The Winner in the Cable/Telco Battle for Consumers Matters to Business

Carl Weinschenk

Many fortunes will be made and lost and many investments shown to be shrewd or a bust in the next decade as cable companies and telcos build out their networks and market their triple- and quadruple-play pitches to consumers. The stakes are high, and the hype machine also is running high. This is especially true of Verizon, which seems to put out a press release every time it signs a new customer to its FiOS service.


Make no mistake about it: Whoever wins the hearts and minds of consumers will be in a far better position to serve the small and medium-size business segment. For that reason, it is important to keep track of the cable/telco dynamic.


This Associated Press story -- here posted at NewsFactor -- is very complimentary to FiOS. The writer said that he got extra channels of programming, that the remote worked better than Comcast's, and that the FiOS modem had to be reset only once. The high-speed data service was not quite as fast as the cable modem to which he was accustomed, but fast enough to satisfy those in his household.


The only problem was that the installer almost burned his house down when he drilled into an electrical wire. The company initially wanted the reviewer to front the money for the new electrical box -- $2,650 -- and be reimbursed. The telco ended up issuing a check in a few days.


The other big telco project is AT&T's U-verse, which is far behind the half-million customers served by FiOS. The AT&T service passed the 100,000-subscriber point this week. The difference between the two services is that FiOS brings fiber all the way to the home, while U-verse terminates fiber at neighborhood nodes. Chris Rice, AT&T's CTO, seems a bit defensive in this Q & A comparing U-verse and FiOS. Most people think the Verizon service is superior, while opinions differ on which is the more cost effective.


R & D never slows down, of course. This GigaOm post has excerpts from an interview Om Malik did with one of two employees experimenting with 100 Mbps connectivity over FiOS. The comments are a bit anti-climatic. There is, it seems, no big difference between today's broadband and the network of the future -- yet. The reason is that the Web is optimized for far lower speeds, so the additional bandwidth doesn't change the perception of the service. Malik comments at the end that infrastructure companies must prepare for the day that 100 Mbps or even greater pipes are available to customers.


It's been a while since FiOS launched, and early assessments are beginning to emerge. Last month, One Touch Intelligence's OneTRAK report -- which looked at the impact of rollouts in Massachusetts -- concluded that incumbent cable companies stand to lose more than 10 percent of customers to the telco service and that operators already competing with the incumbents ("overbuilders") can suffer a 15-percent bite. The report speculates that 40 percent of FiOS customers could be coming from direct broadcast satellite (DBS) companies.


In the same vein, MarketWatch reports that Cablevision's second quarter results revealed an increase in churn -- folks abandoning their subscriptions -- due to FiOS. The fact that this was expected by the cable operator makes it no less significant. However, there is a "newness factor" that certainly accounts for some of the switchers. Future reports will be interesting.


IT planners at SMBs or enterprises supporting many small offices and/or telecommuters should follow these trends closely. There is a big difference between the networking platforms -- not to mention the amount of money the service providers charge.

Add Comment      Leave a comment on this blog post

Post a comment





(Maximum characters: 1200). You have 1200 characters left.




Subscribe to our Newsletters

Sign up now and get the best business technology insights direct to your inbox.