Convergence, part three (or four or five)

From a historic perspective, Comcast is the latest in a long line of service providers to foist its version of convergence on the world.

Let's try this one more time and eventually we'll get it right. In a convoluted way, that's what Comcast told cable customers when it sent its letter to C. Michael Armstrong, announcing an unsolicited offer to buy AT&T Broadband.

Comcast's bid to take over AT&T Broadband — cobbled together by the company that became an American corporate icon by creating the public switched telephone network — has the potential to become a welcome distraction to the continuous stream of layoffs and missed earnings. (Like most high-stakes games of corporate chicken, though, no matter who ends up with possession of AT&T's 13.8 million cable customers, the one certainty is investment bankers and lawyers will walk away with wads of cash.)

Perhaps it was a high-level corporate version of sweet revenge that drove Ralph and Brian Roberts to send Armstrong their Sunday afternoon proposal — for far less than they were willing to spend a few years ago when this corporate tryst began. On a different level though, Comcast really is telling Armstrong to step aside and give the Roberts' a shot at running the big convergence ship.

While making the presentation of what many analysts have called an opening bid, not once did Ralph or Brian Roberts or Comcast Cable Communications President Steve Burke say they intended to radically change the strategy of AT&T Broadband. AT&T Broadband offers video in analog and digital formats, high-speed data service through cable modems and voice service. Comcast intends to offer the same services over the same networks to the same customers. They did promise to run a slightly tighter operation. More important, they presented their plan in a language that spoke directly to investors who have seen the value of their shares evaporate by more than half during the past several months. Relying on their position as true cable insiders, Roberts, Roberts and Burke claim they can increase margins in all three services while keeping the dream of convergence alive.

From a historic perspective, Comcast is the latest in a long line of service providers to foist its version of convergence on the world. And in a tasty turnabout for a concept that entered the popular lexicon when the former Bell Atlantic tried to buy the former Tele-Communications Inc., Comcast's version of convergence will require a cable operator to acquire a telco-owned group. Along the way, various telcos and cable operators each have tried their own forms of convergence with little success.

All of which leads to the question: Will we ever get there?

Based on Comcast's initial proposal, I'm inclined to say definitely maybe. Though Comcast has not displayed the same commitment to providing voice, video and data over the same network as say Cox Communications, those on the techie side of the market believe Comcast has the most pure version of convergence. Instead of hitching its future to IP-based data and circuit-switched telephony, Comcast is taking the lead toward an all-IP future.

The problem, of course, is that the future is nowhere near ready for deployment, leaving those with visions of convergence with nothing more than visions. Considering the version of convergence pursued by most telcos includes some voice, plenty of data and very little video, the cable version is as good as it gets. The issue customers have to resolve is whether having Comcast provide video, data and eventually IP-based telephony really means convergence. At least until yet another variety makes its appearance.

Contact Vince Vittore at vvittore@intertec.com