CableCos' Achilles Heel??

The Wall St. Journal has a story based on a Cable Labs report that suggests the cablecos may have to make aggressive investments in their systems to compete with Verizon's fiber-to-the-home node technology. Needless to say, it's a controversial report that has already been rebuffed by some cable executives as speculation because bandwidth (a.k.a. bigger, fatter pipes) has been the cable industry's trump card in recent years as the broadband wars have become increasingly fierce. As a result, many investors have placed their bets on the cablecos amid the belief they could simply “fatten” their networks while the carriers struggled to keep pace. If the Cable Labs report is accurate, this could change this investment thesis. Keep in mind, however, that Verizon is one of the more aggressive carriers when it comes to FTTN with plans to spend a staggering $20-billion. In Canada, the major ILECs, Telus and Bell, are betting on fiber-to-the-node, which is a less expensive strategy, so perhaps the cable thesis is still and alive well, which is good news for investors in Rogers, Shaw, Videotron and Cogeco. For more, check out IP Democracy's thorough recap, GigaOm and Nyquist Capital.