Cable Companies Show Interest in the SME Market

The Wall Street Journal picked up the cable companies' interest in the SME market. It is suggested that organic growth is coming down. I would add that buying cable assets (Cablevision (CVC), Insight, RCN (RCNI)) includes the risk of clashing with regulators over reaching more than 30% of US households.

My take on this:

Reaching the desired 20% share of the SME market will not be that easy. Competing on price is the way to go, and telcos are not going to let this happen hands down.

Another lucrative market (like SMS and international roaming in the European wireless space) is under attack: business services. Prices could converge to consumer-service levels.

Why not expand by buying assets? Comcast (CMCSA) could target CLECs that focus on the SME market (Cbeyond, Deltacom, NuVox, One Communications, PAETEC/US LEC, Tele-Pacific), including resellers (Granite Telecomms). It would be about their customer bases, that can be transfered to the Comcast network. Add a topping of fiber backhaul and metro assets.

Disclosure: Author has no position in the above-mentioned companies.