For Whom Ma Bell Tolls2/06/2005 7:00 PM Eastern
Among the dizzying display of telco-related headlines, one fact stands out: SBC Communications Inc. ponied up only $16 billion for AT&T Corp.
That sounds like a pittance when compared with the northwards of $17 billion Adelphia Communications Corp. is asking for its 5.2 million subscribers — a patchwork of clusters that are not terribly desirable, with the exception of the crown jewel, Los Angeles.
While SBC and possibly Verizon Communications Inc. are looking to expand their long-distance footprints, all of the telcos, to some degree, are having conversations with programmers about carrying their networks as the Baby Bells re-enter the video arena. Remember, they came in 1995, did not conquer, and went away.
A decade later they’re here again. Already, Court TV, Discovery Networks U.S. and other programmers have signed up — or are on the verge of doing so.
What this telco tizzy says to me is that these companies are in disarray, scrambling to come up with new business strategies as their world is overrun with competitors.
Their re-entry into video is not surprising, but their attempts to crack long-distance — where they hope to pick up business accounts — could prove to be extremely distracting.
Last week, I had some backgrounders with several cable executives who envision a brave new world shaping up within the next 24 months. Some predict only two RBOCs will stand — Verizon and SBC — and that will force more consolidation among MSOs.
But corporate chess games never play out that quickly. Granted, some of the pawns, bishops and maybe a king are all off the board. But the knights and the rooks are playing a protracted end game to capture the queen for a checkmate.
While nearly every programmer is in some stage of discussions with the telcos for carriage, not all of them see a third competitor in the video arena as necessarily a good thing.
One programmer asked me, what would a third video provider actually accomplish? Would a new telco competitor bring new subscribers to the pay TV sector, or would the end game be just a dislocation of eyeballs, with no net gain for programmers?
However, that same programmer told me that he spends the bulk of his time strategizing about what a telco could bring that’s new to the party. And this is what he sees for his networks. It’s clearly not about another video platform delivered on a television set. Nor it is necessarily about finding an outlet for short-form programming over wireless.
But wireless, he says, is the key. He describes a technology that the telcos already have and cable does not— the ability to download programming from a wireless phone to a device like a large projection TV.
Cable, he said, is working on that technology, too, and it’s a good nine months away from being able to deliver. So that explains all the buzz about wireless among the cable crowd right now.