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S&P: Cablecos Have an IP Edge
In a new research report, Standard & Poors believes cablecos have an
advantage in the emerging world of IP services because their “fat pipes”
give them a “clear technical and economic advantage over phone company
competitors” to offer voice, video and data to their subscribers. S&P
analyst Eric Geil also contends that cablecos also have an advantage because
they control all parts of a triple-play offerings while ILECs have to
compile their bundles from different suppliers.
This is an interesting viewpoint because it puts the spotlight on the
network infrastructure used to deliver IP services, which include VOIP.
While the cablecos have “fat pipes”, the ILECs are split on which approach
to take. Some such as Bell Canada believe fiber to the node (FTTN) will do
the trick while others such as Verizon and SBC are biting the bullet and
going down the more expensive fiber to the curb (FTTC) route. The issue for
ILECs is coming up with the most efficient, elegant and economical way to
stuff IP down the pipe as the bundling war picks up momentum.
Bell Canada is adamant FTTN will give it 26Mbps of bandwidth – more than
enough it argues to deliver voice, high-speed Internet and high-definition
TV.
The robustness of the network is a fundamental strategic issue because you
will not be able to play in the triple-play or quadruple-play game without
enough bandwidth. Does this mean cablecos will win the game just because
they have “fat pipes”? Before placing bets it is important to remember that
offering telephony services and winning telephony customers are two
different things. Cablevison has enjoyed some success but they are the
exception to the rule so far.