Billionaire John Malone’s re-emergence in the U.S. cable business is a bet on the growth of broadband, and he believes the industry can soon deliver speeds that are at least 10 times faster than the connections available to the majority of Americans today.

In an exclusive interview Friday with The Denver Post, Malone also said residential high-speed Internet service will ultimately move to a tiered-pricing model that’s similar to the wireless industry, where fees are based on the amount of data consumed rather than speed.

Malone’s Liberty Media, a communications and entertainment conglomerate based in Douglas County, completed a deal in May to acquire a 27 percent stake in cable-TV provider Charter Communications for $2.6 billion.

The investment, which marked Malone’s return to the U.S. cable industry after more than a decade, was spurred, in part, by the anticipated surge in demand for broadband capacity as consumers view more online video.

“In prime time, about half of all the traffic on the Internet is Netflix or Amazon — in other words, it’s video,” he said. “As that trend continues, the need for greater capacity on the local distribution of the Internet really favors cable, and our belief is that cable will be able to charge more for higher speeds and greater capacity.”

The 72-year-old cable pioneer built Tele-Communications Inc. into the largest operator in the U.S. in the 1980s. He sold the Denver-based cable company in 1999.

Until recently, Malone was unable to jump back into the U.S. cable business because of his stake in DirecTV, the nation’s No. 1 satellite-TV company.

“It was only in the last year that I had reduced my interest in DirecTV to a level that the government feels no longer represents a conflict,” Malone said in a phone interview from his ranch in Elbert County. “That involved having to put a substantial amount of stock into a trust.”

His re-entry has driven speculation that the industry is headed for a shake-up. In addition to his Charter stake, Malone is reportedly attempting to acquire Time Warner Cable, the No. 2 U.S. cable company.

“Given that John Malone was at the center of the last significant consolidation wave for the U.S. cable industry, his investment with Charter and the overtures of further acquisitions have been great grist for the M&A conversation,” said Ian Olgeirson, a senior analyst with SNL Kagan. “I see it as primarily about programming scale and the ability to cut more favorable deals on content, but there is also an innovation edge, and both get a little more interesting if you combine a big U.S. (cable systems operator) with Liberty’s international holdings.”

While Malone has been absent from cable domestically since selling TCI, he has been active in the industry overseas. He built Liberty Global into one of the world’s largest cable companies, serving about 25 million subscribers in 14 countries.

Malone believes U.S. cable operators need to consolidate and work more cooperatively to increase scale, drive down programming fees and take advantage of synergies. He pointed to the development of @Home Network, a joint venture between the nation’s cable companies in the 1990s that marked the industry’s foray into the high-speed Internet business.

“The industry, without that cooperation, doesn’t have enough scale to be a serious player in a global world, competing with people like Google or Apple, who are basically thinking in terms of billions of customers rather than tens of millions,” Malone said.

Comcast, the largest cable operator in the U.S., serves about 20 million broadband customers.

Malone acknowledges that companies such as Google, which is reportedly pitching an online video service to content owners, pose a threat to the profitability of cable’s pay-TV business.

“On the other hand, in order to deliver to the end customer, they have to use largely the cable industry’s facilities,” Malone said.

When compared with the fiber-network build-outs facing telecom companies, Malone believes cable operators can deliver broadband speeds of 500 megabits per second “relatively quickly and relatively inexpensively.”

“We think that demand for those services will be there,” Malone said. “That’s the bet that you basically make when you invest in U.S. cable right now.”

In Europe, Internet speeds of 100 Mbps are the norm, far ahead of the U.S., where the majority of residential subscribers have access to speeds of up to 50 Mbps.

“We’re just launching 500 megabits in Holland this summer,” Malone said. “We plan to roll that out across Europe next year.”

It’s a just matter of time before those types of speeds reach the U.S.

“We’re just an investor in Charter. I’m not going to make any commitments. But based upon our experience overseas, I would say it could be done quite quickly,” Malone said. “The technology exists.”

As speeds increase, Liberty Global wants to move toward billing based on consumption.

“There are lot of people who would love the high speeds, but they don’t use the Internet that frequently,” Malone said. “To be fairer to the consumer, it would be better if we get over to volume-based rather than speed-based pricing. … I do see the U.S. going that way.”

Olgeirson, the SNL analyst, said consumption-based billing could come in the long term, although the industry has struggled to find the right mix.

“I think there will be a usage-based billing component, but I don’t believe it will be around volume,” said Nancee Ruzicka, president of Denver-based research firm ICT Intuition. “It will be more around application and transaction-type of activities, meaning when we download a movie, we get charged.”

Andy Vuong : 303-954-1209, avuong@denverpost.com or fb.com/byandyvuong