Cable Operators' Vision Becoming a Reality

Carl Weinschenk

Only a scant two decades ago, the cable industry was a business and technical backwater, a quaint telecommunications afterthought. Telcos ruled the land.

In those days, it was appropriate to characterize the industry by bastardizing a famous quote. Experts essentially said that we should: "Pity the poor cable business. It is so far from God and so close to the telephone industry." (The actual quote, which laments the relationship between the United States and Mexico, is attributed to Mexican president Jose de la Cruz Porfirio Diaz Mori, who lived from 1830 to 1915.)

That has changed, and changed dramatically. While the Bells were broken up and are in the process of being put back together again (maybe), the cable operators have remade themselves. The first step was to rebuild their local area presence, which they did with hybrid fiber/coaxial cable (HFC) designs.

The luck came in the form of the explosion of the Internet. The industry's "coax" proved a perfect conduit for broadband signals into homes and, to a lesser extent, small businesses. This allowed the industry to help drive the transition from dial-up to broadband. This, needless to say, meant big bucks. Later, it enabled the industry to greatly increase its voice offerings.

Two challenges ran parallel to these profitable developments. One was that the industry remained, to some extent, many discrete islands of high-bandwidth connectivity, not an integrated whole in the manner of the phone industry's highly interconnected national footprint. The other was that operators had no cellular presence, a growing problem as mobility proliferated.

The industry is addressing both issues. The challenge of isolation was answered, at least to some extent, by a wave of consolidation. A second positive factor was the emergence of Internet protocol (IP) as the Esperanto of telecommunication protocols, able to give disparate networks at least the chance of effectively exchanging data.

While consolidation and the use of IP are nice, a more robust response to the challenge is the partnership with Sprint Nextel of cable companies representing the majority of homes passed in the United States. This is the beginning of a national multi-provider footprint for cable -- and adds a cellular element to the package to boot.

It's World Series time (at least it is outside of New York), so a baseball analogy is apt: The industry has moved from a triple play (wired voice, video and data) to a grand slam (wired and wireless voice, video and data) offering. The cable/Sprint Nextel group, which goes by the highly creative name "SpectrumCo," intends to lead the charge. It was the leading bidder for capacity in the Federal Communications Commission's (FCC) advanced wireless spectrum auction, pledging $2.37 billion for 137 licenses.

The Sprint Nextel deal was not the first step in the cable industry's grand plan. But looking at it in context shows how big a step it is.

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