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Broadband is the next cable monopoly

Posted Aug 11 2008, 02:50 PM by Kim Peterson
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The next cable monopoly? It's the Internet connection business. Cable companies are handily beating telecoms when it comes to the triple-play of Internet, phone and TV, according to Bernsterin analyst Craig Moffett. About 80% of the new broadband connections in the U.S. belong to cable.

Add that to the trend of people dropping their telephone land lines, and the picture isn't pretty for telcos.

"In the harsh glare of second quarter seasonality, the telcos' wired businesses look not only like they are weakening," Moffett writes, "they look like they are positively collapsing." The landline business is down nearly 10% annually at AT&T and 12% at Verizon.

Those companies are also losing broadband DSL customers to cable, and so broadband growth has stopped, Moffett writes.

You have to wonder, as Larry Dignan writes on Seeking Alpha, if AT&T and Verizon are on their way to becoming pure wireless companies. Give them credit for trying hard to get into broadband, but it looks like cable's monopoly will extend to the Internet connection business as well. Moffett writes:

"The telecommunications  market  is,  after  all,  a  true  natural monopoly market  –  that  is,  the  capital  required  to  build  a network  is  simply  too  great  to  support  more  than  one operator (just like the railroad business before it).  And more than  ever,  it  appears  that  Cable  is  poised  to  be  that  one network."

Related reading:

AT&T faces dropped landlines

Verizon to become largest wireless carrier

Cable companies eyeing nationwide wireless network

 

 

Comments

 

At the least Cable Companys were willing to share some of the effeciencys of digital technologys with their customer. Telcos and wireless providers certainly did not endear themselves with their agressive billing and pea & shell game marketing practices.

Great I love monopolies, I love not having the option of getting a better deal from the competition.

I can not stand cable companies.  The telco's may be late to the game, but some have learned the lesson.  One need only look at Verizon, their Fios network is both better and faster than cable and has much more potential.  Combined with their cellular service, there are great efficiencies there and better competition.  However, that can't be said for all telcos (AT&T I'm looking at you).

I hate government monopolies, What is worse though, is privately owned government protected monopolies.  We HAVE to move away from this private ownership of necessary infrastruture.   I would love to see Radio and TV moved to the internet completely and ALL the airwaves opened up to a publically owned Wi-Max or better coverage continent wide.  Will that happen here till the Chinese do it?  Probably not.

The cable thieves will get their hands on my wallet -- when they pry it from my cold, dead fingers. Broadband service that costs more than twice what DSL does? No, thank you. Sure, cable is faster, but not so much faster as to make much of a difference to most users. TV? A good antenna in the attic gets me all of the HDTV I care to watch -- a hundreds bucks spent once for the equipment, versus a hundred bucks a month. The Wall Street Journal said it best of the cable industry several years ago: "A business model only Tony Soprano could love."

There is no cable monopolies. You can use dish or rabbit ears! THAY JUST SUCK

Both Telcom companies and Cable companies have generally rotten business practices.  

I've learned that the Telecom companies have a much more sound approach to technology, and infastructure to support broadband access.  Pefect example is Verizon's FiOS.  

Telecoms just need to learn the old days of betting the farm on phone service fees, and long distance tolls is over.  Eventually, Telecom companies will win out just due to the massive lopsidedness in product quality and service quatliy compared to cable companies with broadband.  

Ever tried to get a cable guy out to fix your service?  I think it was in the news that some poor old lady a year ago or so ended up putting a hammer through a Comcast Customer Service member's office equipment due to her frustration.  

They are winning no because they have had a huge head start.  That market share will shrink.

It seems that cable has the edge at this point however I don't think it is wise to discount the tortoise yet?  As I understand the FIOS network is much faster than any broadband being offered by the cable operators.

If government unleashes the telcos, and in many areas they have, the entertainment world could belong to AT&T and Verizon

I live in a city of 1.5 million or so in a nice  intown neighborhood.  As crazy as it sounds, I don't think my local telecom, BellSouth, even offers internet access to my neighborhood.  We still get advertisments as though it is available.  So I assume they are still building out in order to offer the service.  

My father's residence across town has DSL available but it doesn't work.  He went to a cable modem and has to have my computer guru brother reset it constantly.  

For some areas of the country the 21st Century is a bit slow in coming.  

"...the  capital  required  to  build  a network  is  simply  too  great  to  support  more  than  one operator (just like the railroad business before it).  And more than  ever,  it  appears  that  Cable  is  poised  to  be  that  one network."

Really??  What about the current telephone infrastructure currently being used for DSL?  It may not be the most technologically advanced network around, but it still is the most widely available.  Fiber is the future, sure, but fiber-optic cable is a little easier to install than railroad track.

The cable companies may have their own problems upcoming with more and more users watching videos on the internet and dumping their way over-priced cable TV subscriptions.

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