What Happens Next In The US Broadband Market

from the all-depends-on-the-RBOCs dept

Bill Gurley's latest column takes a pretty comprehensive look at battle between cable and DSL providers for the connection into the home in the US. He compares it, briefly, to the situation in Japan and South Korea where much higher speed internet connections have much higher penetration rates. He believes we'll get there in the US as well (not a tough prediction to make), but how will depend on a variety of factors. The cable providers clearly have the lead, and where things go may depend on whether the companies are making strategic or tactical moves in terms of offering other services. The cable providers can already offer the famed "triple play" of video, data and voice while the telecom companies are still struggling to figure out the video component. So far, attempts at doing TV-over-DSL haven't gone all that well, and partnering with satellite companies for video is a weak approximation that doesn't achieve any of the real synergies necessary in the triple play. Gurley suggests that the cable guys would be better off just offering the voice component for free to undercut the telecom providers and beat them while they still have the upper hand. The telecom guys, though, should be investing in next generation networks to leapfrog what cable can do (which actually appears to be Verizon's strategy). While Wall Street still hasn't figured out that voice, on its own, is something of a dead end, the telecom firms can leverage their voice revenue to fund such expansion. There are still regulatory concerns in all of this, and Gurley also makes a compelling argument about preventing the cable companies from favoring certain services over others. All in all, a good read concerning where broadband, telecom and video services are headed in this country.

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