Is cable television passe? One could have thought so from the way executives of Comcast Corp. and MediaOne Group Inc., two of the nation's biggest cable companies, trumpeted their $53 billion deal Monday.
Rather than cable, the word of the day was broadband -- jargon for delivering high-speed data services, video and potentially even phone calls over advanced communications pipelines.The emphasis was not a surprise. Delivering an integrated basket of advanced services has become the main goal of almost every communications company in the nation.
In the digital future, cable companies will be on the same playing field as the giant phone companies. Indeed, the new Comcast's most important rivals will be companies like Bell Atlantic. So while cable television provides most of of the combined Comcast-MediaOne's revenue and profits today, that business is not as glamorous nor does it offer as much potential as data services, broadband and the Internet.
Providing advanced services, primarily high-speed access to the Internet, will likely be as vital to the combined company's future as is making sure TV service does not cut out during the Super Bowl.
But in its reliance on cyberspace the enlarged Comcast, which will be the nation's No. 3 cable company, is hardly alone. The entire cable television industry is set to battle the local telephone industry to determine which sector will provide the United States' roughly 100 million homes with office-caliber Internet links.
A combined Comcast-MediaOne, however, has a strong chance to emerge as the cable carrier with the best combination of size and Internet familiarity. Among the nation's biggest cable companies, only Cox Communications Inc. would deliver high-speed data services to a larger proportion of its customers, according to the Yankee Group, a technology consulting firm in Boston.
Even more important, Comcast has convinced at least some major players in the technology world that it really means business about broadband.
Despite Comcast's depth of understanding, the future has not yet arrived. Including the effect of Comcast's pending $700 million deal to acquire control of Jones Intercable Inc., a combined Comcast-MediaOne would sell high-speed cable modem service to only about 135,000, or about 1.3 percent, of its roughly 10.6 million customers, according to the Yankee Group. Cox would sell cable modem service to 67,000, or about 1.8 percent, of its roughly 3.7 million customers.
That would put the new Comcast far ahead of, say, Tele-Communications Inc., which AT&T Corp. recently acquired for more than $30 billion. TCI sells high-speed data service to fewer than one-third of 1 percent of its customers, partly because its network has not been as thoroughly upgraded to offer data service as have Comcast's and MediaOne's, some analysts say.