AT&T (T”) CEO Ed Whitacre and Verizon (VZ) CEO Seidenberg appeared before congress today appealing for relief from local cable TV franchising requirements. The WSJ published an article today summarizing the current situation, but also included a graphic worth sharing. As a background, from the WSJ article:
The phone companies want to avoid what cable companies have had to do for years: negotiate with local governments for permission to offer TV service. Phone companies say that it will take years to get such permission, and that local politicians use the process to extract money for community improvements, such as landscaping in parks.
Rather than putting some competition in place for your single-source cable provider, most municipalities try to milk the opportunity for whatever they can. In all fairness, cable got the same shakedown when they deployed, though not with the same vigor municipalities do now.
Opinion: citizens of these towns should hold their elected officials responsible for delaying the arrival of competition. The feds shouldn’t have to compensate for an uninvolved electorate.
One thing often overlooked is that cable already has competition – satellite. Comcast (CMCSA) CEO Roberts mentioned this threat last week in a strong critique of the Telco’s TV plans. Cable has lost 10% market share over the last four years to a non-triple play technology, and now they are facing a third market entrant – Telco TV. Between existing competition from satellite, upcoming competition from the Telco’s, and future competition from IP based video providers that operate over the broadband connection provided by the Telcos or Cablecos, it’s tough to see how cable will reverse declining market share in their core TV business.
Cable’s attempts to delay entry of other video providers is a fighting retreat. That’s what makes their efforts to take market share in voice as well as broadband so important. Unlike the Telcos, who derive only a fraction of their revenue from residences (most comes from wireless or business connectivity), Cable exists only to serve the residential consumer – and if they lose the TV pipe into the home they have likely lost that customer forever.