April 1, 2005 5:00 AM PST

Cable honchos converge for annual pow-wow

Cable kings will hold court this weekend in San Francisco for their annual get-together, discussing the state of the industry in the face of changing technologies and consolidation among their competitors.

Like every year, the National Cable & Telecommunications Association's annual convention will mix geek with glitz. Such tech luminaries as Yahoo co-founder Jerry Yang, Cisco CEO John Chambers and Google co-founder Larry Page will share top billing with DreamWorks co-founder Jeffrey Katzenberg and NBC Universal CEO Bob Wright.

Other leaders, including the CEOs of the nation's top cable companies--Comcast, Time Warner Cable, Cox Communications, Adelphia and Cablevision--will be headlining with keynotes and panel discussions. Panels will be moderated by well-known cable news anchors, including CNBC's Ron Insana and Maria Bartiromo, Fox News' Stuart Varney, and CNN's Anderson Cooper.

The real discussions during the show will focus on how new technologies will affect the cable industry. Voice over Internet Protocol, or "VoIP," has become a hot topic for cable companies since last year's show. Time Warner Cable and Cablevision have begun selling voice services that are transmitted digitally over the Internet instead of over a conventional circuit-switched phone line. Comcast, the nation's largest cable company, in January began testing VoIP technology in three markets, and plans to offer it to all of its subscribers this summer.

Wireless will also become an important topic. Since cable companies are trying to maintain their lead against the Baby Bell phone companies in broadband and video, wireless has become a hole that many companies are trying to fill. The Bells currently run the nation's top two cell phone companies--Cingular Wireless and Verizon Wireless--while cable remains a nobody in the business.

That could all change. Earlier this week, Time Warner Cable began offering its subscribers in Kansas City, Mo., cell phone service to test how it can run its own wireless service. Time Warner Cable will not build its own towers, but instead offer its cell phone service using Sprint's network. Cable executives have said that figuring out their role in the wireless business will be a challenge.

For now, cable remains in a comfortable lead in two important areas: broadband and video. But that's not a sure thing--over the past year, the Bells have watched subscriptions to their broadband DSL services, which are less expensive than cable modems, surge. Cable companies have responded to this threat by boosting download speeds to about 4mbps in some markets, while maintaining their more expensive prices.

The move seems to be working--cable's market share lead over DSL has not changed--there is still a margin of nearly 2-to-1.

Not to be outdone, the telephone companies are doubling down on their investment in upgrading their decaying copper wire networks with speedier fiber-optic lines. Verizon Communications and SBC Communications in particular plan to spend billions of dollars on their projects, and later this year will begin offering digital video, faster broadband and voice services over one pipe into homes.

The Bells are also becoming bigger, more formidable competitors. Since the beginning of the year, the two largest Bells, Verizon and SBC, have been planning to get even bigger, with their proposed acquisitions of MCI and AT&T, respectively. To address these events, a number of sessions during the convention will cover wireless and wireline convergence.

The convention will begin Saturday afternoon and conclude on Tuesday.

 

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