Cable operators turn to the phone

Diversification: Its impact on the cable industry is apparent at the trade show under way in Baltimore.

September 13, 2000|By Mark Guidera | Mark Guidera,SUN STAFF

If you ask Jim Cologie what the Next Big Thing in the cable television industry will be, he points to a very old piece of technology: the telephone.

Cable operators big and small will begin offering local telephone services bundled with TV programming, and they'll do it sooner rather than later, thanks to the miles of fiber-optic cable being laid coast to coast, he says.

"Telephony services are really where the action's going to be," predicts Cologie, president of the Pennsylvania Cable and Telecommunications Association. He is among thousands from the industry gathering in Baltimore through tomorrow for East Coast Cable 2000, one of the cable industry's largest trade shows.

Cologie's prediction underscores a reigning truth today in the 40-year-old industry: diversify, diversify, diversify.

The sweep of diversification taking hold in the industry is clear at the trade show.

The reasons: satellite TV competitors, Internet service providers and others are cannibalizing cable's customer base. Meanwhile, new software, server and other technologies have made bringing new services into homes and businesses not only possible, but also profitable for the cable industry.

In short, say experts, the industry is looking for new revenue sources it can leverage from recent big investments in new fiber-optic technologies that offer lots of broadband space to pipe all kinds of services into the millions of already wired homes and businesses.

Like telephone service. Or home security protection. Or interactive TV, which is also called "personalized TV."

The budding market is expected to generate sales from subscriptions and e-commerce of $29 billion by 2004, up from $570 million last year, according to Forrester Research Inc., and lots of companies are angling to get in on the cash stream.

Comcast Corp., the dominant cable TV provider in the Baltimore-Washington area, unveiled its digital service in the market last month. The service, like competing services already rolled out around the nation, will allow subscribers to order up movies on demand, among other advanced services.

StarzEncore Group, a movie channel provider and exhibitor at the trade show, plans to begin testing a subscription movie-on-demand service in New Jersey this year in which digital cable customers would pay an extra monthly fee to access as many movies as they want when they want to watch them.

"With this technology, viewers don't think twice about spending money like they do with pay-per-view services," said Warren S. Zeller III, vice president of direct marketing for StarzEncore.

Others angling for a piece of the diversification and the dawn of interactive TV include start-up companies such as EnReach Technology Inc., of San Jose, Calif., one of the 170 exhibitors at the trade show. The company has developed software and $100 set-top boxes that allow TV viewers to quickly and easily adapt their televisions for surfing the Internet and e-mail.

It has also developed software that allows cable providers to allow customers to record and play back specific programs they want when they want to see them - "personalized TV." Users can also create their own TV "channel" that updates such preferences as local weather forecasts and favorite stock prices via the Internet.

"The TV is a technology most people are comfortable with using, and it's much cheaper than buying a computer," said David Cong, EnReach vice president for marketing and business development.

"How we use TV in the future will be very different," he said. "People will have much more control over what they watch, when they watch it and how they respond to programs and advertising."

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