IPTV won't cable-proof telcos

IPTV won't cable-proof telcos
It's been about three years since Verizon chief Ivan Seidenberg announced the company would sink $20 billion into an all-fiber network. It was all about TV. For 20 years, telco executives gambled on various video strategies, but none had ever dared name a capex figure before a single phone pole was climbed. Seidenberg's grand pronouncement wouldn't have raised an eyebrow if not for the $20 billion ante, equal to around 17 percent of Verizon's current market cap.

The former lineman's assistant knew what any number of telco execs have known for years. Land lines and long distance are going the way of switchboard operators in hairnets and seamed stockings. The telco infrastructure offered the same household access as cable, which was growing in leaps and bounds. Unfortunately for the Bells, that infrastructure wouldn't support video delivery. Seidenberg and his contemporaries at SBC and AT&T recognized it was time for a new plant.

Seidenberg's $20 billion proclamation initially was greeted as a bluff. Then FiOS TV appeared in one market after another. It has more than half-a-million subscribers in less than two years after launch. That may not seem like much compared to Comcast's 24 million TV customers, but we're talking about a new infrastructure built out under a complex regulatory regime. This was not a bluff. It was a life or death struggle--no small part of it waged on the backs of Verizon (formerly Nynex) lifers.

But the cable industry wasn't fiddling while FiOS launched. Even now, engineers in cable's Louisville, Colo., thinktank are tweaking technology that will allow multiple, broadcast-quality, hi-def video feeds to be transmitted over a high-speed cable modem connection, faster than fiber. All the cable industry has to do is figure out what comes after the subscription video model joins rabbit ears, dial phones and film cameras. Somewhere in Philadelphia, there's a fly on a wall that knows what that is. 

If you have clue, a comment or a criticism, please email me here at dmcadams@fiercemarkets.com [1]. -D.