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Our Group:
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The industries of Cable TV and Telephony have changed dramatically since Congress passed the Telecommunications Act of 1996. The telephony marketplace was affected most directly by this legislation, and now the Cable TV marketplace is being affected in a more indirect manner. One key goal of the Telecom Act was to promote competition in the local telephony market for the monopolistic local telephone carriers (e.g., BellSouth, SBC Communications, etc). This Congressional action potentially opened the door for long-distance companies to enter the local telephony market (a highly profitable, multi-billion dollar market). Companies like AT&T and MCI had long-distance switches all over the country but could not gain access to its customers' locations. The local phone companies owned the "last mile" to their customers' doorsteps. How could the long-distance carriers afford to compete in the local marketplace if they had to build their own local network first to compete? In steps the Cable TV operators. Suddenly, Cable operators found that they, too, could begin carrying local phone calls over their networks. However, while the long-distance carriers lacked the physical network, the Cable providers lacked the technical telephony expertise required to run phone calls over their networks. In 1998, AT&T Corporation's CEO, C. Michael Armstrong, realized that Cable TV was his much needed physical access. He quickly purchased TCI Cable, formed partnerships with ComCast and TimeWarner, and is now attempting to buy MediaOne. Upon successful completion of these acquisitions and partnerships, AT&T will suddenly be the largest Cable TV operator in the United States. |
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