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Monday, November 06, 2006

In Game With Telecoms, Cable Get A Fourth Ace

Stocks: (TWX)(CMCSA)(VZ)(T)

With fiber to the home all the rage for followers of Verizon and AT&T, it looked like the cable guys might be in trouble. Fiber offers a pipe of almost limitless size, and the old analog cable lines are good for TV, but might get a bit small once they have to carry high def programming, VoIP and broadband.

Not to worry. A company owned in part by Time Warner's venture arm appears to have solved the problem. BroadLogic makes a chip that frees up capacity over analog lines. This level the playing field for analog cable operations where they have to compete with new telecom fiber.

Granted, the cable companies already have a healthy lead. Verizon plans to spend about $20 billion on fiber upgrades and only has slightly more than 100,000 IPTV customers so far. Comcast signed up 483,000 VoIP subscribers in just the last quarter.

The one barrier that the cable companies have been facing in having completely competive service that offers High Def TV, voice, broadband and on-demand channels was the potential limitation of analog deployments. That would now seem to be resolved.

The investments that Verizon and AT&T are making may not look quite as good today as they did yesterday.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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