If we overlook the early demise of cable infrastructure overbuild specialists like Excite@Home, the MSO community has remained at least minimally viable during 2002, far more so than its telephony brethren. This is somewhat surprising, given the decades-old cowboy financing for which many MSOs are famous. Well, the Wild West just caught up with Wall Street.

Adelphia Communications has seen its stock plunge for precisely the sort of intrafamily borrowing for which its owners, the Rigas family, have been infamous for years. The rules are different post-Enron, and Adelphia, Cox, AT&T Broadband and the other large MSOs are quickly learning to adjust. No one's anticipating an imminent crisis. In many cases, the MSOs were much closer to finishing hybrid fiber/coax buildouts than the phone companies were. In the worst case, an MSO in Chapter 11 could manage existing HFC networks with minimal maintenance, collecting monthly digital TV and cable modem fees merely by keeping servers in shape and headends in working order.

But when even the best-run MSOs and phone companies are living hand to mouth, there's plenty to worry about. Footprints for broadband services are unlikely to increase in most areas. Service outages can be expected to increase for companies mired in debt, and you can't address end-user problems to a nonexistent help desk. For the equipment provider and its semiconductor supplier, the implications of headends and central offices in maintenance mode are obvious.

Rumblings are starting in the VC and optical OEM community about the necessity of a national policy to help drive broadband deployment. Asking the feds for a handout or even a blueprint may put the industry in more trouble than it's in right now. Maybe the carrier industry meant less to overall economic health than its proponents wanted to believe. But no matter what Alan Greenspan says, an economy that recovers while its phone companies and MSOs are in critical condition is an economy in danger of falling back into a double-dip recession.