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It’s boiling down to cable vs. telecom

Telecom and cable companies are fond of saying how much competition exists in their respective industries. Dissatisfied customers can always take their business elsewhere, the companies insist.

In fact, few telecom and cable companies actually compete head to head. And now, these businesses are forming unprecedented partnerships as the two industries vie for nationwide dominance over voice, video and Internet services.

AT&T; Inc., Verizon Communications Inc. and Qwest Communications International Inc. -- the three biggest U.S. phone companies -- announced last week that they’re working together for the first time to help customers stay connected when they move to a new city.

The companies’ new website, Movearoo.com, describes itself as “a one-stop shop for America’s moving needs,” offering everything from bundled telecom services to change-of-address forms.

What the site doesn’t include is any information about what local cable providers may offer for people seeking cheaper communications alternatives.

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Meanwhile, six leading cable companies have banded together for something called Project Canoe, which is intended to create a nationwide system for targeting ads to specific viewers.

Project Canoe could give the cable industry a leg up on telecom companies by making their networks more attractive to marketers.

Both Movearoo.com and Project Canoe represent an evolution in how telecom and cable companies operate, an escalating of competition from the company level to that of entire industries.

“It’s a duopoly,” said Michael Shames, executive director of the Utility Consumers’ Action Network in San Diego. “It’s two titans battling for the hearts, minds and wallets of consumers.”

According to Frank Kellam, Verizon’s business development manager, the three big phone companies have been quietly planning for the last year and half to create a “solution to ease the stress of moving.”

He said the detente among AT&T;, Verizon and Qwest reflects a changing business environment in which cable and, to a lesser extent, online Voice over Internet Protocol service providers like Skype are encroaching on phone companies’ traditional territory.

“We are adjusting our strategy to keep our customers away from the cable and VoIP companies,” Kellam said.

Joe Izbrand, an AT&T; spokesman, echoed this sentiment. He said the telecom companies want to ensure that no matter where people move, “they have choices other than cable companies.”

It doesn’t take much imagination to foresee even greater cooperation among telecom companies as they try to fend off these rivals.

And as the phone companies become more intertwined as business partners, they’ll have less incentive to challenge one another in the few areas where they really do compete, such as wireless service.

In the cable arena, Project Canoe isn’t as overt a gesture of defiance toward competitors as Movearoo.com, but in some ways it’s an even more sophisticated stab at circling the wagons of one industry.

As it grows harder for marketers to cut through the clutter of the information and entertainment landscape, the Holy Grail for advertisers is to be able to pitch products at the people most likely to buy them.

In other words, movie studios want to reach households with teens. Pet food companies want to reach households with cats or dogs.

That’s already possible with some cable systems, but no uniform technological standard exists to give marketers nationwide reach. Project Canoe is intended to remedy that.

The participating companies are Time Warner Cable, Cox Communications, Comcast, Cablevision Systems, Charter Communications and Bright House Networks. Trade publications say each has chipped in to create a $150-million pool to develop the technology.

“Project Canoe will help the participating cable companies deliver more value to our advertising partners with increased measurability, targetability and interactivity,” said Landel Hobbs, chief operating officer of Time Warner Cable. “It also allows cable networks to enhance their advertising offering.”

He added: “All of that can be accomplished without compromising the privacy of our customers, which is of tantamount importance to us. In fact, in many ways, targeted advertising, done right, can be beneficial to consumers.”

That remains to be seen, as does the impact on cable viewers’ privacy.

By definition, targeting a TV ad at a specific household requires knowing what that household watches. Cable companies know this already, of course, but they’ve never before attempted to profit from that information on such a grand scale.

“How is this different from what Google does?” asked Alex Dudley, a Time Warner spokesman.

Indeed, Google monitors people’s Internet searches and targets online ads accordingly.

But most people go online with an expectation that little or no privacy exists in cyberspace. Many people probably feel otherwise about what they choose to watch in their living rooms or bedrooms.

Meanwhile, what sort of targeted ads might crop up after an evening spent watching the Playboy Channel? This could make for some awkward conversations between husbands and wives.

Shames at the Utility Consumers’ Action Network said these moves by the telecom and cable industries may be good for the respective businesses, but they almost surely won’t be good for consumers.

“All they’re doing is creating obstacles to each other’s industry from gaining an advantage,” he said. “That’s not competition.”

Well, it is. But not the kind that benefits customers.

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Consumer Confidential runs Wednesdays and Sundays. Send your tips or feedback to david.lazarus@latimes.com.


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