• United States
Executive Editor

The cable companies vs. RBOCs

Jul 18, 20033 mins

The cable companies push their triple play services while the RBOCs prepare their RFPs for FTTP

Later this summer, cable provider Cablevision is expected to roll out voice over IP services, which will serve as a kick in the pants for the regional Bell operating companies to expand their broadband offerings.

Later this summer, cable provider Cablevision is expected to roll out voice over IP services, which will serve as a kick in the pants for the regional Bell operating companies to expand their broadband offerings.

Cox Communications already offers digital voice service over its network, so the RBOCs will be facing pressure from significant competitors.

According to a recent presentation by Wall Street analyst UBS Warburg, the cable companies have been doing well against the RBOCs with their cable modem offers, but haven’t begun a serious assault on their voice services. Cable companies could resell voice and probably successfully, based on others that have tried. UBS says 10% of RBOC voice business has been siphoned off by competitors that use the local phone companies’ own wires to sell voice services to homes.

If cable companies offer voice over their existing networks, they need not rely at all on the regional phone companies and can attract more customers by offering the vaunted triple play – voice, video and high-speed data servcies. All rolled into a single bundle, triple play services are touted as the holy grail for carriers. Voice enabled cable TV networks can support all three.

The problem for the traditional local phone carriers is they don’t have big enough connections to customers to offer video. DSL is big enough for broadband Internet access, but not enough for video services. To that end, three of the RBOCs are seeking proposals to build fiber to the premise (FTTP) networks that will hang fiber optic cable rather than copper wires on the outside of homes.  These connections can deliver the bandwidth necessary for triple play.

The real challenge becomes how fast can they do this.

RFPs for FTTP are due next week, and winners are expected to be announced in the fall. That will likely result in a testing period, which in an RBOC can be lengthy. UBS predicts it won’t be until 2005 that these carriers start deploying FTTP in earnest.

Meanwhile, the cable companies will be pushing their triple play services and grabbing more customers for themselves. If that happens in significant numbers it then becomes a costly proposition for the RBOCs to win them back.

The next few years should bring opportunities for customers as service providers fight over them with the hopes of winning their long-term loyalty. Perhaps bargains are in the offing.