Cox Communications Inc., the third-largest U.S. cable company, plans to start offering much faster broadband service to residential customers this year as entertainment increasingly becomes delivered over the Internet.
The closely held company plans to offer Internet speeds of 1 gigabit a second, about 100 times faster than standard Web access. Cox is joining AT&T Inc. and Google Inc., which are racing to introduce fiber-optic broadband services with speeds as fast as 1 gigabit a second in cities across the U.S.
“We’re working on our road map now to bring gigabit speeds to customers this year,” Pat Esser, the president and chief executive officer of Cox, said yesterday in an interview with Bloomberg Television’s Betty Liu at the Cable Show in Los Angeles. Cox customers have been asking for faster speeds, he said.
Broadband service has become increasingly important to customers as more people sign up for video streaming services such as Netflix Inc. (NFLX:US) and Hulu LLC. As the pool of traditional pay-TV subscribers peaks, Internet-delivered TV is also a looming possibility with companies like Sony Corp. and Dish Network Corp. looking to sell a cable-like bundle of channels via the Web. That would increase competition since the companies could sell TV service to anyone with a broadband connection.
The introduction of Google Fiber has put pressure on cable operators like Cox and Time Warner Cable Inc. (TWC:US) to boost their offerings. After Google said it was coming to Austin, Texas, Time Warner Cable said it would boost speeds for its data customers there to 300 megabits a second from 50 megabits a second at no additional cost.
Google has targeted cities including Phoenix, where Cox is the largest pay-TV operator with about 578,000 subscribers, according to Bloomberg Industries.
AT&T is planning to expand its fastest GigaPower fiber-optic service to as many as 100 cities and municipalities.
Google Fiber began as a showcase for what people can do with dramatically faster Internet speeds. The project also was meant to stimulate competition among broadband providers. Broadband speeds averaged 9.8 megabits in the U.S. in the third quarter, according to data from Akamai.
Cox has about 6 million residential and business customers in the U.S. Most customers currently see speeds of up to 25 megabits per second, Esser said. He didn’t disclose pricing for the faster service.
The company is taking advantage of the business services infrastructure it already built to deliver faster speeds to homes. Businesses pay Cox for Internet and phone connections, which delivered more than $1.6 billion in sales to Cox in 2013, Esser said.
The boost to its broadband services would cost at least hundreds of millions of dollars to build, he said. Broadband customers represents a bigger growth opportunity as video subscribers “leveled off” last year, Esser said.
Last year, the number of Americans paying for television fell for the first time. The industry lost 251,000 customers to total about 100 million, according to research firm SNL Kagan.
Esser’s statements were a rare public appearance for the closely held company, which is trying to talk more openly about its business plans given the attention on mergers and new offerings across the cable-TV industry.
“Cox being a private company, often we’re too humble of a company,” he said.
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