The Wall Street Journal carries an interesting story about broadband—one pitched at the level of titans—and the emerging battle between the cable and phone companies for customers’ retail business. The story’s title is a little misleading since there has only been a bit of movement toward price competition. The Wall St. Journal maven, however, sees price competition in his tarot cards based largely on the fact that in the last quarter the cablecos scored a big win over the telecos, bringing in 75% of new subscribers.
Normally this story wouldn’t qualify for an LPF comment but the implications for our community’s fiber network turn out to be interesting….and heartening. The analysts think that winning at internet connectivity is the key. (And, hey, we think so here too.) The juicy parts:
As bandwidth-hungry applications like video downloads grow, customers prefer the generally faster speeds cable offers. Cable companies have also been marketing more aggressively in recent months, analysts say.
“Phone companies can’t just sit back and let cable companies take that much of the broadband market, or they will eventually cede everything,” says John Hodulik, an analyst at UBS.
Winning broadband customers has enormous strategic consequences for both cable and phone companies. It gives them a foot in the door to sell other services, such as pay-TV and phone service.
The reason that internet subs are so strategically crucial?
Mr. Hodulik says customers are most apt to get phone and TV services from the same company that provides them with their broadband connection. And broadband services are also the most profitable of the bundled services.
So on this analysis, people are deciding which service to go with based on who can give them the best (and cheapest) broadband connection. Then they buy onto the other offered services.
That bodes well for LUSFiber which will have, without question, the best and cheapest data network in town.