IF VIDEO KILLED THE TELECOM STAR

It's not likely to happen-that IP telephony over cable TV networks could be so successful it could replace local phone service in some places. But what if it did? What if people actually received lifeline phone service through cable? Would it turn this whole industry upside down?

Stranger predictions have come true. In 1981, cable TV channel MTV launched its fledgling venture by playing a video of the song "Video Killed the Radio Star," which promptly did just that. From then on, a musician would not be truly marketable unless they could look good, find a good director and dance. If you're unattractive, camera-shy or can't keep a beat, forget about it.

But before we get sucked into bleak '80s nostalgia-here's why cable TV companies are not going to take over your business any time soon.

First, we know that although multiple systems operators are using circuit-switched telephony right now, they want to move on to IP telephony within the next year or so. It's cheaper and faster, and they can deploy it in one convenient box. In some cases, they can bypass the telco altogether. But remember, we're still talking voice over IP here. Yes, quality of service is improving, and many people are insisting that QOS is a problem of the past. And yes, the technology is becoming stronger and more readily deployable. But it's still in the hands of only a few providers-it's not, as they say, a prime time service yet. Before this can be a service in itself, let alone over cable, vendors have to create interoperable gateways. Before that happens, standards have to be finalized. And then a whole new group of standards have to be created for cable IP telephony. True, CableLabs' PacketCable is hard at work in this area, using every major vendor in the industry and predicting that all specifications will be finalized by the end of the year. But really, that's just the start.

Another factor to consider is that every MSO is looking for guidance from a phone company-AT&T. With its purchase of Tele-Communications Inc. and venture with Time Warner, the New York giant has the possibility of bringing circuit-switched cable telephony to 40% of U.S. households. But it is not as confident about IP telephony, and if all of those cable companies wait to see what AT&T does with it, it could be a long time before there's an operational model out there.

There's also the problem with power-keeping phone service within cable up and running, even if electricity goes out. This is less of a technical issue now as MSOs develop battery backup for their networks. But it remains a marketing concern. People may simply feel more secure with phones hooked up in the plain old way, instead of getting service through their cable TV company because they want to know that they can call someone in an emergency.

And marketing in general is no small thing with cable telephony. Ask a random sample of your non-telecom related friends what they think of their cable TV company. Ask them if they'd feel comfortable receiving not just cable TV, not just Internet, but the only phone line out of their house from their cable provider. Maybe a few good MSOs are out there, proving their reliability for multiservice capability (21st Century in Chicago is one), but they're facing an age-old reputation for tardiness, high cost and "The Cable Guy."

Maybe the Internet-savvy residential users will sign on for the newness and techno-geekiness of it all. But telcos still will have the advantage in providing bundled services because, as everyone knows, the money in bundling is in providing services to businesses. And that's not where cable lines are going.

Okay, let's not underestimate the power of CableLabs and AT&T. These are heavy, heavy hitters here. One will soon create the standards needed for cable IP telephony; the other will demonstrate it and serve as one huge, powerhouse model. It would benefit phone companies to get to know not just IP telephony, but the concerns and issues-not to mention the advantages to MSOs-of running it over cable. But don't start with the plastic surgery, leg warmers and Flock of Seagulls hairdos just yet. It's going to take a whole lot of airplay before video puts telecom out of its misery.