Telcos, Cable Providers Compete for Video Share

CHICAGO—A decade after lawmakers envisioned opening up telecommunications so that all service providers could compete in all markets, the vision is beginning to see realization. However, it is primarily video and data applications, rather than voice as originally anticipated, which are spurring the insurgencies.

The telephone companies efforts to take video share from the cable companies target the consumer market primarily, but the service providers have their eyes on businesses as well. Verizon Communications Inc.s new fiber-based, high-speed Internet service, called FiOS, targets consumers throughout half its territory, but the company launched a small business version in Los Angeles, Dallas and Tampa, Fla., last month.

"The cable companies see us as an insurgent in their market," said Verizon chairman and CEO Ivan Seidenberg at the Supercomm conference and expo here. "Were finding, not surprisingly, that speed sells."

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Data delivery is the main focus for the business FiOS service, but there will also be important video applications, such as conferencing and three-dimensional advertising, Seidenberg said. "Youre going to see a tremendous market expansion in the business market because of the capability of what 30M-bps streams can do," he said.

Its too early to say how FiOS is succeeding in the business market, but the consumer version is showing a faster rate of penetration in its first 10 markets than any other Verizon technology, according to Seidenberg.

Cable companies meanwhile are taking advantage of customer jitters over the pending telco mergers to clinch new contracts for their own fiber data services.

"There is pent-up demand [for cable data services] because companies are starting to see the telecommunications consolidation," said Mike Prendergast, vice president of Commercial Services at Time Warner Cable, a division of Time Warner Inc. "Some of our customers are starting to see limited choices."

Businesses anticipating that their redundant services may soon be provided by one and the same carrier are turning to cable, said Prendergast, whose division serves more than 200 Fortune 1000 companies.

Time Warner Cables network passes more than 1.5 million businesses, and it offers the scalability and flexibility that allows services to grow as businesses grow, according to Prendergast. The cable company is also marketing its service heavily to companies and government agencies that want to increase their employees options for telecommuting.

Time Warner Cable currently does not offer voice service in its bundle of business-class offerings, but it is exploring the possibility, Prendergast said.

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