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Cable Companies Ready for Civil War with Google

Traditional media companies are at it again, with their fighting talk. At a recent conference, top executives reacted angrily to any suggestion that traditional media had succumbed to the likes of online media.

“The Googles of the world, they are the Custer of the modern world. We are the Sioux nation,” Time Warner Inc. Chief Executive Richard Parsons said, referring to the Civil War American general George Custer who was defeated by Native Americans in a battle dubbed “Custer’s Last Stand”.

“They will lose this war if they go to war,” Parsons added, “The notion that the new kids on the block have taken over is a false notion.”

Seriously? You can’t do any better than comparing this to events from the Civil War era? I’ve not grown-up in the US, but even an outsider can see that while Native Americans might have one that battle, they hardly won the war.

Via Nathan.

  • http://onlinesaleschannels.wordpress.com/ BigSlick

    Andy,
    I know as a Brit, US history isn’t your strong point but Custer’s Stand was in 1876 and the US Civil war ended 1865. And when it comes to Google vs Time Warner its more like Godzilla vs Mothra.

  • http://www.marketingpilgrim.com Andy Beal

    Ok, that much I know – but would 1876 not be considered the “civil war era”? Thx

  • http://davidvseo.blogspot.com David V.

    I read that article earlier and I agree. Winning a battle it completely different than winning the war; however….

    For a long time the cable companies have had complete control over content on their networks. Now that multi-media services are starting to leverage cable broadband networks their control over content is slipping. The cable companies would much prefer a broadband model where content providers share revenue and negotiate with the cable companies to get access to their networks (or at least “preferred access”).

    They’ve had this ability for a long time with their television channel programming. Traditionally television content providers would have to cater to the cable operators and negotiate cuts of PPV revenue, ad time for the operator on the feed, and other incentives designed to entice the cable operator to carry the channel in their lineup.

    Now that broadband is enabling Internet based multi-media content the cable operators no longer have negotiating leverage. They no longer control the content on their networks and this is what is driving comments like what Parsons said.

    These issues are why net neutrality is so important. Ultimately the war will be fought and won around whether or not Internet services provided via exclusive access to public right of ways is open and free.

    If the cable companies have the ability to participate in an unregulated duopoly (cable / telco) then every web publisher will have to deal with them (aka pay them) directly to ensure access to eyeballs on their network.

    This isn’t just a war of market forces dictating the best products and value. This is a war about ensuring that one or two companies (in any given market) don’t control access to the open Internet.

  • Bo Solaris

    Time Warner is scared. Scared of what is going to happen in a future where insane high speed internet rates are next to nil and everyone has low cost if not free internet.

  • http://davidvseo.blogspot.com David V.

    They’re not that scared. In the markets Time Warner serves there are basically only two providers of broadband services (incumbent telco and Time Warner). Unless high speed wireless provides more competition, Internet access prices won’t fall for a very long time.

    It’s this very lack of competition which has put the US behind the rest of the developed world in broadband penetration and available download speeds. Pull up a browser and shop for broadband access in the UK and Europe to see for yourself. Does Time Warner offer 20Mbps, 50Mbps, or 100Mbps access? With only ~3Mbps DSL to compete with there’s no reason for them to improve their offering or lower their prices.

  • Small Business.

    Why should Google not be sent to “Cable Hell” by the cable companies? Google has been sending all the small business that cannot afford to use Adwords to “Google Hell” (also referred to by Google as “Supplemental Results”).

    Yes, this is a war about ensuring that one or more companies don’t control access to the open/free Internet. If the cable companies are foolish enough to limit their customers to anything other than the entire free internet, it should not take long for the customers to seek another ISP.

    We all recognize that currently Google is the Godzilla of SE. If they continue practices that send small businesses to “Google Hell”, it should not take long for internet users to switch to Yahoo or another SE that allow everyone equal opportunities in SE organic ranking.

    SE organic ranking should not depend on how much you spend on advertising. Google recently has been marketing “Google Checkout” free until 2008. The Google Ads for “Google Checkout” clearly say that if your business uses “Google Checkout” it will have better SE ranking on Google. The catch is that you must be an Adword customer to get the free offer.

    At some point look for Google to change their offer to one that provides free advertising on Adwords for businesses that spend a given amount on the merchant services provided by “Google Checkout”.

    Where will the free internet be when Google is collecting the credit card processing fee for 80-90% of the on-line purchases? Once a business takes advantage of the free “Google Checkout” it will be sure death if they try to back out.

    The small businesses will fade away completely from the internet and then the big businesses will rule. Bad for the consumer!!!

  • Jason

    Google isn’t 100% concerned about losing the cable companies pipeline. Why do you think they continue to purchase all the ‘dead fiber’? They are preparing for the day that cable companies decide Yahoo deserves a better connection than Google. Though if the cable companies never come to this point the fiber network will remain as internal as Google wants. If Google can have an intra-net that spans from coast to coast does that not ensure them a distinct advantage over every other SE out there? I know that sending an email from here to there can not possibly get any quicker but Google’s network is about having instantaneous access to whatever data is out there with the click of a button. Why take 2 seconds or 2 minutes or 2 hours to download a file when you can have instant access to it? The cloud is coming. Just wait. Hell maybe Google already has the cloud and is just waiting for Time Warner and Comcast to make the mistake.

  • http://davidvseo.blogspot.com David V.

    > Why do you think they
    > continue to purchase
    > all the ‘dead fiber’?

    This still doesn’t solve the fundamental problem. Even with a nationwide fiber network Google will still need to get access to the cable companies’ networks where all the eyeballs reside.

    US Internet access providers are *terrible* when it comes to settlement free peering. They just flat out won’t let Google connect to their networks without Google paying a fee.

    The site I manage does a ton of traffic (10′s of Gbps) and I’ve already seen this settlement based peering first hand from major cable companies. It’s something in the works and it’s going to make delivering broadband content much more expensive in the future.

    The only thing that Google is doing which might end run all these problems is their dabbling in wireless Internet access. Of course this will only be as successful as their ability to erode Internet access market share from the duopoly.

    This is a classic eyeballs vs. content battle and if we’re not careful the eyeballs will win at the expense of the open Internet.

  • http://www.ArizonaMansions.com Tony P

    Folks, think outside the box. All Google needs is broadband via satellite to go with their wireless, plus fiber, plus…
    Will Google even need the cable providers in the future?
    Now think of YouTube, FaceBox, MySpace, etc and how did they get so big? Being free. We “all” jumped in. We are the eyeballs and we’ll happily leave the cable companies if we get free broadband via Google. Google would simply become the “over the air television” (being wireless) for this generation. But waaaay bigger. Media content providers will need Google, not the other way around. Rule: He who possesses the eyeballs is more valuable than he who needs the eyeballs, and those who need the eyeballs will pay to be in front of them! That’s why free services can be so valuable. Can you imagine a future with free (or really inexpensive) wireless broadband internet service? I can. Possibilities are immense, and it doesn’t take a genius to see how easy it is to monetize.

  • http://www.giganews.com David Vogelpohl

    If Google can pull that off then great. I agree that wireless is the magic bullet that can put an end to the duopoly, but this technology has been available for a long time and we haven’t seen huge inroads by any wireless Internet providers. Also, it should be noted that broadband via satellite has other technical challenges not the least of which is upload limitations.

  • http://www.HomeListingsArizona.com Tony P

    Only because the duopoly haven’t figured out how to monetize it -themselves. They’re fighting amongst themselves to protect their own interests, outdated as they may now be. The old school generally play by the “good ole boy” rules, and try to intimidate and pressure new concepts or start-ups from treading into their money streams. Google isn’t from their world, growing so big virtually out of nowhere and can’t be intimidated the old fashioned ways…
    Outside the US (notably Argentina and a few other places, from what I’ve read) nationwide wireless has been the goal. It could be Google’s next pot of gold here. Let’s not forget Google is big worldwide, too.
    The technical limitations aren’t as bad as one would think, considering the bandwidth is most necessary for downloads, not uploads for the Eyeballs (the free users), who need the download bandwidth (via wireless) far more than they need the upload speed. It is the Content Providers who would likely need to remain fibered in to overcome the speed deficiency in terms of their Upload speed to remain viable in that scenario. Unless of course someone already inline hosts their content for them…. like Google.