Cable Industry Confronts Wireless Conundrum
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As the cable industry descends on the nation's capital for its annual trade show, a panel of some of the top executives in the business described theirs as a market at a crossroads.
From the talk here at the National Cable & Telecommunications Association's (NCTA) The Cable Show '09, it's clear that traditional cable providers are scrambling to keep pace with consumers' emerging expectation that video content should be available anywhere, at any time.
Meanwhile, cable's leaders are now in full-fledged competition with telecom providers like AT&T and Verizon over voice, video and broadband services, and find themselves struggling for position in the land-grab for the capacity to provide wireless data services.
"Wireless is a conundrum for the cable industry in how we take that first step," said Comcast Chairman and CEO Brian Roberts. "Frankly, AT&T and Verizon aren't the elephants--they're like the super-elephants," he said, referring to the massive stores of spectrum they have acquired to build next-generation wireless data networks. "You could call us the wireless have-nots."
Comcast, the nation's largest cable provider, has its own solution to the wireless challenge. It is one of several companies that took a stake in the reconstituted Clearwire, which joined forces with Sprint last year to build a nationwide 4G wireless network using the WiMAX standard.
The explosion of chic Internet-enabled mobile devices like Apple's iPhone and T-Android-powered G1 have breathed new life into the dream of the mobile Web, where consumers enjoy reliable access to video and other rich-media content on the go. For cable companies, relatively recent entrants into the ISP market, wireless is fast becoming a competitive reality.
Cox Communications is taking a different approach than its larger rival Comcast.
Cox President Patrick Esser noted that his company has invested heavily in wireless spectrum, but that its fortunes remain staked on its existing infrastructure.
"The most valuable asset I own is still the last mile to the home," he said. "Wireless does not change that. Wireless allows you to put a mesh overlay on top of that."
Jerald Kent, chairman and CEO of Suddenlink Communications, a smaller cable provider, is even less enthusiastic about the role of cable firms in the wireless market.
"We're taking a wait-and-see attitude," Kent said. "We're not certain how important the wireless a product is going to be for us going forward."
Avoiding the fate of the newspaper and music industries
Joining the three cable executives on the stage was Craig McCaw, a long-time telecom entrepreneur now serving as the chairman of Clearwire. For the company at the vanguard of the WiMAX build-out (and a direct competitor of AT&T and Verizon), the wireless question is settled.
But heading a company with deep ties to the cable industry, McCaw seemed as concerned as his on-stage companions about the threat of the Internet knocking cable companies out of their role as subscription-based content providers.
After all, they are dealing with consumers who increasingly expect content to be free, ubiquitous and available on demand.
"It's important to recognize the lessons of the newspaper industry and the record industry," McCaw said.
In considering those two industries, the panelists pointed out that they dealt with the Web in virtually opposite ways. "The record industry did not take into account that customers did not want to go buy an environmentally illogical collection of things that they did not want, and the Internet was a way around that," McCaw said.
Newspapers, by contrast, warmed up to the Internet relatively early with a strategy of giving their content away for free, what some analysts have referred to as their "original sin."
Comcast's Roberts sees cable somewhere in the middle. He had kind things to say about Hulu, an online video service where full-length premium content is available for free, supported by minimal pre-roll and mid-roll advertisements.
"First of all, I think it's friend, not foe. I think it's empowering our broadband business," which he said is "one of the faster growing parts of Comcast."
Roberts pointed out that Hulu closely mirrors the longstanding model of broadcast TV, where content is free to viewers who put up with the ads. But the free, ad-supported model doesn't necessarily translate into premium cable content.
"There's different types of content," Roberts said, hinting at new forms of subscription models that the panelists indicated are still very much in the trial phase.
Article adapted from InternetNews.com.