Cable comes courting - cable services - Industry Trend or Event

Home Office Computing, July, 1996 by Jon Pepper

Is Cable the Business Tool To Provide You Phone and Internet Services?

WITH PASSAGE OF THE RECENT TELECOMMUNICATIONS bill fleeing them from regulation, cable companies want the thick coaxial wires that now deliver cable television images to your home to also deliver everything from local phone service to high-speed Internet access. Few businesses have cable TV in their offices today because television is only a strategic business tool for a few industries. Phone service and highspeed Internet access are much more crucial. Their availability might give you reasons to do more business with your cable company. But what could possibly make you switch your existing phone service? And will such offerings be added anytime soon?

The cable companies are poised to remake themselves and the communications world for two reasons. First, their wires are already in just about every home in America and run near most businesses. The local cable companies already have a business relationship with you as a homeowner, which might make you more comfortable if you were to work with them in your role as a business owner. Second, coaxial television cable has ample capacity--or bandwidth--to carry a host of other services and to deliver them with a speed and quality that you probably can't get from your local phone company.

Tele(vision)phone The biggest change could be your phone service. Right now, cable providers such as Time Warner and TCI are looking into giving you local phone service while "phone" companies like Nynex are looking into delivering cable, Internet access, and other communications services. Mike Luftman, vice president of corporate communications for Time Warner Cable explains that his company is definitely looking into providing local phone service. "Our vision of the future is that in any of our larger markets [say, 100,000 subscribers and above], we will be a full-service telecommunications provider from [our] core cable [businesses] to local phone to Internet and other services;' says Luftman.

In theory, you should see lower prices as competition drives down the cost of a local call. In Rochester, New York, where Time Warner Cable is launching a pilot program offering local phone service, Luftman says the company offers discounts that range from 10 to 30 percent over local phone company service. Time Warner plans to roll out local phone service in the Austin, Texas, area later this year. "And we are ready to do it in any area where we get the appropriate permission," he adds.

However, the story isn't quite so simple. For one thing, the Baby Bells aren't ready and willing to give up their stranglehold on local phone service. For another, the cable companies have yet to install some necessary and expensive switching equipment. Although capital investment can solve the second problem, the first one is trickier. Although Congress's telecommunications legislation encourages phone and cable companies to get into each other's businesses, the Baby Bells are dragging their feet about signing interconnect agreements that will tie cable companies' phone lines to their own. Without the agreements, cable companies can't offer meaningful phone service. But how many businesses do you know that willingly choose to make life easier for competitors?

"They are a tremendous obstacle right now as one would expect from companies with a 100-year-old monopoly," claims Luftman. "They would like to pretend there is competition while in fact they are doing everything they can to keep out true competition in the local phone area."

Quicker Data Through Cable While the cable companies wait to provide you with phone service, they'll try to sell you high-speed Internet access over cable wires instead. Cable companies promise speeds that will make even ISDN seem slow. A 28.8Kbps modem takes six minutes to download a 500K image, whereas a special cable modem, which operates at up to 10 megabits per second, can transmit the same image in one second. No more endless waiting for Web pages to load!

Cable modems connect your PC to the cable system's wiring so you can send data back and forth using cable's high bandwidth. Unlike regular modems, you don't need to initiate a call to make a connection. Cable modems are on all the time for instant access to the Net without per-minute pricing. And since video and audio content will download more or less instantly, you will be more inclined to access richer content than you would with a standard modem or ISDN connection.

The process should work something like this: You'll call your cable company and request online service in the same way you order HBO now. The cable company will run cable to the room where your PC is and attach the cable modem. After the installation, you've got high-speed Internet access, custom programming, and more.

Just about every major cable system is involved in a cable modem trial, and many are getting set to roll out service over the next year or so. For instance, Time Warner has a trial in Elmira, New York, and will offer full service in Akron and Canton, Ohio, late this summer, with San Diego to follow. Other systems in the trial or roll-out phase include Continental, Cox, TCI, Viacom, and Comcast.