Archives: Phones & Cell Phones

A May 23, 2005, USA Today article titled "Cable, Phone Companies Duke it Out for Customers" details the complex battle between phone and cable companies to gain customers and keep their stronghold on markets across the country.

The article begins, "[t]o see how nasty things are getting between phone and cable companies, consider the street fight raging in New Jersey.

Verizon wants a statewide franchise deal to sell TV service across the state. Comcast, which provides cable TV to large swaths of New Jersey, is resisting. It insists Verizon must sign franchise pacts with each locality — all 526 of them.

Comcast is also accusing Verizon of 'redlining' — taking its high-speed networks to affluent areas while neglecting others. Verizon denies it. Meantime, Verizon is leveraging its weight as one of New Jersey's biggest employers to get political support for a statewide franchise.

So it goes in the tit-for-tat world of phone and cable companies, which are using any tool they can — regulatory or political — to gain an edge on the other guy.

At stake: the future of the Living Room, which has come to symbolize the long-anticipated convergence of phone, TV and high-speed Internet. The Bells' embrace of video is good news for consumers, says Dominic Endicott, a consultant with Booz Allen Hamilton.

'As the Bells keep putting pressure on the TV side, that will raise the pressure for cable companies to respond' with more innovation, Endicott says. 'Vanilla offerings will lose their flavor.'"

Future of Phones

The article goes on to describe services in the near future, "[t]he biggest Bells are banking on it. SBC, which plans to buy AT&T, and Verizon, which has a deal to buy MCI, are furiously building fiber-optic networks. Once they're done, SBC and Verizon say, they'll be able to deliver a circus of voice, high-speed data and hyper-advanced video products directly to homes.

The Bells won't start launching new TV services until later this year. Even then, the rollout will be on a market-by-market basis. Neither carrier is saying much about its pricing plans. But there are hints: SBC's CEO suggested earlier this year that he thinks $100 for a package of voice, data and video services is reasonable. (That doesn't include wireless.) Verizon has vowed to be competitive.

Initially, the Bells' video packages will largely replicate those of cable-TV operators: ESPN, TBS, Discovery and the like. But within 18 months or so, the Bells plan to distinguish their packages. On the way: video-on-demand, high-definition TV, a la carte programming and customized local content. Also look for them to integrate their services — voice, data, video and wireless — in ways that serve the TiVo culture.

'Integration across the platforms will be big,' says Randall Stephenson, SBC's chief operating officer.

An example: wireless photos. Customers of Cingular, which is co-owned by SBC, transmit about 68 billion photos annually via cellphones, Stephenson notes.

'Think about having that integrated so you could see that same picture on your PC, TV and wireless handset,' he says. 'This is not sci-fi. This is where we're headed.'"

Future of Cable

The article explains the tactics of the cable companies, "[c]able companies are fighting back. Most are scurrying to add Internet-based phone service. They're also announcing their own video-on-demand TV service. And they're trying to use regulation to block the Bells. One of their chief weapons: franchising.

The law requires cable companies to forge franchise agreements with localities. Cable operators pay about $3 billion a year in fees to municipalities. They want the telcos to have to pay, as well. So do the municipalities.

The problem? In the USA, there are thousands of franchising bodies. Each has its own process, rules and fees. It could take the telcos years to win approval from all those localities. That would slow their deployment of TV services.

That's precisely what the cable-TV industry hopes, says Gene Kimmelman, director of Consumers Union in Washington. 'This is a battle of two industries, and each wants to cut corners to get an advantage,' he says. 'Cable is leveraging in a self-interested way and claiming the telcos have to do everything they have to do. It's designed to block competition.'"

To find more information about phone and cable companies take a look at what’s at stake on HearUsNow.org.