Cast Aside?: Why Comcast and Other Cablecos Are Struggling

Two months after the Facebook deal, Comcast announced plans to buy movie-ticketing Web site Fandango and launch an online entertainment destination, Fancast.com.

At CES in Las Vegas last month, Roberts launched Fancast, calling it "the first-ever one-stop destination for entertainment content."

The site features more than 7,000 hours of streaming video and more than 11 million pages of entertainment information, according to Roberts. The cableco claims Fancast lets user search for content across TV, the Web, on-demand assets, DVDs and trailers for movies in the theaters. It also tracks user history and recommends content based on that. Fancast also features integrated message-access capabilities and will be equipped to enable users to instruct their DVRs to record specific content, or receive an e-mail notification of the content if they don’t have a DVR.

On the TV side, a new version of Comcast’s guide that includes the Fancast application will debut in the first quarter of 2009.

For its part, Verizon cut a deal with social networking site Revver Inc., whereby it pays the site for the videos it uses, revenue Revver shares with those it equips to create the content.

But despite the edge in content and advertising/marketing cablecos seem to have, telco rivals claim they’re poised to win.

"Content is a scale game with us having 65 million wireless customers, many whom want to access it from a [mobile] device," says Tyler Wallis, assistant vice president for wireless convergence at AT&T. "I don’t see content ties as a huge advantage that they have. We’ve already assembled the broadest array of entertainment and communications services in the industry. It’s good to be us."

Cable's Wireless Worries

What about wireless? That’s what telco execs started asking loudly in November when the Pivot consortium of cablecos that joined with Sprint to offer wireless services said it had no plans for expansion.

Bright House Networks, Comcast Corp., Cox Communications Inc., Sprint and Time Warner Cable launched Pivot, a co-branded wireless that the telco offered in conjunction with the large cablecos. Pivot initially became officially available in late March 2007 in eight metropolitan areas (Cincinnati and Dayton, Ohio; Austin, Texas; Boston; Phoenix; Portland, Ore.; Raleigh, N.C.; and San Diego), with expectations for it to launch in a total of 40 metro areas last year.

However, citing "provisioning complexities," Sprint decided in early November to halt deployment of the wireless service in 33 markets, with no plan for additional expansion.

And while Cox Cable and Cablevision announced they would bid on the 700MHz spectrum against the likes of wireless giants AT&T Inc. and Verizon Wireless, Comcast said in mid-December that it would not bid in the auction.

At the time, the cable giant was coming off adjusting its 2007 revenue down and capital spending up, news that sent its stock to a then all-time annual low.

Noting its close and fierce combat with Verizon for triple-play customers, pending regulation and looming network upgrades, industry experts have said the last thing Comcast wanted to do was spend more money, and in an auction no less.

With that in mind, one expert sees it as a self-preservation move.

"Infrastructure for mobile voice is a low-ROI proposition," says Tom Nolle, president of CIMI Corp. "So the cable guys wanted someone else (like Sprint) to do the dog work for them. Comcast got whacked hard for lowering its financial guidance and raising their projected capex. Imagine what would have happened if they’d said they were bidding billions for spectrum and spending billions more in rolling out a service."

Others believe that the Pivot effort was an effective move because it showed consumers and others that cable had and has an interest in wireless. However, it largely was ineffective because cablecos didn’t plan to do all the billing and OSS creation, integration and evolution for a network owned by someone else.

Meanwhile, the cablecos’ archrivals, AT&T and Verizon, have more than just seemingly bottomless wireless assets, analysts stress. They also have work well under way to bridge wireless and wireline networks in what could allow the anytime, anywhere communications customers have been salivating for.

Both companies last summer added differentiating, wireless-powered features for their IP video services. The features enable users with certain mobile devices remotely to control and program DVRs in their homes.

"Customers are increasingly mobile and want their data and entertainment to be mobile with them," says Tyler Wallis, assistant vice president of wireless convergence for AT&T. "That goes right to how we deliver what they want, having the largest wireless and wireline networks in the country."

"Good luck to our competitors," says Jerrlyn Jwata, director of programming for Verizon.

But for cable, winning and paying for the spectrum is only one step. What to do with that spectrum and the investment around executing a plan also are huge tasks.

"Today, they’re in something of a balancing act, with cable holding video and telcos holding wireless," says Jason LeBorgne, a financial analyst at JSI Capital Advisors. "But cable getting into wireless will affect their performance, as they’d have to play huge catch-up with the likes of a Verizon Wireless and AT&T. It’s not just buying spectrum. Cable operators will have a long way to go to provide an actual service to customers."

Read more on the FCC’s moves to limit cableco marketshare.

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