Friday, May 07, 2021

Cable Firms Fear Being Left in Dust in Biden Broadband Quest

(Bloomberg) -- The Biden administration’s multitrillion-dollar infrastructure proposal includes $100 billion to bring high-speed broadband to every American, an idea that might be expected to win applause from those who provide the service.

But cable companies such as Comcast Corp. and Charter Communications Inc. that connect about two-thirds of U.S. homes that have broadband service fear the plan’s specific call for “future-proof” technology could leave them facing subsidized competitors.

That’s because the traditional coaxial lines that cable companies still use to serve most of their subscribers don’t handle the upload speeds that consumer advocates say should be required to receive federal infrastructure aid. Many say subsidies should go only to systems that can download and upload traffic at speeds of at least 100 megabits per second.

Cable Firms Fear Being Left in Dust in Biden Broadband Quest

A few observations here:

  • Cable isn’t in the residential telecommunications business. It’s in the video entertainment and live spectator sports business, selling various video and sports packages.
  • Cable companies only got into the IP-delivered services such as data and VOIP because of an accident of history when telephone companies didn’t upgrade their copper to fiber and instead opted for DSL. Cable offered better throughput than DSL.
  • As they were getting into IP services in mid 2000s, cable companies lobbied successfully to create new state laws establishing “video franchises” regulated by state public utility commissions to neuter the power of local governments -- the traditional issuer of cable franchises -- to require service be made available to all addresses. For those households not passed by their cable, they demand thousands and even hundreds of thousands of dollars in connection fees to extend their cable down the road or cul de sac to establish service.
  • Cable service is pricey (consistent with its positioning as a discretionary consumer service rather than a utility) and poor customer service is legendary.
  • All that being said, there is a future for this industry: as a video content provider in a public option open access fiber ecosystem.

 

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