The Cable Company as Your Phone Company
DECEMBER 23, 2003
NOTHING BUT NET
By Alex Salkever
Where the Net Is Heading in 2004
O.K., your guess is probably as good as mine, but I have a column to write -- and at this time of year that means one thing: Predictions
businessweek.com
Making forecasts about the Internet is always a dangerous business. The Web has stubbornly defied conventional wisdom in all manner of areas. Clothes and other high-touch goods would never sell online? Wrong. Everyone would have broadband by 2005? Wrong again. Every kind of communication and entertainment would rapidly converge on the PC? Well, that may yet happen but certainly not for several more years.
So with little fanfare (and don't hold me to them), I'm going to walk the highwire with some predictions for 2004 and hope I don't fall off it too quickly. Deep breath, steady now...here goes:
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Your Cable Company Is Your Phone Company
The Baby Bells that provide local phone service to most of America are in a nasty fix. They rely on old-style phone technology for the majority of their revenues. Yet Americans will begin cutting that local cord in droves in 2004. Instead, they'll opt for wireless phones or Internet-based calling (known as voice over Internet protocol, or VoIP). Wireless number portability now lets mobile customers take their number from plan to plan, making cell phones far more attractive as a full-time replacement for land lines.
At the same time, VoIP has soared in quality. And a host of cable and big long-distance companies are set to offer it to tens of millions of local customers. To fight back, the Bells are going to have spend big bucks to further upgrade their already outdated DSL broadband networks. To date, they've spent close to the bare minimum to compete with cable.
Now the moment of truth is coming, and if they don't improve their networks enough to deliver, say, a viable video service, they'll be toast. Otherwise, they'll have to somehow support an incredibly expensive legacy network mainly by selling Internet access, a service that's rapidly becoming a near-freebie offering from competitors. |
