Cable Internet to SBC: We've been expecting you: MSOs welcome broadband validation, prepare for competition

Cable Internet providers appear to be taking in stride SBC Communications' announcement that it will spend $6 billion in three years to deploy high-speed DSL access.

The message from most of these providers - ranging from the national Excite@Home to very regional companies - is: Welcome to the fight, now try and take our market share.

By 2002, SBC's Project Pronto aims to bring DSL access to about 77 million customers, or about 80% of its customer base after the Ameritech merger. Eventually the RBOC wants to extend high-speed broadband to all eligible subscribers.

"This is a big initiative, no doubt, but it's not different in quality from the RBOCs' DSL rollouts - just in size and scope," said Edwin Herrick, an analyst for NetValue Consulting.

Immediately after the SBC announcement, Excite@Home said in a statement that it welcomed the SBC push and U S West's planned test of fixed wireless technology as proof that high-speed access does not need regulatory intervention (see page 20). RBOC-supported efforts to open cable networks to unaffiliated Inter-net providers only can slow the growth of that competition.

National Cable Telecom Association President and CEO Robert Sachs agreed, saying SBC's announcement is "further evidence that the market place is working and that government regulation of broadband Internet services is inappropriate."

"The more attention paid to ubiquitous broadband deployments, the better," said Kent Oyler, chief strategic officer for High Speed Access, a seller of turnkey high-speed Internet access to cable operators. "This business is really going to broadband, and this is obviously one more very visible vote in favor of that."

Although some of the Internet operations HSA manages are in SBC's 13-state territory, Oyler said the company's strategy of approaching small exurban markets should keep it from going head-to-head with SBC for several years.

"Everything we see indicates that the exurban markets will be targeted after the urban ones by a fairly sizeable gap of three years," he said. "In this business, first to market matters a lot. If we have customers locked up first, then [SBC has] to take them from us, and that becomes more difficult."

TCA Cable, a Texas-based multiple systems operator bought by Cox Communications last summer, offers broadband Internet access and video services to 80 communities in Arkansas, Louisiana and Texas. Both the Internet product, Cox Communications Internet, and the video services are targeted at middle markets - "`classic' cable markets, those which do not have all the standard affiliates available through over-the-air broadcast," said Robert Roseman, vice president of business development for TCA.

These markets should be secondary to SBC's DSL deployment, he said, because the demand for high-end telephone service is not as strong as in dense urban markets.

"Telephony works on a top-down strategy in most cases, as Internet access does," Roseman said. "This gives us a little more time to market. Certainly we don't think they intend never to reach these markets. We just think that they'll start in the Dallas/Houston/Kansas City, Mo., larger market areas before they get into the secondary and tertiary markets we serve."