Your local cable company (aka MSO) and local phone company (aka RBOC) have enjoyed monopoly status for years. The telecom act of 1996 was meant to spur competition in the local phone market while the emergence of direct broadcast satellite providers was expected to drive competition in the pay tv market. Each of these events spurred some competition, but the real battle is just starting to shape up.
Today cable companies are starting to offer voice over IP (aka VOIP) service that competes directly with wired telephony service. Verizon announced long ago that they intend to run fiber optic cables to the home which would give them the opportunity to offer video services, super speed internet access, and other services yet to be dreamed up over the huge bandwidth pipe that fiber provides. While telephone companies have been dreaming of running fiber to the home for years, it appears that costs are finally starting to hit points that make the unit economics feasible (meaning that it makes sense to spend $1,000 running fiber to the home since the discounted cash flow expected from the new offering exceeds $1,000).
The only certainty in this coming war is that consumers will win. Consumers are already seeing the benefits when these two companies fight to offer broadband services (DSL prices have come down from $54 to around $29 per month). Today I spend around $180/month to RCN for digital cable (HBO, Cinemax, etc.), all I can use local and long distance phone service, and high speed internet access (5 mbps which rocks!)... but I can't wait for the day that Verizon can offer me the same package and price wars break out. I can envision cost competition driving this bill down to around $80/month if not less.
God bless competition.
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