Broadband is the next cable monopoly
Posted
Aug 11 2008, 02:50 PM
by
Kim Peterson
Rating:
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