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Cable 'foxes' enter the telco henhouse

Long a bitter rival to the phone industry, the cable camp's dominant role in delivering broadband to U.S. homes has won it center stage at a key telephone network gear show.

ATLANTA--Cable executives took center stage Wednesday at a key telephone network equipment show, a tense experience due to bitter rivalry between the two industry camps.

The keynote speeches by two cable company executives at Supercomm 2003 here hinted at a detente between the cable and the telecommunications industries, which combined are expected to sell $13 billion in broadband services this year.

Anything's possible, Richard R. Green, president of industry group CableLabs, suggested during his keynote address.

"When I watched the news this morning, I saw that (Chicago Cubs slugger) Sammy Sosa corked his bat and Martha Stewart might be going to jail," he said. "And two cable guys are at Supercomm. What's the world coming to?"

"A couple of cable guys being invited to Supercomm is like being a fox in the henhouse," Patrick Esser, executive vice president of operations at Cox Communications, said in his keynote speech, trying to make light of the intense rivalry between the two camps.

It will likely take a long time for tensions to ease and the two sides to cooperate as Green suggested was possible, given the past decade of hostilities. And the rivalry continues. Most recently, Time Warner Cable launched the equivalent of a mortar round at the telephone industry when it introduced "Digital Phone," a $40-a-month voice plan initially available only in the Portland, Maine, area.

With similar services also being launched by cable providers Comcast and Cablevision Systems, major local phone companies across the country--sometimes called RBOCs (regional Bell operating companies)--are close to seeing the collapse of the last barriers to local phone competition.

But there are several reasons for the two sides to work together. Cable and telephone companies are chasing the same goal--a triple play of voice, TV and broadband subscriptions--and could help each other greatly by sharing knowledge, Green suggested. Cox was the first cable company to sell voice calling, broadband Internet connection and cable TV in one package. At the moment, telephone companies sell only voice and broadband services, but some U.S. carriers recently signaled their intention to introduce a TV service.

In addition, the RBOCs have begun focusing efforts on a long-awaited project to extend their networks directly into homes using fiber-optic technology--an area in which the cable industry has more experience. Fiber-optic technology, which cable companies use, is the dominant conduit for broadband delivered to U.S. homes. Nearly three times as many U.S. homes use cable broadband from cable companies than use DSL (digital subscriber line) broadband from telephone companies.

But neither side has raised a white flag yet, leaving the field open for continued competition. For instance, cable equipment manufacturers look likely to adopt a new standard for better Internet telephony, which uses the Web instead of a phone network to direct voice calls, Green said.

Beyond phone calls, cable company Cox has begun to put on trial two new surveillance services that most telephone companies don't even have on their drawing boards. One uses a broadband connection to "check in on the babysitter," using a camera secreted away someplace in the home, Esser said. Another, which is set for testing later this year, is a health care service through which devices monitor a patient's vital statistics, then relay that information to care providers using a high-speed cable connection.