"Com21 and AT&T Labs are expected to talk about plans for getting telephony functions to work on cable plant equipment".
Cable players face a changing industry
By Corey Grice and Jim Davis
Staff Writers, CNET News.com
June 11, 1999, 1:30 p.m. PT
As cable leaders converge on Chicago next week for the industry's annual
convention, they shouldn't be surprised to find a host of new players stealing their
spotlight.
A number of new faces will be on hand at the National Cable Television Association's
annual Cable '99 conference, including C. Michael Armstrong, chief executive of
AT&T, and Microsoft co-founder Paul Allen, who owns the rapidly growing Charter
Communications.
AT&T will be the No. 1 cable operator when its merger with MediaOne Group is
complete, while Charter has made 11 acquisitions this year
alone, putting Allen in fourth position on the cable totem pole.
AT&T's place at the conference's center stage is telling of a
rapidly consolidating industry that is reinventing itself with every
new multibillion-dollar deal.
Once a bunch of family-owned operators that primarily delivered television
programming, the cable industry has evolved to focus not only on TV but on newer
broadband services for the Internet and cable telephony. Players like AT&T, Microsoft,
and others traditionally outside the cable fray are now helping fuel that transition.
"This will be the first cable convention where the largest cable company is a
well-respected telecommunications carrier. It really has changed the dynamic,
especially culturally," said Michael Harris, president of Kinetic Strategies, a cable
industry research firm. "It's certainly fitting to have Armstrong give the keynote."
Last year, Bill Gates addressed the convention in his first NCTA keynote since
Microsoft's $1 billion investment in Comcast. While the cable industry viewed his
presence with a wary eye, this year that "outsider" concern has been largely forgotten.
"The changing face of the industry, which had been run by the venerable cable
families, will be noticeable," said Jeannette Noyes, a communications industry
research manager for market data firm International Data Corporation. "There's a shift in
power. There's new people involved."
The old guard hasn't been forgotten, however. AT&T's newly acquired cable guru Leo
Hindery and Time Warner CEO Gerald Levin will be on hand, as well as programming
firms such as Liberty Media and traditional cable equipment makers General Instrument
and Scientific-Atlanta.
Microsoft, which recently invested $5 billion in AT&T, is expected to tout its WebTV
Networks service as well as set-top boxes based on its Windows
CE operating system, analysts said. Ericsson and Lucent also are
likely to make a splash with new cable-specific product
announcements, according to analysts.
A broadband boom
Regardless of its revolving play list, the industry has plenty to
cheer. New revenue streams from digital video, cable modem Internet access, and
upcoming telephony services have given the industry a new feel and also boosted the
stock valuations of cable firms.
Broadband services have been the biggest growth prospect for the cable TV
companies. With hybrid fiber-optic and coaxial cable (HFC) networks--"fat pipes" that
can carry huge amounts of digital information--cable may be the best technology to
deliver many new services to consumers, many analysts say.
"They've got some clearly defined new service offerings that three years ago they
probably were thinking of dabbling in, but now it's
their future livelihood," said IDC's Noyes.
Competition and other hurdles in the broadband
market have kept cable firms wary. Direct broadcast
satellite (DBS) operators such as DirecTV and
EchoStar Communications continue to encroach
on cable companies' traditional TV turf.
In addition, the specter of new federal regulations,
in the wake of a recent court ruling, which could
force operators to open their networks to
competitors will surely have industry leaders talking.
Executives also are expected to beat the
drum on the issue of cable television
pricing restraints. A five-year federal
moratorium on cable prices expired earlier
this year, but the industry says it is fearful of
drawing regulators' attention by raising
rates--while analysts say it could spell
doom in an era of increasing competition.
Standards cease-fire
Many of cable's standards battles are
settling down and operators largely have
decided on specific equipment vendors for channel converters, cable
modems, and set-top boxes.
General Instrument, the largest supplier of cable set-top converters in the
United States, is expected to show for the first time 3D games running on its
next-generation DCT-5000 set-top, company executives said. Online gaming
could become a big revenue generator for cable operators, given the size of
the game console market. Meanwhile, Com21 and AT&T Labs are expected to
talk about plans for getting telephony functions to work on cable plant
equipment.
The industry also has also settled the debate over the Data Over Cable Service
Interface Specification (DOCSIS), aimed at making cable modems work on any
cable network, thus increasing their deployment. Many consumer electronics
companies now offer certified DOCSIS-compliant cable modems, which soon
will be available widely in retail stores.
"A lot of these devices are available at volume now, and it's no longer just
speculation," Harris said. "It's not just about [General Instrument] and
Scientific-Atlanta anymore."
Harris estimates more than 900,000 people in North America use a cable
modem, a good sign for cable Net access firms such as Road Runner and
Excite@Home.
But Excite@Home has seen its stock price plummet from a high of nearly 200
in early April to below 90 today, partly due to the pull-back by the entire
Internet sector and the recent court ruling which could affect its exclusive Net
access arrangements with cable companies.
Cable upgrades
While cable players tout their broadband plans, a lot of groundwork has yet to
be done before these promises become reality.
Much of these new high-speed services are dependent on costly network
technology upgrades, which are being completed--albeit inconsistently--across
the industry.
Cable operators cannot afford to move too slowly with their upgrades as local
phone companies are simultaneously rolling out digital subscriber lines (DSL),
a competing high-speed Net access technology.
AT&T will talk about how it will combat these issues next week when it presents
a research paper that will detail how it expects to "future-proof" its network in a
cost-effective manner, said Cynthia Brumfield, principal of Broadband
Intelligence. |
