Cable One, Inc. (CABO): Business Model Canvas [10-2024 Updated]

In today’s fast-paced digital world, Cable One, Inc. (CABO) stands out with a robust business model that caters to diverse customer needs. By leveraging strategic partnerships and a fiber-rich infrastructure, Cable One delivers high-speed internet services to both residential and business clients, especially in underserved areas. Dive deeper into the intricacies of their Business Model Canvas to discover how they maintain competitive pricing and customer loyalty while navigating the challenges of the telecommunications landscape.

Cable One, Inc. (CABO) - Business Model: Key Partnerships

Collaborations with broadband-centric providers

Cable One, Inc. has established partnerships with various broadband-centric providers to enhance its service offerings. For instance, the company has engaged in collaborations that leverage shared infrastructure and technology to expand its broadband capabilities. As of June 30, 2024, Cable One reported a total of 1,062.8 thousand residential data primary service units (PSUs), reflecting a marginal increase of 0.5% from the previous year.

Strategic investments in fiber expansion businesses

Cable One has made strategic investments in fiber expansion businesses to bolster its market presence. Notably, during the first half of 2024, the company incurred capital expenditures totaling $137.5 million, focusing significantly on scalable infrastructure and line extensions. This investment aims to improve network capacity and enhance customer experience. The company's equity method investment loss was reported at $44.3 million for the six months ended June 30, 2024, primarily stemming from its investments in Clearwave Fiber and MBI.

Investment Type	Investment Amount (in millions)	Impact on PSUs
Capital Expenditures	$137.5	1,062.8 thousand residential data PSUs
Equity Method Investment Loss	$44.3	Clearwave Fiber and MBI

Partnerships with local governments for infrastructure development

Cable One has actively partnered with local governments to facilitate infrastructure development, particularly in underserved areas. These partnerships enable the company to enhance its service delivery and expand its geographic footprint. As of June 30, 2024, the company reported a total of 2,809.2 thousand homes passed, representing a 2.8% increase from the prior year, which can be attributed in part to these collaborative efforts.

Furthermore, the company has participated in the FCC's Affordable Connectivity Program, which provided discounts to low-income consumers. However, the program ended in the second quarter of 2024, resulting in the loss of approximately 4,000 residential data customers.

Partnership Focus	Homes Passed (in thousands)	Change (%)
Local Government Collaborations	2,809.2	2.8%
FCC Affordable Connectivity Program	4,000 customers lost	—

Cable One, Inc. (CABO) - Business Model: Key Activities

Expansion of high-speed data service

Cable One, Inc. has focused on expanding its high-speed data services as a key activity to enhance its service offerings. As of June 30, 2024, the company reported a total of 963.2 thousand residential data primary service units (PSUs), reflecting a slight increase of 3.1 thousand from the previous year, which represents a 0.3% growth. The company continues to prioritize its data services, with residential data contributing $466.2 million in revenue for the first half of 2024, down 4.8% from $489.5 million in the same period of 2023.

Infrastructure improvements and upgrades

Infrastructure enhancements are critical for Cable One's operational strategy. The company invested $137.5 million in capital expenditures for the six months ended June 30, 2024, a decrease of 22.6% from $177.6 million in the same period of 2023. This expenditure included costs for customer premise equipment, scalable infrastructure, and line extensions, with specific allocations as follows:

Category	2024 (in thousands)	2023 (in thousands)
Customer premise equipment	$19,040	$34,386
Commercial	$11,190	$18,952
Scalable infrastructure	$18,006	$22,945
Line extensions	$33,634	$20,465
Upgrade/rebuild	$15,519	$35,633
Support capital	$40,090	$45,232
Total	$137,479	$177,613

These upgrades are essential for improving service quality and capacity, enabling the company to meet customer demands effectively.

Customer acquisition and retention strategies

Cable One has implemented several strategies to acquire and retain customers amidst a competitive environment. The company reported a total of 1,095.7 thousand customer relationships as of June 30, 2024, which represents a decline of 5.3 thousand from the previous year. Specific strategies include targeted pricing and product offerings, which have resulted in a 4.7% decrease in average revenue per user (ARPU) for residential data services, dropping to $80.58 from $84.57. The company aims to counteract subscriber losses by focusing on high-margin data products and enhancing customer service experiences.

Cable One, Inc. (CABO) - Business Model: Key Resources

Fiber-rich infrastructure network

Cable One, Inc. operates a robust fiber-rich infrastructure network that is essential for delivering high-speed internet and other communication services to its customers. As of June 30, 2024, the company reported a total of 2,809.2 thousand homes passed, representing a 75.2 thousand increase from the previous year, a growth of 2.8%.

The capital expenditures related to the infrastructure network for the first half of 2024 amounted to $137.5 million, a decrease of 22.6% compared to $177.6 million in the same period of 2023. This investment is crucial for maintaining and upgrading the network capabilities, ensuring that Cable One can meet the increasing demand for data services.

Skilled workforce and technical expertise

Cable One's workforce is a vital asset, comprising skilled technicians and support staff with technical expertise necessary for operating and maintaining the network. As of June 30, 2024, the company had a total workforce of approximately 1,500 employees. The company has emphasized ongoing training programs and development initiatives to enhance the skills of its workforce, which is critical in an industry characterized by rapid technological advancements.

In addition, selling, general, and administrative expenses for the six months ended June 30, 2024, totaled $181.2 million, reflecting an increase of 4.8% from $173.0 million in the same period of 2023. This increase is partially attributed to higher costs associated with workforce management and training programs aimed at improving service delivery.

Financial resources for capital expenditures

Cable One's financial resources are essential for capital expenditures required for network maintenance and expansion. The company reported cash flows from operating activities of $320.3 million for the six months ended June 30, 2024, down from $331.4 million in the same period of 2023. This decline is associated with a decrease in net income, which was $75.5 million for the first half of 2024, compared to $90.8 million in 2023.

The total debt of Cable One as of June 30, 2024, was approximately $3.57 billion, a slight decrease from $3.68 billion at the end of 2023. This ongoing management of financial resources enables the company to fund its capital projects while maintaining operational stability.

Metric	2024 (H1)	2023 (H1)	Change
Homes Passed (thousands)	2,809.2	2,733.9	+75.2 (+2.8%)
Capital Expenditures (in millions)	$137.5	$177.6	-22.6%
Cash Flows from Operating Activities (in millions)	$320.3	$331.4	-3.3%
Net Income (in millions)	$75.5	$90.8	-16.9%
Total Debt (in millions)	$3,570.9	$3,680.5	-3.0%

Cable One, Inc. (CABO) - Business Model: Value Propositions

High-speed internet with Gigabit capabilities

Cable One, Inc. offers high-speed internet services with Gigabit capabilities, positioning itself as a leader in broadband technology. As of June 30, 2024, the company reported total residential data service revenues of $466.2 million, representing 58.4% of total revenues. The average revenue per user (ARPU) for residential data services was $80.58, a decrease of 4.7% from the previous year. This decline reflects the company's strategy to implement targeted pricing and product offerings to attract value-conscious customers.

Reliable and flexible data service offerings

Cable One provides a range of reliable and flexible data service offerings to meet the diverse needs of its customer base. As of June 30, 2024, the company had 963.2 thousand residential data primary service units (PSUs), which is a slight increase of 0.3% year-over-year. Business data PSUs also saw growth, reaching 99.6 thousand, up by 1.8%. The company's focus on enhancing its network infrastructure is evident, with capital expenditures amounting to $137.5 million in the first half of 2024, down from $177.6 million in the same period of 2023.

Competitive pricing for residential and business customers

Cable One's pricing strategy aims to remain competitive in a challenging market. The company has adjusted its pricing structures in response to market conditions, which has influenced its ARPU. For residential data services, the ARPU was reported at $79.36 for the second quarter of 2024, down from $85.20 in the same quarter of 2023. Business services experienced a similar trend, with an ARPU of $244.52, decreasing by 2.6% compared to the previous year. The company's commitment to competitive pricing is critical as it navigates customer attrition in its video and voice service segments.

Service Type	Revenue (in $ millions)	Percentage of Total Revenue	ARPU (in $)
Residential Data	466.2	58.4%	80.58
Residential Video	117.5	14.7%	154.86
Residential Voice	16.8	2.1%	36.75
Business Data	113.3	14.2%	245.24
Business Other	37.8	4.7%	N/A
Other Revenues	47.1	5.9%	N/A
Total Revenues	798.8	100%	N/A

Cable One, Inc. (CABO) - Business Model: Customer Relationships

Focus on long-term customer retention

Cable One, Inc. has implemented various strategies aimed at achieving long-term customer retention. As of June 30, 2024, the company reported a total of approximately 1.1 million residential and business customers, with a focus on enhancing the customer experience through tailored data services. The residential customer relationships count was approximately 992,900, while business customer relationships were around 102,800.

The company has shifted its customer mix towards higher-margin residential data and business data product lines, moving away from traditional double- and triple-play packages. This strategy has been in response to competition from direct broadcast satellite services and over-the-top offerings.

Personalized service and local community engagement

Cable One emphasizes personalized service by engaging with local communities. The company operates in 24 states, with approximately 74% of its customers located in seven states, including Arizona, Idaho, and Texas. This local focus allows for tailored marketing and service offerings that resonate with community needs. The company aims to deliver an effortless experience, combining advanced technology with a personal touch.

Customer Segment	Count (in thousands)	Percentage of Total Customers	Change from Previous Year
Residential Customers	992.9	90.6%	-0.6%
Business Customers	102.8	9.4%	+0.6%
Total Customers	1,095.7	100%	-0.5%

Customer support and technical assistance

Cable One places a strong emphasis on customer support and technical assistance. The company reported a decrease in operating expenses of $12.6 million, or 5.6%, for the six months ended June 30, 2024, which reflects its efficient management of customer service costs while still providing adequate support. The ability to maintain lower costs while enhancing customer service is critical to retaining customers in a competitive market.

As part of its customer support strategy, Cable One has made significant investments in system conversions and customer service technologies, which amounted to $1.8 million in system conversion costs and $3.0 million in marketing costs. This investment is intended to streamline customer interactions and improve overall service delivery.

Cable One, Inc. (CABO) - Business Model: Channels

Direct sales through company website and local offices

Cable One, Inc. utilizes its corporate website as a primary channel for direct sales, allowing customers to sign up for various services including internet, video, and voice services. As of June 30, 2024, the company reported a total of 1,300.4 thousand primary service units (PSUs), which includes both residential and business customers. The residential data PSUs accounted for 963.2 thousand, while business data PSUs reached 99.6 thousand. This direct engagement through the website is complemented by local offices that provide customer support and service activation capabilities.

Digital marketing and advertising campaigns

Cable One has increased its investment in digital marketing to enhance customer acquisition and retention strategies. For the six months ended June 30, 2024, marketing costs rose by $3.0 million, reflecting an emphasis on targeted advertising campaigns. The company's efforts include social media advertising, search engine marketing, and email campaigns, aimed at reaching potential customers in specific geographic areas. The average revenue per user (ARPU) for residential data services was reported at $80.58, indicating the effectiveness of these marketing strategies in maintaining revenue levels despite competitive pressures.

Partnerships with retailers for service promotions

Cable One has established partnerships with various retailers to promote its services through bundled offers. These partnerships are designed to enhance visibility and accessibility of Cable One's services to potential customers. In 2024, the company focused on leveraging retail channels as a way to drive service adoption, particularly in underserved markets. The partnerships are expected to contribute to an increase in customer relationships, which totaled 1,095.7 thousand as of June 30, 2024, with a slight decline from the previous year.

Channel Type	Details	Metrics
Direct Sales	Company website and local offices	1,300.4 thousand PSUs (as of June 30, 2024)
Digital Marketing	Targeted advertising campaigns	$3.0 million increase in marketing costs (2024)
Retail Partnerships	Service promotions through retailers	1,095.7 thousand customer relationships (as of June 30, 2024)

Cable One, Inc. (CABO) - Business Model: Customer Segments

Residential customers in non-metropolitan areas

Cable One, Inc. primarily serves residential customers in non-metropolitan areas, focusing on providing broadband internet access, video, and voice services. As of June 30, 2024, the company reported a total of 1,154.7 thousand residential primary service units (PSUs), which represents a slight decline of 39.3 thousand or 3.3% compared to the previous year.

In terms of revenue, residential data service generated $466.2 million for the six months ended June 30, 2024, accounting for 58.4% of total revenues. This represents a decrease of $23.3 million, or 4.8%, from the same period in 2023, largely due to a decrease in average revenue per user (ARPU) from $84.57 to $80.58.

Additionally, residential video service revenues decreased by $18.9 million, or 13.8%, to $117.5 million, attributed to a decrease in video subscribers.

Small to medium-sized businesses

Cable One targets small to medium-sized businesses (SMBs) by offering tailored data services. As of June 30, 2024, business data PSUs increased to 99.6 thousand, reflecting a net gain of 1.7 thousand or 1.8% over the year. Business data revenues reached $113.3 million for the first half of 2024, up by $2.9 million, or 2.7%, compared to the previous year.

The average revenue per user for business services was reported at $245.24, showing a slight decline of 2.1% from the previous year's $250.41. The continued growth in business data PSUs indicates a robust demand for reliable internet services among SMBs, which Cable One aims to capitalize on through competitive pricing and enhanced service offerings.

Enterprise and wholesale clients

Cable One also serves enterprise and wholesale clients, providing high-capacity data services tailored to larger organizations. Although specific numbers for enterprise clients are not disclosed, business other revenues, which include enterprise services, totaled $37.8 million for the first half of 2024, a decrease of $4.8 million, or 11.3%, from the previous year.

The company’s focus on enhancing its high-capacity network infrastructure is evident in its capital expenditures, which amounted to $137.5 million for the first six months of 2024. This investment aims to strengthen service delivery capabilities for enterprise clients and ensure scalability to meet future demand.

Customer Segment	PSUs (thousands)	Revenue (in millions)	ARPU	Change (% YoY)
Residential Customers	1,154.7	466.2	80.58	-4.8%
Small to Medium-Sized Businesses	99.6	113.3	245.24	-2.1%
Enterprise and Wholesale Clients	N/A	37.8	N/A	-11.3%

Cable One, Inc. (CABO) - Business Model: Cost Structure

Significant capital expenditures for infrastructure

The capital expenditures for Cable One, Inc. amounted to $137,479 million for the six months ended June 30, 2024, compared to $177,613 million for the same period in 2023, representing a decrease of 22.6%.

The breakdown of capital expenditures by category is as follows:

Category	2024 (in thousands)	2023 (in thousands)
Customer premise equipment	$19,040	$34,386
Commercial	$11,190	$18,952
Scalable infrastructure	$18,006	$22,945
Line extensions	$33,634	$20,465
Upgrade/rebuild	$15,519	$35,633
Support capital	$40,090	$45,232
Total	$137,479	$177,613

Operational costs including labor and maintenance

For the six months ended June 30, 2024, Cable One's operating expenses (excluding depreciation and amortization) were $212.4 million, a decrease of 5.6% from $225.0 million in the same period of 2023. The decrease in operating expenses was primarily attributed to:

• $17.7 million reduction in programming costs due to video customer losses.
• $2.1 million decrease in labor and other compensation-related costs due to organizational changes.

However, there were increases in:

• $1.8 million in network backbone costs.
• $1.7 million in rent expenses.
• $1.5 million in property and other taxes.
• $1.3 million in software costs.

Marketing and customer acquisition expenses

In the first half of 2024, Cable One incurred $181.2 million in selling, general, and administrative expenses, which was an increase of 4.8% compared to $173.0 million for the same period in 2023. This increase was primarily driven by:

• $6.6 million in severance costs due to organizational changes.
• $3.0 million increase in marketing costs.
• $1.8 million in system conversion costs.
• $1.3 million in software costs.

These expenses represented 22.7% of total revenues for the six months ended June 30, 2024, compared to 20.4% in the prior year.

Cable One, Inc. (CABO) - Business Model: Revenue Streams

Residential Data Services

Residential data services generated 58.4% of total revenue, amounting to $466.2 million for the six months ended June 30, 2024. This represents a decrease of $23.3 million, or 4.8%, compared to the prior year, primarily due to a 4.7% decrease in Average Revenue Per User (ARPU) to $80.58 from $84.57.

Business Data Services

Business data services accounted for 14.2% of total revenue, generating $113.3 million for the six months ended June 30, 2024. This reflects an increase of $2.9 million, or 2.7%, driven by a rise in business data subscribers. The ARPU for business services was $245.24, a decline of 2.1% from $250.41 in the previous year.

Residential Video and Voice Services

Residential video services contributed 14.7% of total revenue, totaling $117.5 million for the first half of 2024, down by $18.9 million, or 13.8%. This decline is attributed to a reduction in residential video subscribers. Residential voice services contributed 2.1% of total revenue, amounting to $16.8 million, a decrease of $2.5 million, or 12.9%, due to a drop in subscribers.

Service Type	Revenue (in millions)	Percentage of Total Revenue	Change (in millions)	Percentage Change	ARPU
Residential Data	$466.2	58.4%	$(23.3)	(4.8%)	$80.58
Business Data	$113.3	14.2%	$2.9	2.7%	$245.24
Residential Video	$117.5	14.7%	$(18.9)	(13.8%)	$154.86
Residential Voice	$16.8	2.1%	$(2.5)	(12.9%)	$36.75
Other Revenues	$47.1	5.9%	$(0.6)	(1.2%)	N/A

Overall, the total revenues for Cable One, Inc. for the six months ended June 30, 2024, amounted to $798.8 million, reflecting a decrease of $47.1 million, or 5.6%, from the previous year.