Cable One Stock

Cable One, Inc. is a leading broadband communications provider committed to connecting customers and communities to what matters most. The company strives to deliver an effortless experience by offering solutions that make its customers' lives easier, and by relating to them personally as its neighbors and local business partners.

For businesses ranging from small and mid-market up to enterprise, wholesale and carrier, the company offers scalable, cost-effective solutions that enable businesses of all sizes to grow, compete and succeed. The company provides critical to the development of new businesses and drive economic growth in the non-metropolitan, secondary and tertiary markets that it serves in 24 Western, Midwestern and Southern states. As of December 31, 2023, approximately 74% of the company's customers were located in seven states: Arizona, Idaho, Mississippi, Missouri, Oklahoma, South Carolina and Texas. The company provided services to approximately 1.1 million residential and business customers out of approximately 2.8 million homes passed as of December 31, 2023. Of these customers, approximately 1,059,000 subscribed to data services, 142,000 subscribed to video services and 119,000 subscribed to voice services as of December 31, 2023. The company generates substantially all of its revenues through three primary product lines.

The company focuses on growing its businesses, namely residential data and business services. The company's strategy acknowledges the industry-wide trends of declining profitability of residential video services and declining revenues from residential voice services. Separately, the company has also historically focused on retaining customers who are likely to produce higher relative value over the life of their service relationships with it, are less attracted by discounting, require less support and churn less.

Residential Data: The company has experienced significant growth in residential data customers and revenues since 2013 and it expects growth for this product line to continue over the long-term. The company's broadband plant generally consists of a fiber-to-the-premises or hybrid fiber-coaxial (HFC) network with ample unused capacity, and it offers its data customers internet products at some of the fastest speeds available in its markets. During the fourth quarter of 2023, the company's average residential data customer used 705 Gigabytes of data per month, with nearly 25% of its customers using over 1 Terabyte of data per month.

Business Services: The company has experienced significant growth in business data customers and revenues since 2013. The company attributes this growth to its strategic focus on increasing sales to business customers and its efforts to attract enterprise business customers.

Residential Video: The company intends to continue its strategy of focusing on the higher-margin businesses of residential data and business services while de-emphasizing its residential video business. As a result of its video strategy, the company expects that residential video customers and revenues will continue to decline. The company offers Sparklight TV, an internet protocol-based (IPTV) video service that allows customers with its Sparklight TV app to stream its video channels from the cloud. This transition from linear to IPTV video service enables the company to reclaim bandwidth, freeing up network capacity to increase data speeds and capacity across its network.

The company continues to experience increased competition, particularly from telephone companies; fiber, municipal and cooperative overbuilders; fixed wireless access (FWA) data providers; and over-the-top (OTT) video providers. The company has rolled out multi-Gigabit download data service to certain markets and offers Gigabit download data service to nearly all of its homes passed. The company has also deployed DOCSIS 3.1, which, together with Sparklight TV, further increases its network capacity and enables future growth in its residential data and business services product lines.

The company serves its customers through a plant and network with capacity generally measuring 750 megahertz or higher and have DOCSIS 3.1 capabilities throughout its systems. The company's technologically advanced fiber-based infrastructure provides for delivery of a full suite of data, video and voice products. The company's broadband plant generally consists of a fiber-to-the-premises or HFC network with ample unused capacity, and nearly all of its homes passed have access to Gigabit download speeds, including certain markets that have access to multi-Gigabit download speeds, which it meaningfully distinguishes its offerings from certain competitors in its markets.

Strategy

The key elements of the company's strategy are to focus on non-metropolitan markets; and drive growth in residential data and business services.

Products

Residential Data Services

Residential data services represented 58.4% of the company's total revenues for 2023. The company offers simplified data plans with lower pricing and higher speeds across its premium tiers, with download speeds up to 1 Gbps available to nearly all of its residential customers. In certain markets, the company has rolled out multi-Gigabit download service offerings with further multi-Gigabit rollouts planned in the future. The company also offers unlimited data options on most of its plans across most of its markets. Further, to meet the increasing bandwidth needs of its customers who use a growing number of devices in the home, the company offers most of its customers its advanced Wi-Fi service combining state-of-the-art technology solutions with certified technicians, who locate and configure hardware based on individual customer needs. This service provides customers with enhanced Wi-Fi signal strength, which extends and improves the Wi-Fi signal throughout the home.

Business Services

The company considers the data, voice and video products it provides to its business customers to be a separate product from its residential versions of these services. Business services represented 18.1% of the company's total revenues for 2023. The company offers services for businesses ranging in size from small to mid-market, in addition to enterprise, wholesale and carrier customers. The company will continue to experience growth in sales to business customers over the long term given the sizeable total addressable market within its footprint and its history of expanding penetration rates.

The company's offerings for small businesses are provided over both its fiber and HFC networks, with all new buildouts being fiber. The company's data services offer various options with download speeds ranging from 25 Mbps up to 2 Gbps over HFC, with varying upload speeds, along with managed Wi-Fi. The company's small business voice solutions include hosted voice with unified communications as a service from one line to multi-line options, including the availability of popular calling features like simultaneous ring, hunt groups and selective call forwarding. Business video packages range from a basic service tier to a comprehensive selection including variety, news and sports programming in high-definition. The company's small- and medium-sized business customers experience up to 6 Gbps symmetrical speeds over fiber in select markets.

The company offers delivery of data and voice services using fiber-to-the-premises technology primarily for mid-market customers. This shared fiber architecture provides for symmetrical data speeds ranging from 50 Mbps to 6 Gbps.

For enterprise and wholesale customers, the company offers dedicated bandwidth and Enterprise Wi-Fi in addition to multiple voice services via fiber optic technology. The company's fiber optic-based products include dark fiber in addition to dedicated internet access and E-Line, E-Lan and E-Access Ethernet services. The company also offers network-to-network interface connections to other carriers at multiple points of presence across the United States. The company's enterprise customers experience symmetrical speeds of up to 10 Gbps over fiber.

Residential Video Services

Residential video services represented 15.4% of the company's total revenues for 2023. The company offers a broad variety of residential video services, generally ranging from a basic video service to a full digital service with access to hundreds of channels. The company offers Sparklight TV, an IPTV video service that allows customers to stream its video channels from the cloud through a new app on supported devices, such as the Amazon Firestick, Apple TV and Android-based smart televisions, and provides a cloud-based DVR feature that does not require the use of a set-top box.

Residential Voice Services

Residential voice services represented 2.2% of the company's total revenues for 2023. The majority of the company's residential voice service offerings transmit digital voice signals over its network and are interconnected Voice over Internet Protocol (VoIP) services. The company also offers traditional telecommunications services through some of its subsidiaries.

Competition

The company's video business also faces substantial and increasing competition from other forms of in-home and mobile entertainment, including, among others, Amazon Prime Video, Apple TV+, Disney+, Max, Hulu, Netflix, Paramount+, Peacock, YouTube TV and an increasing number of new entrants who offer OTT video programming, including many traditional programmers.

Regulations

Title VI of the Communications Act of 1934, as amended (the Communications Act) establishes the principal federal regulatory framework for the company's operation of cable systems and for the provision of its video services. The Communications Act allocates primary responsibility for enforcing the federal policies among the Federal Communications Commission (FCC) and state and local governmental authorities.

The FCC regulates various other aspects of the company's video business, including among other things, equal employment opportunity obligations; customer service standards; technical service standards; mandatory blackouts of certain network and syndicated programming; restrictions on political advertising; restrictions on advertising in children's programming; maintenance of public files; emergency alert systems; inside wiring and exclusive contracts for service provided to apartment and condominium complexes; and disability access, including requirements governing video-description and closed-captioning. The company was a grant recipient under the FCC's Rural Broadband Experiment program, which requires it to meet certain build-out and public service obligations over a five-year period. The company is also a grant recipient under the FCC's Rural Digital Opportunity Fund (RDOF) program, which requires it to meet certain build-out and public service obligations over a ten-year period.

History

Cable One, Inc. was incorporated in 1980.