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MSOs, Telcos Dash for Home

Raymond McConville
LR Cable News Analysis
Raymond McConville
4/16/2008
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While home networking is becoming popular among consumers, it won't do service providers any good in winning market share unless they can develop unique offerings.

That's the good and bad news in the latest Light Reading Cable Industry Insider report, "Home Networking: MSOs vs. Telcos."

Home networking services have been around for a while, but adoption has only recently started ramping up among both MSOs and telcos. For example, Cox Communications Inc. , specifically, has noticed that its take rate among such services has recently tripled, according to Tim Kridel, the analyst who wrote the report.

One reason for the sudden uptake from customers is that MSOs and telcos are doing a better job at marketing the products, but they've still got room for improvement.

For instance, "they still don't do the math for the customer in pointing out the savings," Kridel says. That's despite the fact that cable MSOs offer home networking installations to their customers for less than competing services such as Geek Squad and Firedog .

The key, though, is that most home networking offerings aren't different enough to convince, say, a cable customer to sign up for a telco service like FiOS.

"I don't think there's anyone really ahead yet," says Kridel. "It's a market-by-market basis. In areas where FiOS is available, it's still going to come down to whether or not the consumer really wants 50-Mbit/s service or not. If they don't need it, they'll be content sticking with cable regardless of the home networking offerings."

A home networking service has to do more than just "spread the broadband connection around the residence," Kridel says. He points out service providers like Mediacom Communications Corp. that are adding home security and control on top of the home networking.

Another wrinkle for telcos and MSOs is whether the emergence of femtocells makes wireless carriers serious contenders.

A wireless carrier like Sprint could use femtocells to encourage customers to drop their wireline provider altogether.

Then again, femtocells rely on a wired connection for backhaul. "It's technically possible for a telco or MSO to thwart wireline voice displacement by blocking that backhaul connection," Kridel writes in the report.

(Whether that kind of thwarting becomes blocked by regulatory initiatives remains to be seen.)

A collaboration between the two sides in home networking is very possible. Cable MSOs do have some interest in adding a wireless component, and wireless carriers like Sprint Corp. (NYSE: S) and T-Mobile US Inc. have no wired broadband and video networks.

For more information on this report, click here.

— Raymond McConville, Reporter, Light Reading

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