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October 21, 2005
Cable and wireless convergence
The cable TV industry has been tiptoeing around the edges of the wireless phone market. Sprint Nextel has made a nice business selling wireless phone service to cable TV operators such as Time Warner. But until now, the cable companies have no interest in owning wireless networks. Years ago, Comcast and Cox and Sprint operated a wireless venture called PCS Primeco, but the cable companies left.
The time may be right for another cable TV foray into wireless communications. Wireless networks are increasingly filled with short video clips of sports and news. It's still crude, but the level of sophistication will soar as networks become faster and handsets more powerful. That will happen over the next six to 12 months. It's not science fiction. By the end of next year, mobile users will be able to access the Web at speeds that begin to rival that of a household DSL connection. Many do so already, although coverage is still limited to certain markets. "The cable guys want to tap mobile video content," says Albert Lin, telecom analyst with American Technology Research.
Big wireless companies would be extremely expensive. So perhaps the cable companies will try and find a more creative way to enter the market. One possibility would be to link up with satellite communications companies, which can use their extra capacity for terrestrial, cellular-based service. That's why deals or partnerships between cable TV companies and communications companies such as Mobile Satellite Ventures and Motient might be at hand. Rudy Baca, telecom analyst with The Precursor Group, says such combinations could put pricing pressure on the entire wireless sector. "Satellite spectrum is not auction able. It was obtained for free, which would give satellite operators a cost advantage over wireless," Baca says.
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