by Bob Smith
former Board Member, Cable Co-op
My major interest in Cable Co-op is the quality of our technology, programming, and advanced services.
For several years, the Co-op was arguably the best cable system in the country. We can all be proud of that record. But, changes in technology and the marketplace make the proposed sale necessary and desirable.
The communications marketplace is now very competitive and getting more so, and Cable Co-op will not be able to compete.
There are already two satellite systems, DirectTV and Echostar, that provide much better programming than the Co-op at competitive prices. Only two weeks ago the US Congress passed new legislation that will allow the satellite companies to carry local broadcast programming; this will make the satellite systems more competitive. DirectTV and Echostar already have digital television, interactive menus, and Dolby Digital sound, and DirectTV just started HBO’s new high-definition HDTV service in August. These satellite companies are on the cutting edge of programming and technology and are very well funded.
On the ground, RCN Corporation of Princeton NJ has announced plans to wire the California coast with a new highly competitive system that will include Internet and telephone service along with video. RCN just received 1.6 billion of funding from Microsoft founder Paul Allen, and has been advertising heavily in the South Bay in recent weeks. RCN has proven a strong competitor elsewhere.
In the Internet service business, we have too much competition to even catalog here, including several companies supplying DSL broadband Internet service in competition to the Co-op’s ISPChannel. In addition, SBC Corporation, the parent of PacBell, recently announced a $6 billion effort to upgrade Internet service and to add video services as well.
The list of competitors may change, but there will be competition, and it will be fierce. Competition will be good for consumers, giving them choices, lower prices, and a variety of new services. We will see fiber, digital television, faster Internet service, and high-definition television technologies here within the next few years. Companies will package their services in creative ways, giving the consumer options to save money and to increase convenience.
The Cable Co-op cannot compete directly in this new marketplace. Even if we could refinance our 40 million dollars of debt, we are in no position to raise the additional capital—tens of millions—to upgrade the system and to compete. Even a small loss in subscribers to our competitors could move the Co-op from being slightly unprofitable to being unable to meet its payroll.
Hundreds of local, independently owned systems have been sold in the last few years—systems far better capitalized than the Cable Co-op—when their owners realized that they did not have the capital, the depth of technical expertise, or the business synergies to compete.
This sale will provide the means by which we continue to keep this community on the cutting edge of new communications technology and services. I am confident that when our members study the technology trends changing this industry, they will support the sale.
A major activity of the human race in the next decade will be building the new world-wide broadband communications network. This community expects—even demands—to be at the cutting edge of this effort. A small, independent, financially struggling cable television system is simply not going to be up to this challenge.
The very factors that in 1985 made a co-operative an excellent choice for this community now work against a co-operative solution. We have moved from an era of regulation and monopoly control to a time of intense competition and capital investment.
It would be irresponsible of the Cable Co-op to sit on this franchise in the foreknowledge that we do not have the means to meet the needs of the community. While the Co-op cannot stop the future, we could slow it down and burden the community with problems if we try to keep the Co-op afloat.
This sale is a relatively complete plan for how the Cable Co-op meets
its commitments and make contributions to the future. Like any plans, it
may not please everyone in all details. I do believe that it represents
an excellent approach, and I ask for your support and affirmative vote
for the sale.