One of the better telecom dramas of the last decade had to do the phone companies' reactions to the onslaught of VoIP from competitors, which was led by the cable industry. They indeed did survive, and to a great extent have subsequently thrived due to the broadband boom and, for those with fortuitous corporate entanglements, the wireless explosion.
The next act-in a play that never really ends-deals with how cable operators will react to encroachment on their turf by, well, just about every company with enough money to buy or lease a few servers. The industry is in a very vulnerable position as it watches wearily for signs that its subscribers are moving to Internet-delivered over-the-top (OTT) programming.
The industry certainly hopes recent research sponsored by ESPN suggesting that cord cutters are having a marginal impact is true. The findings, however, fly in the face of significant subscriber losses and a gut-level feeling that subscribers must be going somewhere.
This is a big deal, albeit an indirect one, for businesses. Cable operators are now the co-equal of the telcos as the top wireline carriers. How they view their business will impact the investments they make. This, in turn, will influence the services and prices that are available for businesses that need capacity to ferry their bits and bytes hither and yon (i.e, transmitting their data). While most cable companies run different business entities for their commercial customers, there is significant overlap and the health of one influences the other.
It is worth noting that the industry, which has been making noise about becoming big players in the commercial sector since the Hoover administration (okay, perhaps Reagan), finally seems to really have something to crow about. Cox, Time Warner Cable and Comcast all are on pace toward-or already have achieved-$1 billion in commercial services revenue for 2010. The growth will continue, but probably will do so more quickly if the video arms of the corporation are hale and healthy.
Comcast has just made the most telling move in this area. It was reported today on The Wall Street Journal's website that the cable company is testing a set-top box that combines traditional cable with OTT in Augusta, GA. Comcast can offer the service, labeled Xcalibur and Spectrum-as a way to retain as many video customers as possible, even if the broadband-based subscribers deliver less revenue. The tests, presumably, will focus both on the technology and the ways in which that technology can be marketed.
The telcos eventually introduced their own VoIP services. As long as their subscribers were moving to the new service, the thinking went, it was prudent for the telcos to offer an alternative. Comcast and, more than likely, the industry as a whole-cable operators generally move in lockstep-apparently are thinking along the same lines: Cannibalizing your customer base is better than losing it outright.