Cable Executives Gear Up for Bigger Competitive Onslaught

That message was clear at the Society of Cable Telecom Engineers’ (SCTE) Emerging Technologies conference Wed. Cable officials, consultants and others warned that despite several false starts in the past few years, the phone companies are really committed to beating out cable in the video market. They said the phone companies may finally have the means to carry out this long-stated goal.

David Reed, CableLabs exec. vp-chief strategy officer, said the regional Bells seem deadly serious about relying on a combination of advanced DSL products, costly fiber network builds and IP-based TV (IPTV) technology to surpass cable’s video offerings. Although he doesn’t view video-over-DSL as “disruptive,” he believes the phone companies will try to seize the technological edge with IPTV and fiber networks to protect their core voice business, even if they can only break even on video service. “The telcos view it [video] as a competitive necessity,” Reed said. “I anticipate that the telcos will try to use IPTV to leapfrog cable. The emergence of IPTV is certain, although the timing and exact [business] are not.”

“Competition will intensify over the next 24 to 36 months,” agreed Anthony Werner, senior vp-CTO of Liberty Media. Although he, Reed and others believe cable will ultimately triumph because it has the best technology and infrastructure, they urged the industry not to be complacent.

James Farmer, CTO of Wave7 Optics., said many smaller phone companies are already building fiber-to-the-home (FTTH) networks to trump cable’s hybrid fiber-coax (HFC) plant and emerging triple-play offerings of video, voice and data. In fact, he cited research statistics indicating that phone companies, municipalities and electrical coops are now wiring 217 communities in 32 states with all-fiber lines.

Referring to FTTH as “cable TV on steroids,” Farmer said the all-fiber networks offer much greater bandwidth than cable’s existing HFC plant. He also noted that FTTH costs about the same as cable HFC plant to build, but much less to run because fiber doesn’t need signal amplifiers. “The maintenance and operation costs [of FTTH] are much lower,” he said.

System Dynamics co-founder Sandy Teger said such wireless technologies as Wi-Fi and WiMax may also pose a major threat to cable, particularly outside the home. She noted that Nextel, Clearwire and cities such as Philadelphia and Spokane are launching or planning wireless broadband services with lower prices and/or simpler plans than the ones promoted by MSOs. In particular, Teger warned that the forthcoming rollout of WiMax, with shared bandwidth of up to 100 Mbps and much greater coverage than Wi-Fi, could put a dent in cable’s commanding broadband market share. “It’s a really big deal and you want to keep your eyes on it,” she said.

Steven Osman, dir.-engineering & new service development for SES Americom, said satellite TV providers have a few tricks up their sleeves. He said DirecTV and EchoStar plan to use incrementally spaced “tweener” satellites, spot-beam satellites and other new high- powered birds, along with next-generation digital compression, to greatly boost bandwidth and spectrum efficiency and surpass cable’s capacity.

Despite such competitive threats, Charter Chmn. Paul Allen painted a bright picture of cable’s broadband future. In a keynote, Allen argued that cable’s 2-way capability and high-speed bandwidth give it key advantages over all rivals. “We're in the driver’s seat going forward,” Allen said. “We have the superior platform… We are in the best position to capitalize on all these transitions.”

Allen seems especially enthralled about the idea of meshing wireless data and phone service with cable’s current trifecta of wireline video, data and voice products. Referring to the four integrated services as “the Quad-Play,” he argued that cable has the potential to become “the central provider” of digital entertainment, information and communications services in the home. “Some people suggested I should call it fourplay,” he cracked. “But I resisted the urge to do it.”

Allen also contended that cable operators will blaze the path to all-digital transmission systems over the next couple of years. He predicted such digital simultaneous transmission pilots as Charter’s initial rollout in nearby Long Beach will lead to fully digital plants and the reclamation of analog spectrum, beginning next year. “Our networks are designed to grow in capacity beyond 4 Gbps per coaxial line without digging up the streets,” he said.

But even Allen conceded that cable must smooth out several thorny issues before it can rule the digital home. He cited TV channel navigation, the fast pace of consumer electronics innovation and the integration of wireless and cellular services as major challenges the industry must overcome.