09:58 AM

800-pound gorilla

by Doug Millison for SiliconValleyWatcher.com

Cable TV is the 800-pound gorilla in the living room that nobody at the Consumer Electronics Show in Las Vegas is ignoring.

That's the thrust of an informative article by Seth Hansell in today's New York Times, "Breaking Free of Cable's Stranglehold." Hansell writes:

Cable television companies are not among the exhibitors here at the Consumer Electronics Show. But their influence is everywhere, as equipment makers seek to work with - or bypass - the cable industry's bottleneck control over the way most Americans watch TV.

Things will only get worse for Silicon Valley companies that want to maintain or gain market share with devices to compete with set-top cable boxes that add functionality - TiVo-like DVR capabilities, for example - or who seek to make an end run around the cable companies altogether with alternative delivery channels for information, entertainment, and other services.

My investment banker buddy in New York takes cable TV dominance as a given and continues to invest - and recommends that others do so - in the companies that dominate the cable TV market. He manages a multi-billion dollar portfolio of investment funds that regularly earn a handsome profit, with a specialty in telecommunications and broadcast, so I tend to listen carefully to what he says.

Cable TV companies had 74 million subscribers last fall when he was studying some particular investment opportunities. Some 22 million subscribers pay for direct satellite TV. That's nearly 100 million Americans who have learned to look to their television screens for programming.

These companies are aggressively signing up subscribers for high-speed Internet service.

That's a huge lead over the telephone companies which are playing catch-up on the high-speed Internet front, and looking forward to the next generation of wireless networks that will, eventually, offer mobile telephone and PDA users programming that can compete with today's digital cable TV.

Better make friends with that gorilla, fast.

Meanwhile, the company that comes up with a cheap satellite uplink that will let satellite TV (and radio) companies offer reliable high-speed two-way Internet service could make a killing. Something tells me that this prospect has not gone unnoticed in Silicon Valley.



Breaking Free of Cable's Stranglehold by Seth Hansell, New York Times, 6 January 2005

What's the story? Doug Millison also edits OnlineJournalist.org, "on a need-to-know basis"