In the US, cable company shares have been taking a battering. Mega-deals, such as the one between the cable giant TCI and the telephone company Bell Atlantic, have fallen apart, and sentiment is turning decidely twitchy. The trigger has been domestic - the US government's decision to slash domestic cable rates by more than 17 per cent.
But there is more to it than that. US cable networks are facing stiffer competition. Stale programming has lost them viewers to both the terrestrial and burgeoning satellite networks, and their dreams of building a vast fibre-optic, interactive information superhighway have been dented by the damage to their profitability caused by the rate cut.
At the same time the telephone companies have fallen out of love with their go-go siblings. The Baby Bells used to think they were essential staging posts on the way to the information superhighway, providing programming and entertainment know- how as well as cable networks. Not any more. The Baby Bells, which have been experimenting with video programming for up to two years, are even beginning to think they might be able to go it alone on the fibre-optic front.
In the UK, unlike the US, cable companies are in the unique situation of being able to offer profitable telephone services as well as entertainment. But that also puts more pressure on BT to find ways to compete. As well as its video-on-demand experiments, BT is beginning to dangle before the Government the possibility that it might fund the building of its own fibre- optic information superhighway. As long, that is, as it is allowed to compete directly with the cable television companies.Reuse content