Charter Communications, Inc. (CHTR), Time Warner Cable Inc (TWC), Comcast Corporation (CMCSA): Is This Market Only Big Enough for Two?

Through a cable, Broadband can deliver speeds of more than 15 Mbps (Megabytes per second) whereas satellite providers typically offer slower speeds between 64 and 400 Kbps (Kilobytes per second). In 2012, Time Warner upped its standard speed to a swift 15 Mbps. The drawback is that often cable providers have difficulty reaching rural areas because of the necessity of a physical cable. Mergers would allow the smaller firms to combine resources and extend the arms of the cable network. And believe me, if rural consumers had a choice, they would take cable broadband over satellite every time.

Bottom line

This situation reminds me of a dilemma sports teams often face when their star player is in the last year of his contract. The team has two options: trade him and be sure to get something useful in return, or let his contract expire and hope to resign him. Often, once his contract is allowed to expire, the player signs with another team, leaving his former club with nothing.

I think that the cable industry will eventually boil down to two players. Smaller cable companies like Charter have two choices: embrace the change and benefit from it, or fight the shift and come away with nothing. Charter’s Tom Rutledge has the right idea. It’s time the rest of the industry got on board.

The article Is This Market Only Big Enough for Two? originally appeared on Fool.com and is written by Marie Palumbo.

This article was written by Randy Holcombe and edited by Chris Marasco and Marie Palumbo. Chris Marasco is HeadEditor of ADifferentAngle. None has a position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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