US heartland offers visions of cable’s future

It is 600 miles from Olathe, Kansas, to Englewood, Colorado, and both towns can seem a million miles from the media hubs of New York and Hollywood. Yet two announcements from the US heartland this week provide important pointers to the future of the cable industry and the content companies that depend on it.

In Olathe, Google unveiled plans to roll out the fiber optic network it is testing in nearby Kansas City, offering broadband speeds of up to 1 gigabit per second. That is roughly 100 times faster than the country’s typical download rate, for $70 a month or $120 with a video service. One day “the Google guys” might bring to mind installers in grey uniforms rather than Larry Page and Sergey Brin. But Google Fiber is for the time being a tiny experiment, much debated for what it might mean to rivals yet – so far – with no clear plan to jump to the wider market.

Few people know that market better than John Malone, Liberty Media’s Englewood-based chairman, who started Tele-Communications Inc in 1973 and became the world’s largest cable systems owner before selling TCI to AT&T in 1999. Malone kept overseas cable interests after that through Liberty Global, which last month agreed a $23.3 billion bid for Virgin Media in the UK. This week, he returned to the US cable business with a $2.6 billion investment that bought him 27 percent of Charter Communications. Opportunism often drives Malone’s investments, but when he returns to a game he has sat out for 14 years, it is worth asking what has changed. The answer, according to his chief executive, Greg Maffei, is that cable’s “pipes” are becoming more valuable.