"Some say we should not think of ourselves as cable operators anymore," said Ted Turner, the irascible vice chairman of Time Warner Inc. (NYSE: TWX). "Cable is holding the distribution high ground. While we are ahead right now, the game is ours to lose."
Turner was one of five cable industry execs that voiced opinions on the changing cable business here at the Western Cable Show Wednesday morning.
The largest current threat to cable execs comes in its battle with many Internet service providers and content creators over the issue of open access.
America Online Inc. (NYSE: AOL) and MindSpring Enterprises Inc. (Nasdaq: MSPG) have demanded that cable companies provide Internet service providers with access to their broadband pipes.
As founders of the OpenNet Coalition, the two companies have been pushing federal regulators to espouse such a policy to benefit consumers by offering more choice in broadband carriers.
"Open access is a threat to the broadband industry," said Turner. "We have to fight open, forced access."
Turner and other cable execs called their systems "open" -- under a liberal definition.
"If someone really wants AOL, they can get it through their cable network," said Turner. "We just want to have them go through our RoadRunner service to get to AOL, though. It's our wire and we will do what we want to with it."
The result, however, isn't kind to the consumer, who has to pay for RoadRunner service on top of an AOL subscription.
The dispute is quickly coming to a head. Already, 5 million cable customers have digital cable boxes capable of handling Internet traffic.
But cable companies can not live in the business of only transporting data to the customers, argued Michael Bloomberg, president and CEO of Bloomberg L.P.
"The fundamental business of transporting zeros and ones is a really hard one in which to get a leg up," he said, stressing that only companies who can make their systems and content proprietary will survive. "The public is going to have multiple paths into the home. You have to be able to build a moat around your business that no one else can copy."
The cable cabal may be losing ground, however. On Dec. 6, AT&T Corp. (NYSE: T) announced it had broken ranks with cable providers and signed agreements with MindSpring to allow access to its networks without requiring customers to go through AT&T's @Home-Excite service first.
Seemingly taking the side of AT&T -- if weakly -- Leo Hindery Jr., former president of AT&T Broadband and Internet Services, argued that an open network would be better for the industry.
"If you contemplate a world with virtually unlimited access to households worldwide, then you are only limited by your creativity," said Hindery.
However, such a network would mean that content producers would have more competition, he stressed.
"If someone says that your pipes are open-able, then it will be open to streaming," said Hindery. "Zeros and ones are interchangeable. That's why embedded in RoadRunner and embedded in @Home are video streaming restrictions."
Those restriction may also be removed as part of an open-access agreement, he said.
'Be careful what you wish for' Also, Internet service providers moving into the world of channel-surfing customers may not find the new industry completely to their liking, argued Robert Sacks, president of the National Cable Television Association, during his keynote.
"To AOL, I say be careful what you wish for," he said. "You may just get it in the form of the government regulating your business."
