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Cable's 'Dumb Pipe' Dilemma

11:50 AM -- I read with fascination a post by Sam Greenholtz, a retired manager from Verizon Communications Inc. (NYSE: VZ) and the principle and a founder of Telecom Pragmatics, a consulting and research firm.

In his latest Hardball article, titled "Cable TV Apps an Oxymoron," he contends that the cable industry has not created any worthwhile applications, and that the true recent innovators have come from Silicon Valley.

This view may have some validity in today’s marketplace, but to accept his premise that the cable industry has not created any innovation or applications, despite building a profitable business through collaboration and partnerships, is somewhat of a misapprehension.

What Mr. Greenholtz may be trying to convey is that today's cable industry leadership is out of synch with the consumer and fails to acknowledge the shift from traditional digital TV delivery to one that accounts for the ways the younger generation (tomorrow's future cable TV subs) likes to communicate and use services. That shift is already well under way and is speeding through wireless networks and social networking and over-the-top video applications, leaving today's outdated format of cable content delivery already looking like a history lesson.

This is not to say the major MSOs and telcos will close their doors and fade into history books, but it does indicate that they'll need to struggle to maintain the heady consumer numbers they are accustomed to. And they are all making some efforts in the right direction.

Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Inc. (NYSE: TWX), for example, have teamed to offer "TV Everywhere." And several other MSOs, telcos, and even satellite TV service providers are following suit with their own visions for such a service. Verizon, meanwhile, is having success with FiOS, adding breadth to broadband services, though it's expensive to construct. AT&T Inc. (NYSE: T) has its IP-centric U-verse platform. (See Comcast Nears 'TV Everywhere' Launch.)

It's evident that the current pipelines have to both collaborate with and accept new technological innovations, and reach out to the entrepreneurs who are creating ways for consumers to socialize and interact with these applications and services.

This will be key to self-preservation and future growth for both the telcos and the cable MSOs. The real question to ponder in the new generation of applications is whether these pipeline providers will become “dumb” or become key ingredients of the shifting consumer paradigm.

— Leonard Grace, a cable industry vet, is a telecom strategist and blogger. He can be reached at [email protected]. Special to Cable Digital News

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