Telecom: Bulking Up to Take On Cable

TELECOM: BULKING UP TO TAKE ON CABLE
[SOURCE: BusinessWeek, AUTHOR: Steve Rosenbush]
[Commentary] None of the fears surrounding telecom consolidation appear to have been realized. AT&T and Verizon are doing better financially; investors are being rewarded. And while consumer groups fret about phone prices, the public is benefiting from an infusion of innovative new technologies, from cheap Internet phone service to high-speed phone lines hauling voice, data, and video. The fact is, AT&T and Verizon must invest in new technology. Cable TV operators such as Comcast and Time Warner are selling high-quality digital phone services loaded with features. "It's easier for the cable companies to expand into phone service than it is for the phone companies to expand into TV, so for now the cable companies have the edge," says Richard Siderman, a telecom credit analyst at Standard & Poor's. That balance of power is unlikely to change for the next few years, until the phone companies can gain some traction in the video market. Without national scale and scope, they wouldn't have much chance of competing against the cable companies. But it is through the mergers of the past years that they have now achieved that scale and scope.
http://www.businessweek.com/technology/content/oct2006/tc20061025_463844...