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Cable industry looks to future with digital networks
By Aaron Pressman
WASHINGTON, May 3 (Reuters) - As the cable television industry gathers this week to celebrate its 50th birthday, the emphasis will be decidedly on the next 50 years.
Cable companies still garner the lion's share of revenues from traditional TV viewers tuning in to see HBO, CNN and other stalwarts, but new digital technologies are on the horizon, offering opportunities to rake in big money for Internet and telephone services.
That has the top cable operators scrambling madly to hook up with high-tech companies. While few analysts expect major announcements at this week's National Cable Television Association meeting in Atlanta, wheeling and dealing among the various moguls will be rampant.
Microsoft Chairman Bill Gates will address the group Monday and repeat his call for cable to speed the deployment of fast Internet connections for consumers.
Microsoft last June agreed to invest $1 billion in Comcast Corp., the fourth-largest U.S. cable operator, to ''galvanize'' such efforts, Gates has said in the past.
Microsoft, Sun Microsystems and Oracle are battling for a place in the cable industry's next generation software systems while hardware manufacturers seek contracts for building cable modems and new set-top boxes.
But similar new technologies are also being deployed by potential cable competitors. The Baby Bells, also with Microsoft's blessing, recently announced plans to offer super-fast Internet links over ordinary phone lines using a technique called Digital Subscriber Line service.
While aimed initially at the Internet crowd, DSL and some new wireless services could eventually pose a challenge to cable's core business by offering video programming as well.
In the short-term, however, the cable outlook is extremely positive, analysts said.
''Finally most of the clouds have dissipated,'' said Merrill Lynch analyst Jessica Reif. ''We're super, super bullish.''
Internet and telephone services ''are not a big part now but obviously it's going to be in the future,'' Reif said. ''The next two years we'll see it start to add to growth rates.''
Online analyst Gary Arlen warned that the expansion of cable Internet offerings would be slowed by outdated systems used by many cable operators.
''Lots of systems don't yet have the capability for data, although it's changing fast,'' said Arlen, president of Arlen
Communications.
Some industry officials said they expected Oracle would announce a major deal with the cable Internet services RoadRunner, owned by Time Warner and MediaOne Express, owned by MediaOne
But a spokeswoman for Roadrunner declined to confirm the speculation.
''We may not be making an announcement,'' said spokeswoman Sandy Colony.
Since December, when Roadrunner and MediaOne Express agreed to merge, ''we have had ongoing conversations with a variety of Silicon Valley types and we definitely plan to make an announcement at some point
but I wouldn't count on it at NCTA,'' she added.
The two firms have about 75,000 customers using their super-fast Internet modems in the United States and plan to end 1998 with as many as 150,000.
Oracle did not returns telephone calls.
Time Warner and MediaOne, along with Tele-Communications Inc., definitely plan at least one announcement. The three firms said they will unveil a joint initiative on Monday to raise consumer awareness of cable Internet
connections. (MSFT - news; CMCSA - news; SUNW - news; ORCL - news; TWX - news), (UMG - news).(TCOMA - news) |
