US broadband: above the fray

Netflix? Hulu? ESPN? HBO? YouTube? Entertainment companies are waging a brutal war for consumer eyeballs and dollars. The companies that operate the pipes, meanwhile, can sit back. Whatever content is most popular, they will get paid to deliver it.

A market once obsessed with the threat of cord-cutting by pay-TV subscribers now looks at the likes of Charter Communications and Comcast and sees big gains in high-speed internet users. This year those two and a smaller provider, Cable One, have seen their shares jump. Now, private equity gave its mark of approval. TPG Capital acquired two small, regional cable and broadband providers RCN Telecom and Grande Communications for $2.25 billion, collectively. The regional monopolies that rule US TV and internet delivery are not quite as dominant as they seem. RCN and Grande are “overbuilders” that put service over wires that incumbents have already built. Customers can pick a fringe provider if they do not want 500 channels, preferring fast internet and streaming video from Netflix and its growing list of rivals.