Cable and Telco Networks Remain Convergence Linchpins

Carl Weinschenk

While 3G and WiMax are well positioned to advance the boundaries of interactivity and converged applications, it is clear that wired phone and cable networks are the main players in the world of high-bandwidth services. How these two behemoths fare from the technical, business and regulatory points of view likely will determine the fate of advanced services.

 

The industries have unique problems and, so far, it's been a mixed autumn for each. The phone companies are desperately trying to win statewide or even national franchises. The latest skirmish, in Connecticut, seems to be going the telco's way. For the cable industry, the challenge of the moment is fending off the Federal Communications Commission -- or, more specifically, chairman Kevin Martin.

 

This New York Times story details Martin's efforts to determine if the "70/70" rule should take effect. The rule, which is part of the Cable Communications Act of 1984, mandates that the FCC can take more control over the industry if service is available to 70 percent or more of households and 70 percent or more of those households actually subscribe.

 

The story details which of the four other commissioners are likely to join with Martin on the vote. The situation is a bit odd, since cable industry seems to be facing a tremendous amount of competition, both from satellite services and telco-based fiber initiatives. Clearly, it is a more competitive landscape than it was when the Act took effect two decades ago.

 

On another level, a rule based on video viewership levels made sense in 1984. Today, however, it seems that real market power and dominance would be better determined by an assessment of the impact being made by the bundles of wired and/or wireless voice, data and video each industry is offering its customers and prospects.


 

This may seem like a regulatory tug-of-war -- and not a particular new one, at that -- but it is important. The reality is that a lot of things that don't seem directly relevant (or even particularly interesting) have a big impact on how the market treats various carriers and service providers and, in turn, how quickly they build out and upgrade their networks.

 

In this context, it is important to note what a tough few months it's been for Comcast. On one hand, it has to worry about the machinations of the FCC while, on the other it has legions of dissatisfied customers (one of which, according to this Media Post blog, led Advertising Age columnist Bob Garfield to start a blog called "comcastmustdie.com"). The post describes a general sense of mistrust of the company on Wall Street as well as among its customers, a loss of customers to the phone industry -- FCC pronouncements notwithstanding -- and a generally sour atmosphere. The piece doesn't even touch on the battle with subscribers over peer-to-peer limits.

 

Neither the cable or phone companies are going away, of course. It will be interesting to see how the franchise landscape evolves and how hard Martin and the FCC push the cable industry, especially as it considers an initiative to relax newspaper/television cross ownership rules.



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