iPhone Juggernaut

Apple’s iPhone is perhaps the most anticipated, marketed and outright hyped gadget in history. And now cable has a specific challenge: Figuring out how to capitalize on Apple’s June 29 introduction just as cable operators start rolling out their wireless component. Yes, it would have been nice if Apple had inked an exclusive iPhone deal with cable partner Sprint Nextel but, alas, that prize went to cable nemesis AT&T. And it lasts five years no less! So where does this leave cable?

First of all, it’s important to take a step back. To be sure, the iPhone should reinvigorate the often-maligned "smart phone" space — especially in the multimedia entertainment and Web browsing areas. Even The Wall Street Journal’s Walt Mossberg, a gadget kingmaker of sorts who often skewers new products, called the iPhone "a beautiful and breakthrough handheld computer" that "sets a new bar for the smart-phone industry."

Is that bad for cable? Not really. In fact, the iPhone could actually make it easier for cable to market new wireless features. Through the Sprint JV, MSOs are already planning cable-on-the-go features that will allow consumers to remotely interact with their cable service and/or even watch cached (or perhaps even streamed) cable shows from anywhere.

Complex licensing negotiations will make true portability a challenge, but cable’s deep, historic relationship with programmers should give it a leg up against Verizon and AT&T. And if millions of consumers buy AT&T iPhones over the next couple of years, cable operators will have little convincing to do when they try to sell existing customers on the concept of a media-rich wireless component.

Furthermore, the iPhone currently works only with AT&T’s relatively slow EDGE wireless network (even though it also can link to WiFi hotspots, that’s not always an option). AT&T could, of course, switch future versions of the iPhone to its faster 3G network, but for now it’s hostage to a network that’s hardly the most robust available — a fact that cable JV partners should exploit with gusto. People won’t have to take cable’s word for it: Consumer Reports already rates AT&T’s wireless network among the worst. Cable is known to have the fastest broadband wire, so why not extend that aura to the wireless arena?

Of course, the iPhone’s wow factor makes it harder for cable to pass off features like remote DVR control and mobile program listings as "cool." So the industry may need to go further with portability than it originally planned, which could mean higher capex. That’s just the Apple effect. (Remember pre-iPod MP3 players? Apple just did it better and forced others to spend big on R&D.) But if cable plays its cards right, it could overcome AT&T’s iPhone exclusivity with better product integration and execution. Let the games begin.

Michael Grebb is executive editor of CableFAX Daily. He can be reached at [email protected].