Cable's strength is programming, but telco 'pipes' are catching subscribers

Jim BartholdSometimes telecommunications can make one and one and one add up to five or two or seven. It has something to do with engineers and marketers and executives and misdirection.

Last week, interpreting everything correctly, one and one and one added up to three.

One, cable, led by its top player, showed an increased inclination to delve into the programming side of things. Comcast (Nasdaq: CMCSA)--in this instance Comcast's newest acquisition, NBCUniversal--managed to crosscheck ESPN right out of hockey. In light of hockey's popularity compared to football and baseball and even bicycle racing, that may seem like a small matter; to the NHL, which will reap billions from the new deal, it's no small matter.

Almost at the same time, word filtered from 30 Rockefeller Plaza, where Comcast revolves in its programming sphere, that things were a little tense between the old guard, led by Dick Ebersol, and the new leadership, Comcast and Steve Burke, over how much money should be spent to televise the Olympics. It's a tough decision since the Olympics traditionally lose money and Comcast abhors losing money. On the other hand, as sports go, the Olympics are probably a lot more popular than hockey--and a lot of other NBC shows for that matter. The story should evolve.

This all happened, incidentally, as In-Stat released a survey that said, among other things, sports would not save the traditional pay TV model. Considering all the hubbub about sports--and there's always more around the corner or down the page--that's an interesting perspective.

The second part of last week's news triple play was yet another report that ravaged cable's customer service and customer loyalty. The Temkin Group surveyed a diverse group of people and--no surprise here--cable's loyalty figures were in the bottom of the pile. Comcast fared worst, finishing 143rd in field of 143 but the rest of the industry did not do much better; no cable company finished in the top half. The only consolation is that no phone or satellite company did either.

The third part came during earnings reports where AT&T (NYSE: T) and Verizon (NYSE: VZ) said that U-verse and FiOS are continuing to attract new subscribers. Those subs are coming from somewhere and, if some smart math person were to draw a chart, it would probably show parallels between cable's subscriber losses and telcos' cable TV subscriber gains.

The conclusion of the three events is that cable, never really comfortable as "just a pipe," is conceding winning subscriber love as a service provider and leaning towards becoming an entertainment icon. Telcos, on the other hand, having grown up as pipes, are now taking that expertise away from voice and into television to the point where the next competition may not be over subscribers but over how much those subscribers--and their pipe providers--must pay for entertainment.--Jim

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