Triple Plays Are Not a Sure Thing

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The tremendous triple play cable can offer — video, high-speed data and, increasingly, voice-over-Internet protocol telephony — is a superior wireline business strategy, but it ignores the now wide and rapidly expanding world of wireless communications.

MSOs this year have been reporting slight losses in video subscribers, largely to direct-broadcast satellite, but they’ve prospered by more than offsetting those losses with increases in data and telephony revenue.

Cable’s wireline competitor, the local phone company, is keenly aware that several million plain old telephone service customers will have cut the cord this year in favor of wireless for their voice and low-speed data needs. However, in most cases, the incumbent local-exchange companies (ILECs) have cannibalized themselves as Alltel Corp., Cingular Wireless LLC, Sprint Corp. and Verizon Communications Inc. are four of the top six U.S. cellular providers, too.

Recent cable VoIP announcements have also talked about the deals, including a future option for the cable operator to become a mobile virtual-network operator. While this is certainly a way to put one’s foot in the door, reselling mobile on a low-margin basis is no better a wireless strategy than the ILECs’ decision to resell DirecTV Inc. or EchoStar Communications Corp. service is as a long-term video strategy.

If cable wants to continue to rule its own roost and maximize profits its going forward, it needs to strategically review where and how it should become its own facilities-based advanced wireless service provider. This means acquiring spectrum below 3 Gigahertz and offering cable’s own branded portable and mobile broadband data and voice services.

The one North American service provider who best understands how to combine cable and wireless is Rogers Communications Inc. Not only is it Canada’s largest cable operator, but it entered wireless right from the start and has, to date, been that nation’s No. 2 cellular provider.

Now, Rogers has become the white knight for Microcell, an acquisition which would not only make it the largest cellular provider in Canada, but provide it with a second, more-advanced wireless service asset as well.

The licenses held by Microcell subsidiary Inushuk Internet are for 60 MHz of the 2,500 to 2,596 multipoint communication-service spectrum allocations. Inushuk is already providing its iFido branded high-speed broadband wireless service in parts of British Columbia, Ontario and Newfoundland. In Toronto, it has involved AOL Canada.

In the U.S., underutilized spectrum was re-banded in June by the Federal Communications Commission into broadband radio service (BRS). Along with instructional-television fixed service (ITFS), which the FCC has changed to educational broadband service (EBS), there is now at least 144 MHz of new advanced wireless-service spectrum available between 2,496- to 2,690-GHz in every market. What had been 31 interleaved swatches of 6 MHz, originally for analog video, is now eight contiguously spaced blocks of 16.5 MHz — four in a low band, four in a high band.

BRS licensees and EBS lessees can offer their choice of technologies based on low-power cellular frequency-division duplexing (FDD) or time-division duplexing (TDD).

The new FCC rules specifically state that cable providers can acquire BRS and EBS rights so long as they use the spectrum for broadband delivery. The only restriction on cable providers remains a prohibition on delivering multichannel video via MDS/ITFS channels — a product offered by only a handful of remaining rural operators, as DBS proved a decade ago it was going to be the only meaningful nationwide pay TV competitor to cable.

The point here is that available, newly minted BRS and EBS spectrum that will deliver 4G advanced wireless services can be found in large and small markers by those willing to go the extra mile. And cable operators ought to be concerned that a real portion of their current last mile data and VOD customers may walk out on them to get cheaper priced fixed wireless service or to benefit from always connected metro-wide laptop portability, or in a few years, 3 Mbps smart phone/PDA mobility.

If that’s not worrisome enough, the ancient mariners out there aren’t only still fiddling to increase capacity on twisted-pair lines. In some rich guppy pools, they’re replacing them with fiber — plus surfcasting with new wireless lures to keep and attract as many old and new fish as possible. Cable needs to realize there are risks inherent in counting too long on its current, red-hot triple play.

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