Telcos Are Losing the Battle to Cable Operators

A few days ago Om Malik drew my attention to the state of the telcos vs. the cable operators and how it's not only voice that moving away from the telcos. It's broadband too. The reason in my book though goes beyond simply the speed issue. It's also about customer service.

In the 80s and 90s the cable operators as a group began attacking the "Cable Guy" image head on. They worked very hard to change the perception that they had acquired. And it worked. That said, we all hear the horror stories about Comcast or Time Warner, and that has come as a result of simply rapid growth. That said, I'll take my cable folks over the telcos any day.

To me, this creates opportunity. Municipalities, like Cambridge, MA and over-builders, like SureWest in Sacramento have proven they can be better, and cheaper, than both the telcos and the cable operators. To me, the future of great service, and competitive pricing will come from these upstarts, not the legacy carriers who have forgotten how they got to where they are today.

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Telcos never owned broadband to begin with - the only major market where DSL beat cable is San Francisco, and that's mostly because pre-SBC AT&T used to own the cable franchise here and starved it of investment so badly they didn't even offer Internet access or digital TV until Comcast took over about 10 years ago.

I loathe AT&T even more than Comcast because of their pattern of milking rotting infrastructure for profits while refusing to invest in maintenance or upgrades, unlike Verizon, with visible consequences as any iPhone owner can tell you. That said, telcos' prices for their product have declined or stayed constant, whereas cablecos' rate for basic and premium TV service have risen far faster than inflation, to stratospheric levels. Thus, if anything cablecos are far more adept at gouging their customers than telcos.

I certainly hope municipal broadband can rectify this, but don't hold my breath as the telco/cableco lobbies are in rare alignment against muni broadband, are invariably among the top 5 lobbies ranked by spending in Washington, and wield an army of tame congresspeople to do their bidding.