TIS17: Consolidation, Customer Experience Drive Small Op Success

INDIANAPOLIS – The rash of recent M&A deals in the small cable space is likely to continue, but money also will flow into the sector to build out networks and increasingly focus on in-home networking, customer service and improving the overall experience according to a panel session at The Independent Show.

The handful of top executives at small cable operators said they expect consolidation to continue especially as larger companies recognize the strength of their networks and the rising demand for fast and faster broadband speeds.

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Already there has been a flood of deals in the past year – private equity firm TPG’s purchase of RCN and Grande Communications last August for $2.25 billion and its May agreement to buy Wave Broadband for $2.36 billion; and Cogeco Cable’s July agreement to purchase MetroCast for $1.4 billion.

New deal currencies form recent IPOs at WideOpenWest and Altice USA also should provide fuel for more deals.

But the operators during the panel session moderated by CNBC senior analyst and commentator Ron Insana said there is also a big push to continue to improve the overall customer experience, and that means a sharper focus on in-home networking and customer education.

WOW CEO Steve Cochran, which went public in May, said he was encourage most by the fact that many of the recent deals involved small companies buying small companies.

“It’s all about knowing the customer segment you’re going after,” Cochran said, adding that he was happy that recent transactions involved many of the people that are in this room coming together.”

Knowing that customer segment involves providing faster data speeds for both residential and business customers. At EPB, the Chattanooga, Tenn.-based municipal electric utility, that means providing a good product and with strong customer service.

Vice president of new products Katie Espeseth said customer service said customer service is still the biggest differentiator for small operators competing against larger, deeper pocketed competitors.

“It’s what really sets us apart,” she said.

Related: Indie Cable Operators: Small but Powerful

Espeseth sees small cable and municipal broadband operators not just as providers of less expensive, more efficient service, but as catalysts for the local economy.

“We see our role as being the sparkplug in the community,” Espeseth said. “We spur economic development; we see these type of broadband services as being a catalyst not only for residential customers but to improve businesses and provide an environment for entrepreneurs to grow and flourish.”

But Espeseth said with choices and options increasing exponentially as new methods of content delivery emerge, from streaming to over the top services and TV Everywhere, customers are getting increasingly confused.

That means that education is becoming increasingly important to help customers navigate their choices and to “steer [them] to an experience they feel they personally curated.”

Wave Broadband chief operating officer Harold Zeitz added that allowing customers to integrate their services and devices via in-home networks is the next big priority for the industry, adding that it is essential that operators educate customers in how to use the products they’re offered.

Harron Communications EVP and general counsel Ryan Pearson said in-home networking is high on his priority is, adding that it is also important for customers to be able to interact with their provider in the way they want, whether that be via e-mail, text, or social media.