Sunday, October 15, 2017

Cord Cutting looming challenge for Mi-Connection (aka Continuum)

The newly renamed municipally owned cable operation formerly known as Mi-Connection now doing business as Continuum faces a number of challenges.

The recently announced re-branding of the operation to the Continuum name and the new marketing campaign that doubles down on the hyper-local nature of the company won't immediately solve the revenue problems, and subsidies will continue to be needed for years to come.  Competition will continue to grow as new players enter the market - including wireless providers who may eventually leapfrog the idea of even needing a wired connection to the home.  The emerging idea of "cord cutting" will also become more and more of an issue as well.

This last one - "cord cutting" - made industry-wide news this week as powerhouse AT&T posted numbers saying it had lost 390,000 net subscribers in just the 3rd quarter with the losses ascribed to cord cutting, or the decision to forgo the traditional cable subscription in favor of so called Over the Top (OTT) services such as Netflix, Playstation Vue, or SlingTV.  See this article from Hollywood Reporter for more on that announcement and how it affected stocks of the large competitors.

What started a few years ago as a bit of a novelty has now gone mainstream.  This new article from shows that those ditching traditional cable may have reached 1 million in a single quarter in the 3rd quarter of 2017. aShortChronicle HQ ditched cable and phone a couple years ago and can confirm for you it is doable and certainly can be less expensive depending on your TV habits.

So, what does all this mean for a company like Mi-Connection/Continuum?  Not much if you listen to the comments that have come from Town Hall in recent years.  You'll likely hear something like "the company doesn't make much money on TV anyway.  Data is where it's at in the future." While that may be true, it ignores the fact that pure data access is quickly becoming a commodity.

As data becomes a commodity with more providers able to provide a comparable service, subscribers will be able to switch from provider to provider based on who has the lowest price.  If they get their content via OTT services they won't have to deal with new set-top boxes and user interfaces.  This will increase what's called "churn" between providers.  Churn is a costly thing for providers to deal with just to maintain revenue as is, much less grow it.

Mi-Connection's FY2017 numbers were flat compared to FY2016.  If cord cutting and churn were factors in that, the company isn't saying in its press releases like AT&T.  However, if this industry trend is impacting the biggest of players, it will very likely make its way into the equation in the long march towards profitability for Mi-Connection/Continuum.

Something to keep your eyes on in future information from Town Hall.

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