The second-largest cable operator in the U.S., Time Warner Cable Inc (NYSE:TWC) has performed very well for its shareholders over the past few years, rebounding nicely from the 2009 low of $20.19 to the $100-ish level it trades for currently.  Additionally, the company began paying a dividend and implemented one of the best buybacks in the market.  With the company set to report its 2012 earnings on Thursday, Jan. 31, investors want to know that there are still good times ahead for Time Warner Cable, despite the growing competition.

Just to make readers aware, the giant gap down in 2009 as seen in the chart below was not a crash in the share price, but the splitting off of Time Warner’s other businesses.

Time Warner Cable currently has about 12.5 million subscribers -- not a bad market share, given that its cable systems encompass about 29 million homes.  That means about 43% of Time Warner’s potential customers are subscribers.  Even though this is a good percentage, it still leaves room to grow.  The company’s Road Runner internet service has 11.3 million subscribers (38.5% of homes), and its digital phone service has 5.2 million subscribers (18%), mostly bundled with other services.

I don’t foresee the phone service expanding by a significant amount going forward, but the cable and particularly the internet service both have definite potential.  The numbers listed above, the most recent available, applied as of the end of June 2012.  During the earnings call, pay attention to the new data in these three categories.  Any signs that the internet service is expanding would be very welcome news by investors.

Although Time Warner Cable has been increasing its footprint with several recent acquisitions, such as Insight Communication this past year, the competitive landscape has gotten tougher over the past few years, and this is my biggest concern with Time Warner going forward.

Always a threat, satellite providers DIRECTV (NASDAQ:DTV) and DISH Network Corp. (NASDAQ:DISH) are both investing a ton of resources on advertising and courting new customers.  However, satellite has positives and negatives, which may ultimately bring customers back to cable.

One issue with satellite is that while there is on-demand content, it is structured differently.  Instead, it is similar to downloading a movie on the internet, causing an inconvenient delay before you can actually watch.  The inconvenience of no TV in bad weather is a big turn-off as well.  Consumers are apparently frustrated with satellite, as the growth of these two companies has significantly slowed over the past few years.

Telecom Giants Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) are more of a threat, with their growing TV service.  I’m most familiar with AT&T’s U-Verse, since that is what is available in my area.  These two companies have a unique competitive advantage in that they can offer “bundle” discounts to their wireless customers.  U-Verse is offering a bundle deal that includes TV, internet, and a digital phone for only $89 for existing wireless customers.  However, there is the issue of not being able to watch and/or record a total of two HD channels at once in the entire house.  Very inconvenient if you have several TV’s.