Consultant Lays Out Competitive Threats


San Francisco -- The battle between cable, satellite and telephone firms to sell bundled services to customers will get bloody over the next few years, with phone providers Verizon Communications and SBC Communications Inc. poised to penetrate at least 20% of the video market and Rupert Murdoch and DirecTV Inc. likely teaming up with Craig McCaw’s WiMAX service to secure a high-speed-Internet data play.

Those were among the predictions offered Monday morning at a National Show session by Deb Mielke, managing director of Treillage Network Strategies Inc.

The good news for cable operators, according to Mielke, is that back-office infrastructure, provisioning and billing problems may slow telcos’ entrance into the video business.

“You’ve got a big mess, but their mess is bigger,” Mielke told an audience of cable operators attending a panel session on the competitive threat posed by telephone companies. It was sponsored by Cisco Systems Inc.

Mielke warned that SBC -- which has already picked up 320,000 video customers through its co-marketing deal with EchoStar Communications Corp. -- poses a serious threat. She noted that the company makes 9 million customer-telemarketing calls monthly.

“Cable has about 3 million [voice-over-Internet-protocol] customers today. SBC alone believes it can have that many TV customers by the end of 2007 or earlier,” Mielke said.

SBC plans to charge $10 more monthly for its IPTV video-programming package than EchoStar does, as it “will add stuff that people will pay for,” she added.

Among the challenges for both SBC and Verizon are network-infrastructure issues, a lack of brands associated with television and union issues, Mielke said, pointing out the power of Communications Workers of America and its 700,000 members.

Cable’s weaknesses include a lack of skill sets for delivering voice products and a back-office setup that was not designed to handle more complex data services, Mielke said.

Opportunities for cable as it competes head-to-head with telcos in the video business include its installed base of video customers and its ability to provide interactivity and to leverage content brands, Mielke said, adding, “Folks are used to seeing you -- that’s important.”

Mielke also predicted that DirecTV will continue to dominate EchoStar in the satellite sector, and that DirecTV boss Murdoch will eventually team up with McCaw’s WiMAX company to add broadband wireless. “I don’t think [EchoStar] is a viable long-run company,” she added.