CABLE'S BETTER

Nothing gets telcos moving on a strategic initiative like a swift kick in the rear from a large competitor. Last week's National Cable Show in San Francisco should send carrier executives running for the reserve R&D funds. With operators crowing often about their success in early voice-over-IP deployments, having confidence that they will maintain their edge in broadband service and Time Warner becoming the first of what is expected to be many that will test the wireless waters, cable is optimistic. Those with long memories, though, will take note that like much of the programming on the industry's most successful networks, cable invading the telephony market is a rerun of sorts. Cable's interest in all forms of voice service isn't new. Cable operators have been dabbling in it since the first rollout of TCI's PeopleLink service almost a decade ago — and even before that with the formation of Sprint PCS (which ironically included Time Warner in its ownership group). What makes cable's telephony interest different this time around is the use of IP technology, which makes it much more economical than previous attempts. Perhaps just as important, Comcast, Cox, Time Warner and others have woken up to the reality that selling voice service (be it mobile or fixed) isn't all that different from pushing video packages. While consumer expectations may be slightly different, the mechanics of setting up either service are becoming closer aligned. For telcos, last week's cable show was more than a warning shot. It was a boot to the behind in what is quickly becoming a fight for the future of its core residential revenue.