U.S. cable TV companies already are the dominant suppliers of high speed Internet access and entertainment video, and share the fixed network voice market with telcos.
But there are other reasons to wonder. A traditional rule of thumb for telephone networks serving consumers is that suppliers make money in the suburbs, lose money in the rural areas and break even in the urban areas.
With the caveat that services for business customers make a difference, those rules of thumb largely remain useful.
What sort of services provider historically concentrated first on rural areas, then moved to suburban areas and only lastly on urban areas? Cable TV networks is the answer.
Networks first were created to import distant TV signals from urban areas to rural areas, meaning network economics had to account for the high cost of building fixed networks in low-density areas.
Later, when the business model changed from “signal access” to “provide more choice,” the suburban areas were wired. The last stage was extension to urban cores, something that happened in the 1980s.
The point is that network economics were tweaked, from the start, for the worst business case. That tends to extend to every other part of the business.
In the end, network economics always are a balance between expected revenue and expected capital investment to garner those revenues.
So if gross revenue starts to be an issue, as it now is, the lower-cost provider is going to have advantages. Since all triple-play providers now sell the same products and services, that matters.
Network economics plays a role in fixed service provider strategy, the perhaps longest-running example of that being the decision when and where to invest in fiber to home platforms and when to use some other next generation network platform, for the moment.
In that regard, cable TV hybrid fiber coax networks have an advantage: they do not yet require as intense a fiber deployment as do fiber to home networks, but can deliver services that might otherwise require FTTH.
For example, Morgan Stanley surveyed 2,500 U.S. households during August 2015 and September 2015 on broadband and TV services, and found "U-verse and AT&T DSL had especially weak satisfaction results," compared to cable TV customers.
Cable customers reported an average speed of 38 megabits per second, while DSL subscribers said they had 21 Mbps service on average.
Verizon Communications FiOS customers on average had nearly 30 Mbps service and were happier, despite price hikes, says Morgan Stanley.
There are new questions we might raise. As customers increasingly find they can substitute use of one platform for another, and as new suppliers enter existing markets, market positions can change.
Substitution of mobile for fixed voice and messaging provides one example. Use of mobile Internet access does affect demand for fixed Internet access. And a coming shift to mobile video likely will provide another challenge.
At the same time, new suppliers are entering and reshaping the market, especially gigabit-providing independent Internet service providers such as Google Fiber and a growing number of third-party suppliers.
It no longer is absurd to consider a future where former telcos are unable to compete in fixed network markets.