TWC's Marcus: 12% of customers supply their own modem, but BYOD-only world still years away

The cable industry will eventually move to a BYOD (bring your own device) world, Time Warner Cable (NYSE: TWC) Chairman and CEO Rob Marcus conceded. But he said in the meantime the MSO will continue to aggressively lease set-tops and modems.

The Arris/Motorola SB6121 is one of the handful of modems that TWC said customers can supply themselves.

"I think that is a multi-year kind of event," Marcus said Thursday, responding to a question on the topic during TWC's second-quarter earnings call. Marcus was asked whether TWC customers will start supplying their own streaming devices and modems, rather than leasing them from TWC, since the company now provides its services digitally.

"At this point in time, we're anticipating that we're going to continue to provide the best possible equipment for our customers that we can deliver," Marcus said. "We do offer customers an opportunity to bring their own modems. And I think it's roughly 12 percent of our base that's brining their own modems. That means the vast majority of modems are still being purchased by Time Warner Cable."

It's notable that Charter Communications (NASDAQ: CHTR), which is in the process of trying to buy TWC, uses a Cisco-provided, cloud-based video delivery system that requires very simple set-top technology.

Still, Marcus said he expects TWC's capital expenditures on customer premises equipment (CPE) to remain high for the foreseeable future, as the company continues the rollout of its TWC Maxx product. The service offers Internet speeds of up to 300 Mbps and an Arris-made 1 terabyte DVR capable of storing 150 hours of HD programming. TWC said Maxx will be deployed in around 50 percent of its footprint by year's end.  

Marcus, however, did concede that long term, CPE needs will change in an all-IP environment. 

"I think on a longer time horizon … as we deliver our video product in IP, it enables customers to use any of their customer-owned IP-enabled devices to consume the video product," he said. "And that in time will result in fewer customers leasing boxes that we have to spend capital on and more bringing their own device."

For more:
- listen to this TWC Q2 earning call replay

Special Report: Why the once-great pay-TV set-top box market is now in retreat

Related articles:
Time Warner Cable loses only 45K video subs, best Q2 performance since 2008
TWC to cover 3M customers with 300 Mbps Maxx service by year-end, including Austin

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