Instead of entering into a price war, cable companies invested heavily to improve their product.

'That's why we have broadband in this country and why cable guys didn't get trumped by satellite guys,' said Blair Levin, the chief of staff for former Federal Communications Commission chairman Reed Hundt and now an analyst at Legg Mason.Īccording to Levin, these upgrades can be seen as indicative of cable's behavior during periods of competitive uncertainty. In the process, companies transformed their analog coaxial cable lines to support digital, in turn opening bandwidth to support services such as phone, video-on-demand, high-definition TV and broadband. Throughout the mid- to late '90s, relaxed government regulations allowed cable companies to pour an estimated $75 billion into upgrading their equipment to support digital signals. Satellite was also expected to become a major player in delivering high-speed data services, but that plan eventually foundered. Cable's core video business was under pressure from satellite services, such as Hughes Electronics' DirecTV, that offered hundreds of more channels and a clearer signal. Adding phone calling to the package, cable companies are equipped with a triple threat against their nemeses: the Bells and satellite TV.Ĭompetitive fears over satellite's growing popularity in the early 1990s drove cable to enter the broadband game in the first place.

'It turns out that people are just as accepting of 'faster at relatively cheaper prices' as they are of 'very fast at expensive prices,'' Hindery said.īroadband is one critical piece of cable's campaign to bundle high-speed data into its core video-programming business.

Leo Hindery, AT&T's former cable chief, said the cable industry's current emphasis on high speeds could make it vulnerable to cheaper offerings.

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