During his State of the Union address in 1930, President Herbert Hoover said, “Competition is not only the basis of protection to the consumer, but is the incentive to progress.” He was talking about railroads, but he might as well have been talking about the cable television business.
My cable bill has been a grudge payment for my entire adult life. The bill keeps going up, the product stays marginal and the term “customer service” is an oxymoron. It is fair to say I hate my cable television provider with a passion; I just hate them less than I hate the other “competitive” options available to me.
What are my competitive options? Well, another cable provider that offers fewer services at a lower price, which is not realistic. Or, a rooftop antenna for free over-the-air TV or satellite television. Neither are actual options because I live in an apartment building and do not have access to the roof. So, in practice, there is one cable television option. My cable provider enjoys a de facto monopoly and I hate them!
With no competition in the marketplace, my cable television provider was able to sit back, relax and take my money. Until 2005, there was absolutely no reason to think about improving anything. No pressure to evolve. Sure, they had to come up with the triple play (video, voice and data) to keep satellite television from taking too many subs, but they didn’t improve the video product or the data product. In fact, the success of the triple play had the opposite effect. The service actually degraded because of the number of consumers contending for the limited amount of available bandwidth.
2005 was an interesting year. That’s the year that Verizon launched FiOS in Keller, Texas. It changed everything. FiOS is real competition for the cable industry. Pundits and subject matter experts questioned whether Verizon’s leadership was of sound mind and body when they announced what they were going to spend to create a “network for the next century.” But build it, they did. FiOS is a stunning technical achievement and it is way, way better than anything the cable television industry has ever offered … until now.
Unless you live under a pile of old hard drives, you have probably seen thousands of commercials for FiOS. The network passes over 12 million homes and they have signed up over 3 million customers. It’s big, it’s real and, most importantly, it is “real” competition for the cable industry.
Has cable noticed? You bet they have, FiOS is growing fast. What will cable do? Can it possibly compete with a fiber-optic network built for the 21st century?
DOCSIS is an abbreviation for Data Over Cable Service Interface Specification and, if you have a cable modem in your home, it is almost certainly a DOCSIS 2 modem. They are cheap and more than good enough for captive, ignorant consumers who don’t know any better. DOCSIS 2 is nowhere near as fast or flexible as FiOS. It wasn’t designed to be. So with very little marketing effort, FiOS could tell a speed and power story that decimated the cable competition.
However, the cable industry has had a not-so-secret weapon ready since before FiOS was announced: DOCSIS 3.
While everyone likes to talk about the speed of fiber-optic networks (like FiOS) the practical matter is that a DOCSIS 3 modem can deliver comparable speeds over the existing cable infrastructure. The cable guys could have installed this system in your home before FiOS even got to your neighborhood. But they didn’t have to. You didn’t know you needed it and they were under no evolutionary pressure to provide better service.
This is all changed.
Remember December 8, 2010. It’s the day that Time Warner Cable publicly admitted that it was no longer a de facto monopoly and launched SignatureHome – a connected living experience that rivals FiOS feature-for-feature and benefit-for-benefit. I am happy to report that New York City now has two real competitive connected living experiences. FiOS and SignatureHome.
SignatureHome goes even farther than just a broadband speed and quality video story. Time Warner Cable has acknowledged that there are a plurality of devices in your life that need to be connected, and they want SignatureHome to be the center of your connected life. So much so, that customer service and custom installations are its central focus. They are offering a premium product at a premium price. It’s not a cable package; it is a premium service that is designed get everything in your life connected.
Which begs for the question: Is this the right competitive approach? FiOS is great, fast and less expensive. Time Warner SignatureHome is already mostly installed and requires a simple phone call for the upgrade (and up to three hours of Time Warner SignatureHome technicians hanging out in your house to hook you up).
Oddly enough, the answer doesn’t matter. The important thing is that consumers in Time Warner Cable/FiOS markets now have a real choice of services that can be compared and considered. Oh, but wait … what about people who can’t afford a premium connected living service and are stuck in Time Warner Cable budget-priced hell? My guess is that with two competitive infrastructures in the marketplace, the story will actually have a happy ending.
With all of the talk about oligopolies and monopolies, national broadband plans and net neutrality — there is one small beacon of hope: “Competition is not only the basis of protection to the consumer, but is the incentive to progress.” Thanks, President Hoover.