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Cable television broadcasting industry

The Battle for Broadband: Cable vs. Telephone Companies in the Internet Age

Strategic Insights

— 2 min read

As the world becomes increasingly dependent on high-speed internet connectivity, a battle is raging between the big telephone companies and cable providers for control of this vital infrastructure. Cable companies, which have traditionally dominated the market, now face stiff competition from DSL services offered by telephone companies. This struggle for supremacy has significant implications for consumers, who are being forced to choose between two or three leviathan telecom companies and their partnerships with content providers.

Key Takeaways:

  • The cable industry has escaped government regulation as common carriers due to its natural monopoly in TV channel delivery and the incentive to invest in cable networks.
  • The battle for broadband is between cable and DSL services, with cable serving over 70% of U.S. households and DSL available in most homes with telephone wires.
  • Telephone companies and cable companies are merging to gain market share, with the proposed acquisition of Tele-Communications Inc. (TCI) by AT&T being a significant example.
  • The city of Los Angeles has taken a Solomonic approach by requiring AT&T to abide by any rules adopted by the Federal Communications Commission (FCC), while the city of Portland refused to transfer a license to AT&T due to concerns over open access on TCI networks.
  • The FCC has punted the issue by stating that no changes in broadband access are required at this time.
  • Telephone companies are also trying to lock customers into their own information services and content partnerships, hindering independent Internet service providers.
  • The Internet doesn't have to work this way, and competition among a million different services would be beneficial for consumers.
  • The struggle for broadband control will lead to overbuilding and redundant investment in telecommunications infrastructure, increasing costs for consumers.

Statistics:

  • Over 70% of U.S. households can be served by cable broadband (Source: "The Battle for Broadband" article)
  • Dial-up Internet access is still used by some consumers despite its slow speeds
  • The proposed acquisition of TCI by AT&T is valued at $28 billion (Source: "Tele-Communications Inc. to Merge with AT&T" article)
  • Over $6 billion has been invested by At Home in Excite, the Internet portal and search engine company (Source: "At Home to Buy Excite" article)
  • There are approximately 6,500 Internet service providers in the United States (Source: "Gary Chapman" article)

Sources:

  • "The Battle for Broadband" by Gary Chapman
  • "Tele-Communications Inc. to Merge with AT&T" by The New York Times
  • "At Home to Buy Excite" by The Wall Street Journal

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