The Cable Cowboys Call Collect

Posted by Mike Walsh

1/10/05 6:45 AM

The last time the US cable industry played musical chairs - the theme was convergence. Despite an antiquated network and a crushing regulatory regime, TCI managed to sell to AT&T in the late nineties on the dream of a single high tech network that could provide everything from movies on demand to phone calls. What the telco giant didn't realise, was just how many billions it would take to upgrade the cable network to do just that.

Flash foward to the present and Comcast, America's largest cable operator is gearing up to rollout Voice over IP services (VoIP) to their base of over 21 million subscribers. Why the fuss? VoIP services run over the existing cable networks and represent an attractively high-margin business for the cable carriers. Even better, as ruled by the Federal Communications Commission in November, cable VoIP services are not even subject to traditional state telephony regulations.

In all, it should come as no surprise that the cable barons are eager to sell their customers more services. Thirty years ago the primary momentum behind cable signup was improved television reception. After spending $75 billion upgrading their systems in the nineties, the only way to amortise those costs is persuade subscribers to buy into the quadruple play of Internet, television, voice-over-IP and wireless telephony.

As you can imagine, competitive tension is building between the cable industry and traditional telephone companies such as AT&T. And no wonder. The glittering prizes at stake are no less than the fight for control of a converged access platform which will grant significant market power over the pricing and distribution of content and communications.


Topics: Media

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