to a steep rise in net income ($26 million in 2016, a $53.6 million improvement over 2014) while revenue increased about 1% to $1.2 billion.

At the same time, video customers have declined steadily while broadband increases have been relatively minimal. Video revenue-generating units (RGUs) fell from about 635,000 in 2014 to 474,000 by this March, according to the prospectus. High-speed internet customers increased from 728,000 to 729,000 in the same time period. During that time, WOW sold its Lawrence, Kan., system with about 31,000 customers, to Midco.

WOW apparently sees greater upside in broadband, driven by increased data consumption from social media applications, OTT video and cloud-based computing. Customers who crave video are just going to have to pay more.

Prominent analyst Craig Moffett’s decision to downgrade Charter Communications stock to “neutral” last week was a bit of a contrarian move — most of the other analysts covering the sector rate the stock at a “buy” or equivalent — but it raises an important question about cable distributors overall: how long can the euphoria last?

Moffett still has high hopes for Charter, figuring the company will generate about $30 per share in free cash flow by the end of the decade and should meet integration targets for its recent purchases, Time Warner Cable and Bright House Networks.

Charter’s expected entrance into the wireless market could prove risky — both it and Comcast have said they have exercised their mobile virtual network operator (MVNO) rights with Verizon Communications — but that isn’t expected to have a material short-term impact on the stock.

The issue is whether Charter’s success and potential are already baked into its stock price.

“Given Charter’s strong [year-to-date] performance, it is now more difficult to see significant near-term upside for Charter’s stock,” Moffett, the MoffettNathanson principal and senior analyst, noted.

TARGETED AT $305

That said, Moffett still has one of the highest 12-month price targets (at $305 per share) on Charter, one of several distribution stocks that have performed well this year.

In the past 10 months, Charter shares have risen 27.3%, from $202.50 per share to $257.86 on Oct. 11. That’s only slightly behind Liberty Broadband, the vehicle that holds cable legend John Malone’s 27% interest in Charter, up 29.9% for the year.

The top performer so far this year is Cable One, up 35% to $584.80, mainly on speculation it could be a takeover target in an expected consolidation wave.

Comcast is in third place, up 15.1% to $64.96 per share on Oct. 11.

Even slower-growth stocks like AT&T, which purchased DirecTV in July 2015 and lost about 391,000 Uverse TV customers in the second quarter, and Verizon, which has seen customer additions for Fios TV product slow down, have seen their stocks rise.

Shares in AT&T are up about 14% so far this year to $39.33 from $34.41, while Verizon has risen 9% to $50.30 from $46.22.

Cable stocks have been on a phenomenal run since 2013, when Charter and Malone first goosed the market with their initial pursuit of Time Warner Cable. After a brief hiccup — the attempt by Comcast to buy TWC that was later abandoned — Charter sealed the deal last May.

Cable distribution stocks were up 50% in 2013, 15% in 2014 and 10% in 2015. So far this year, despite two fewer stocks in the mix, the sector is up about 25%. (Charter absorbed Time Warner Cable and Altice USA took in Cablevision Systems.)

Programmers, by contrast, have been hit hard due to uncertainty around over-the-top services, skinny bundles and falling ratings and ad revenue.

After a strong run in 2013, when the sector was up 52%, programming stocks began to slide in 2014 (down 1.7%) and fell 15.4% in 2015. So far in 2016, programming stocks are down 4%.

CASH RISE IN LATE 2017?

Other analysts still see runway for Charter. Telsey Advisory Group media analyst Tom Eagan raised his 12-month price target to $302. Eagan said new pricing and packaging slated for select TWC and Bright House markets in the second half of the year should be completed system-wide by mid-2017. Cash flow, expected to reach $13.96 billion by the end of this year, should rise to $15.3 billion by the end of 2017, according to Eagan’s estimates, fueled by cost synergies ($600 million in 2016 alone) and customer growth.

Eagan predicted Charter would add about 30,000 residential video subscribers and 1.75 million high-speed Internet customers in 2017.

Pivotal Research Group CEO and senior media & communications analysts Jeff Wlodarczak, who has had a “buy” rating on Charter since it came out of bankruptcy in 2009, still sees plenty of upside in cable stocks going forward, fueled by their broadband dominance. Wlodarczak also has a $350 per share target price on Charter.

“My cable thesis remains unchanged,” Wlodarczak said. Cable’s position as the primary provider of high speed Internet service to residential and commercial customers should allow cable companies to continue to “take data share, raise prices and create a halo effect for phone and TV additions,” he said.

Cable One is joining the gigabit club.

The MSO announced Thursday that it will offer a 1-Gig (downstream) residential broadband service in more than 200 cities next year.

That offering, branded as GigaONE, will initially be powered by DOCSIS 3.0, the platform that fellow mid-sized MSOs, Suddenlink Communications and Mediacom Communications, are using for their respective 1-Gig residential services. On the horizon is DOCSIS 3.1, a platform that will bring multi-gigabit capabilities to HFC networks. 

According to the FAQ for GigaONE, the service will provide max downstream speeds of 1 Gbps paired with a 50 Mbps upstream path. To receive that service, customers will need an approved DOCSIS 3.0 modem that can bond 32 downstream channels.

Pricing and the data plan for GigaONE will be announced in early January. Cable One’s current top residential broadband tier offers 200 Mbps down and 10 Mbps up, paired with a monthly consumption ceiling of 500 gigabytes.

Cable One will offer GigaONE across its network, and has set up a web site that will keep track of deployments. Customers can also register to be alerted when GigaONE is available to them.

The following Cable One markets will get GigaONE in Q1 2016: Altus and Duncan, Okla.; Borger, Texas; Emporia, Kan.; Bisbee and Cottonwood, Ariz.; and McCall, Idaho.    

“GigaONE will support the technology needs of the communities we serve, now and in the future,” said Joe Felbab, vice president of marketing for Cable One, said in a statement. “We are excited to be able to offer Gigabit service to nearly 1.5 million homes in the markets we serve.”

Cable One said it has invested more than $500 million over the past five years on network upgrades and enhancements.

"Unlike many of our competitors, Gigabit service will be available to all of our customers – not just a select few in certain areas,” Felbab noted in an apparent reference to the buildout model of  providers such as Google Fiber and AT&T (for GigaPower).

But even as Cable One puts more emphasis on broadband than video, the results haven’t shown it yet.

While larger MSOs had blowout Q3s with respect to broadband sub growth, Cable One’s year-over-year growth, at about 2.1% , was comparatively weak. The MSO added 9,259 residential data subs in Q3, extending its total to 457,973.

“The evidence for a stronger-than-expected link between broadband and video certainly isn’t conclusive, but it’s enough to raise legitimate questions about Cable One’s video-lite strategy,” MoffettNathanson analyst Craig Moffett, who sees Cable One as an M&A candidate, said in a research note issued today. However, ARPU in the broadband category is growing (up 7.7%) thanks to  aggressive pricing paired with faster speed tiers.

MoffettNathanson principal and senior analyst Craig Moffett raised his rating on the cable sector to “overweight” on Wednesday, citing the sector’s improved basic-video subscriber performance even as cord-cutting continue to chip away at the overall pay TV customer base.

“Time heals all wounds,” Moffett wrote in a recent report to clients.

In a 35-page report, Moffett wrote that despite the true emergence of cord cutting – he says they are now “front and center” – cable has turned in some of its best subscriber performance in years, dramatically slashing losses.

“Cable isn’t just holding its own, it is dramatically improving video even as the sector has trended down” Moffett wrote.

Moffett said declines in the satellite sector – especially at DirecTV – and the loss of telco TV subscribers in the second quarter also bolster the case for cable. But he added that he does not expect the competition to take it lying down.

Already AT&T has announced some aggressive promotions and Moffett expects that to continue and then-some to help the phone giant justify its recent purchase of DirecTV.

“Still, Cable’s advantages are becoming clearer even as sector contraction accelerates,” Moffett wrote.

As far as individual companies, Moffett raised his rating on Charter and Comcast to “buy,” with a 12-month price target of $210 and $67 per share, respectively. Moffett also maintained his “neutral” on Time Warner Cable ($204) and Cable One ($380), and kept his “sell” on Cablevision Systems ($9).

Perhaps a cable operator’s greatest weapon in carriage disputes with major programmers is a simple one: perseverance.

Phoenix-based Cable One is more than seven months into a carriage fight with Viacom, a battle the small-market operator appeared to be losing in the early stages.

It lost about 34,500 basic-video customers in the second quarter, more than double its losses of the previous year.

But the declines seem to have leveled off to about 14,000 video customers in the third quarter, slightly better than the previous year.

More heartening, according to one prominent cable analyst, is that broadband subscribers — the most profitable customers for most cable companies — actually grew in the period.

Cable One parent Graham Holdings said high-speed data customers totaled 486,142, an increase of 3,417 subscribers for the period. That’s the first broadband increase for the company since the dispute with Viacom began on April 1. (Cable One lost about 1,443 broadband customers in the second quarter.)

Cable One now has more broadband customers (486,142) than video customers (476,233). It has packaged a tight 50-channel video lineup with high-speed Internet to draw new subscribers. But now new customers are increasingly ignoring video altogether.

“Nearly 60% of our new connects are Internet- only, at 50 Megabits per second [and] less than 10% are video only,” Cable One spokeswoman Patricia Niemann said.

The cable firm is in the market with a broadband offer of 50 Mbps download speeds for $35 a month, significantly less than what other larger cable operators charge.

Niemann said Cable One high-speed data customers are increasingly looking to over-the-top video solutions such as Netflix, Amazon Prime and Hulu, and with additional OTT video offerings expected from Dish Network, Sony and Verizon Communications, Cable One is embracing possible replacements for its video product.

“We have always viewed OTT as a big longterm plus for our Internet product,” Niemann said. “Our third-quarter and year-to-date increases in cash flow and cash-flow margins over last year, despite a 15% drop in video subscribers, strongly indicate that lack of importance in video cash flow today. The 4% growth in HSD subscribers, despite a 15% drop in video subscribers, also indicates the lack of importance of video as a gateway product.”

Losing the video offering could force small cable operators into pricing competition with deeper pocketed competitors. But for the moment, even analysts are beginning to see some advantages of minimizing video.

“Perhaps the biggest takeaway from the Cable One experience is the confirmation that you can, in fact, lose video subscribers without hurting your broadband business,” Craig Moffett, MoffettNathanson partner and senior analyst, said. “That had been theorized before, but it’s heartening to see the empirical evidence.”

That evidence also is emboldening some smaller operators, who are beginning to weigh the benefits of dropping or severely curtailing their video offerings.

At Buford Media, a Tyler, Texas-based cable operator with about 6,000 customers in Arkansas, Texas, Alabama, Oklahoma, Louisiana and Mississippi, CEO Ben Hooks said doing without video is becoming increasingly attractive.

“I am losing interest in providing video content,” Hooks said, adding that rising rates for content are making it more difficult to compete with satellite-TV providers, his main competition.

Hooks estimated he pays more than $50 per month for an average of 50 channels, or roughly twice the 55 cents per channel the Federal Communications Commission has estimated the average consumer pays for cable programming.

“The only reason to continue to provide video content at this time is that it still helps pay the bills, but without other broadband services it can’t support the expenses anymore to cover all the plant and programming costs to operate the system,” Hooks said.

Whether dropping video becomes the norm for smaller operators or just a negotiating tool for future carriage agreements, Moffett said operators must increasingly make hard choices about which programmers they will carry.

“But in a way, the realization that video is less important to the business is liberating,” Moffett said. “It allows for more serious negotiation with programmers, backed with the realization that if video subscribers leave it’s not the end of the world. And it encourages experimentation with new video models and packages.

“Cable One has realized that they have less at stake in these negotiations than they used to believe, so they can focus exclusively on striking whatever balance they think is best for the largest number of customers,” Moffett said.

Entering the seventh month of its carriage dispute with Viacom, Cable One said its video business has “less value and emphasis,” indicating that the small-market operator may be contemplating exiting from or at least downplaying its video business.

Cable One ended the third quarter with 476,233 basic-video customers, a loss of about 14,076 subscribers. That is a slight improvement over the 14,643 basic-video subscribers it lost in the third quarter last year and vastly better than the 34,000 it lost in the second quarter of this year.

Cable One threw down the programming- cost gauntlet on April 1, opting not to accept a carriage proposal from Viacom that it believed was too costly. As a result, 15 Viacom-owned networks — including MTV, Nickelodeon and Comedy Central — went dark to Cable One customers in about 19 states.

Cable One at the time said it did not believe its customers valued the Viacom channels so highly.

While the third-quarter results could indicate subscriber losses are beginning to level off, Cable One said the video customer count is down about 15% since the third quarter of 2013, and said the video business is not as desirable as it used to be.

“Due to rapidly rising programming costs and shrinking margins, video sales now have less value and emphasis,” Cable One owner Graham Holdings said, noting that “programming costs have been reduced significantly.”

Cable One spokeswoman Patricia Niemann did not return calls for comment by press time.

Cable One, operating in markets such as Odessa, Texas, and Winslow, Ariz., has been de-emphasizing video for years: one of its most popular packages bundles about 50 channels with high-speed Internet.

Companies like it and Seattle-based Wave Broadband are focusing less on video programming and more on building gateways to let customers tap into over-the-top services, including Netflix, via their home DVRs.

Pivotal Research Group principal and senior media and communications analyst Jeff Wlodarczak said that for smaller operators, making video a lower priority is almost inevitable.

“Scale matters in cable,” he said, and some smaller operators might be hoping to get swooped up in the consolidation wave that is expected after the Comcast-Time Warner Cable merger is completed next year.

“I don’t think it is, frankly, a great idea to get out of the video business, but smaller operators such as Cable One are in between a rock and hard place,” Wlodarczak said. “If they push back and stop carrying programming, they run the risk of losing their high per-capita income video subscriber. If they don’t [push back], they will have to continue to raise their video prices and lose their more price-sensitive pay TV subscriber to alternatives. If I were a small cable player, your best move right now, before you lose a material percentage of your video subscribers, is to sell out.”

CableOne said Friday that it is partnering with the Arbor Day Foundation to plant a tree on behalf of every one of its customer who adopts paperless billing from Aug. 5 through Arbor Day on April 24.

“We’re excited to launch this green initiative across all of our markets, and we encourage all of our customers to make the switch to paperless billing with us,” CableOne Vice President Pat Dolohanty said in a statement. “Whether they care about conserving natural resources, planting trees in their community, or simply enjoying the convenience that paperless billing offers, we’re offering customers a simple way to make a difference with just a few simple steps.”

Trees will be planted in CableOne markets and in national forests. Cable One has about 720,0000 video and broadband customers in 19 states, including Washington, Oregon, Louisiana and Texas.

“The generous support shown by Cable One allows us to plant additional trees that will help provide clean air and water, critical wildlife habitat, and beauty that will be enjoyed by our children and grandchildren,” said Arbor Day Foundation president Dan Lambe in a statement.