Is Telecom TV Bad For Cable's Business?

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I would appear that when two companies offer TV and other services over lines into the home, prices drop a lot. According to the American Consumer Institute, the drop is 27% over five years.

Which means, oddly enough, that the new telecom fiber-to-the-home initiative from Verizon and AT&T may not be good for big cable like Time Warner and Comcast, but is may also be bad for the telephone companies.

The competition for "triple play" customers who get voice, broadband and TV in one package has been written about for a couple of year. Now that telephone companies are putting down fiber, they can offer TV along with voice and broadband. Verizon says it will have four million TV customers by 2010.

But, going back to the folks at the American Consumer Institute, they reckon that competition between phone and cable comanies could save consumers $10 billion a year. That is $10 billion that someone is not getting in revenue. It means a price war. With cable already in the ground for years, and Verizon spending $18 billion to put in its own network, price cutting will hurt that last guy in the most.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.