Atlanta—The venue for the 2006 National Show may have changed from New Orleans to Atlanta, but the challenges faced by operators remained unaltered, as industry leaders sized up the competition and pondered how they would expand on their service bundles.
Cable's top engineers appeared completely confident that no matter what DBS or telco competitors come up with, operators can meet or beat it with their HFC networks. In fact, after an hour of talking about technology and infrastructure during the annual tech panel, Time Warner CTO Mike LaJoie nearly exploded on the subject.
"It does not matter one bit," LaJoie said, later adding for good measure: "IPTV? It's a buzzword, like freaking 'fiber.' Who cares how it gets there? It's a silly discussion. We can do all of it."
Fellow panelists Dave Fellows of Comcast Corp., Chris Bowick of Cox Communications, and Dermot O'Carroll of Rogers Cable were in agreement.
Still, though MSOs can perhaps do it all on an HFC network, they haven't done it all yet.
When moderator Leslie Ellis asked about developments to look for in the near future, LaJoie called DCAS (downloadable conditional access system) a sleeper but critical going forward; Bowick said the industry will be pushing for ubiquity of IP infrastructure to support telephony and will be working on wireless; and O'Carroll said Rogers will be transitioning to switched transmission and launching HSDPA to accelerate its wireless service data rates.
Moderator Leslie Ellis (far left) led the tech panel, which featured David Fellows of Comcast,
Mike LaJoie of Time Warner Cable, Chris Bowick of Cox Communications
and Dermot O’Carroll of Rogers Cable.
LaJoie said Time Warner's trial with switching is going well, rendering bandwidth economies of better than 50 percent. The company will have it in four to six systems by the end of 2006, and roll it out more extensively next year. As for OCAP (OpenCable Application Platform), LaJoie said Time Warner is aiming at a full-scale rollout in July of next year.
Bowick said Cox will deploy switching in two markets this year. "There's not a sense of urgency for switching like there was for simulcast," he added. Cox is also conducting trials of PacketCable Multimedia (PCMM), a CableLabs-specified architecture that injects QoS into a range of IP apps. The first application is a speed preview that allows customers to taste faster HSD tiers for a limited period.
The introduction of the place-shifting Slingbox device from Sling Media clearly has caught everyone's attention. The engineers on the panel, however, said there was nothing new there technologically, and had they thought space-shifting was legal, they might have tried offering it as a service themselves—and may yet do so.
If operators want to offer something similar, however, there would be licensing issues, LaJoie said, given that most MSOs have contracts with content providers that have geographical limitations. Those contracts would have to be renegotiated.
Ellis asked if the telcos "were providing any hurt yet?" Fellows drew a laugh when he said: "Yeah, they have 95 percent of my telephone customers."
In response to the question of whether hybrid fiber/coax or fiber-to-the-home is superior, Fellows observed that even with FTTH, the connection from the wall to the box is coax. "It's all HFC," he dryly observed. LaJoie drew another laugh when he interjected with: "HFC is better because it exists."
Bowick said when Cox was faced with rebuilding from scratch in New Orleans, it evaluated fiber-to-the-curb and to-the-home technologies, and re-evaluated HFC. Given the inherent capabilities, the lower costs, and the potential to split nodes at will, Cox chose HFC.
Ellis asked about the shortage of set-tops that beset operators this year. Fellows and Bowick said it was self-inflicted—they didn't order enough. LaJoie said TWC had an aggressive plan and had ordered enough to avoid the problem.
The panelists all said they are now installing more HD-DVRs than any other type of box, by far.
Fellows also provided a status report on Comcast's proposed RNG (Residential Network Gateway) boxes. The low-end RNG-100 box, which was supposed to be $35, is now just under $100 after adding advanced codecs (MPEG-4 or VC-1), the memory and processing to handle OCAP, and other features.
—Brian R. Santo, CED Senior Editor
The cable industry is beset with competitive pressures from the satellite and telecommunications industries, and tough decisions loom ahead about what services customers want and how they want them delivered. But innovative new technologies, and cable's ability to deliver them will provide the industry with a competitive edge and bright future, agreed panelists during general session: "Add Cable and Stir: A Recipe for Business Success."
The dominant theme throughout the discussion was focusing on the consumer. "We have a wonderful physical plant in place. The key is to focus on the consumer and what they want and not get enamored with the technology. If we focus on the consumer, we should see all the technologies as opportunities," said Glenn Britt, president and CEO of Time Warner Cable.
Indeed, the entire cable marketplace is an opportunity, maintained Tom Rutledge, COO of Cablevision Systems Corp. "It's bigger than people realize, and there is a lot more in front of us, including the commercial business. We've built most of our infrastructure in front of the business marketplace, so we already have plant there. And, with advertising opportunities, the major media form is cable."
Cable's form, and the entire business, however, must be viewed differently than in the past. "We started to look at the business fundamentals very differently and focused on the blocking and tackling and the competitive environment, which is a very different way of doing business," said Michael Willner, vice chairman and CEO of Insight Communications.
Yet competition is not going to be the deciding factor in whether cable wins or loses customers, insisted Mark Cuban, president and chairman of HDNet LLC. "It will be based on bandwidth and how to optimize it. The tipping points this year will be the execution of HDTV sets at the retail level and the analog cut-off date of 2009. I think next year the retail wars will start to grab customers, and HD will be very important."
Just as important will be the acceptance of new technologies. "People still watch 12 to 14 channels, but younger people want to download to iPods and consumers are experimenting with those. Broadband wirelessly delivered may be the most popular," said David Zaslav, president of NBC Universal Cable.
Most panelists agreed that bandwidth, and how it's managed, will play a pivotal role in cable's future. "With the Internet and other services, there may be a point where we will need lots of bandwidth," said Patrick Esser, president of Cox Communications.
Digital video recorders will play a role in the expanding cable market as well, albeit an evolving one, maintained Tony Vinciquerra, president and CEO of Fox Networks Group. "Not everyone sits at home with a DVR. There are a significant number of people that still want to watch on a schedule. But DVRs will have an impact on advertising, and will evolve."
—Craig Kuhl, CED Contributing Editor
A growing number of small market cable operators are pushing ahead with innovative new business models for triple play and even wireless services, with VoIP, HDTV and high-speed Internet services leading the way.
Yet issues such as competition, economies of scale, developing effective partnerships and plant preparation must be addressed in conjunction with the launching of new services, said panelists at the session titled, "Independent's Day: Big Ideas from Smaller Operators."
"We've developed lots of bundles and that was the key. We spent a lot of time understanding how to launch triple play services, including plant issues. A clean plant was critical—node sizes and leakage especially. We're still wrestling with some technology issues, bandwidth and billing integration, which is huge," said Jim Gleason, president of NewWave Communications.
Plant preparation stood out as a crucial step in launching new services in smaller markets, according to Amy Tykeson, president and CEO of Bend Cable Communications of Oregon.
"We spent a full year of planning plant readiness. We had no expertise in the phone business, so we hired a consultant and defined our spectrum of paths to enter the phone business. We chose the hybrid model and used Nortel's softswitch as the heart, and Level 3 for connectivity, with back office integration by Sigma [Systems]. Then we built our organization. It was plant preparation and choosing the right partners that were crucial," she maintained.
For Sunflower Broadband, expanding its service to include a rural wireless service and a voice navigation system are the latest and greatest service rollouts. "Rural wireless leverages our technical assets, but there are some caveats. It's unlicensed spectrum, so it's impractical in metro areas, so we don't recommend it there. But it can be managed in rural areas," said Patrick Knorr, general manager of Sunflower Broadband.
The launching of new, innovative technologies and services such as VoIP, high-speed Internet, HDTV and wireless can be tricky, and session panelists had no illusions about what it takes to integrate those services into the marketplace, and into their networks.
"Cable used to be simple. Now, any new product comes with a multitude of problems, and trying to find the right people with the right skills is crucial," said Gary Shorman, president and CEO of Eagle Communications. —CK
Switched digital services technology, including multicast, unicast and microcast, is changing the broadcast channel model, and targeted advertising is one of its valuable by-products. But what's driving switched digital technology is the need for speed and the proliferation of consumer devices, according to panelists at the "Throwing the Switch: The Move Toward Personalized Media" technical papers session.
Switched broadcast and personalization were front and center at the
“Throwing the Switch” technical session.
"There's no end in sight for consumers and new devices, but the challenge is bandwidth management, so switched digital is a powerful bandwidth management tool, enables new programming and is transparent to customers. It's the key component to next-generation networks," maintained panelist Lorenzo Bombelli, director of product strategy and management for Scientific Atlanta.
And those next-generation networks will include more technologies geared around switched digital services, added Bob Duzett, chief architect for video hardware systems at C-COR Inc. "Well thought-out, quantitative models can be very effective in designing switched digital systems," he said.
Switched unicast is also on many operators' agendas. "The switched unicast drivers are content personalization, targeted addressable advertising, expanded choices of CAS (conditional access system) and CPE, and reclamation of bandwidth," maintained Jim Nguyen, senior director of product marketing for BigBand Networks.
And though panelists agreed that reclaiming bandwidth is a key driver of switched digital technology, targeted advertising via unicast or microcast is the business model many in the cable industry are chasing. "How do you advertise with unicast, and what model makes sense? We want to go to the individual screens of customers and match ads to subscriber interests using demographics, voluntary subscriber profiles and advertising data about customers," said Steve Riedl, principal architect for the advanced technology group at Time Warner Cable.
A growing number of companies are now gaining a better understanding of just how to do that via switched digital technology. "With switched video or broadcast, we now understand how to overcome issues. And it's all about enhancing around the advertising model. We're changing the model of the broadcast channel," said Michael Adams, vice president of video architecture and technology for Terayon Communication Systems. —CK
Six early-stage technology companies offering a wide range of new, innovative products and services shared their business models and products with a room full of venture capitalists and potential investors during a sneak preview of what the cable industry can expect from smaller, emerging technology companies during the "Spotlight on Innovative Technologies" session.
Designed to offer an opportunity for six emerging companies to tell their story to a group of potential investors, the session allowed companies such as Quartics to describe their technologies and/or services and demonstrate their value.
"We're a chip company with a value proposition being multi-standard codecs that connect laptop computers wirelessly to the TV. In the past month, there have been lots of discussions on Web content, including Disney's free content on the Web. Users are looking for content," said Safi Qureshey, CEO of Quartics.
For the early-stage company Revver Inc., its value proposition is to "monetize the open flow of the Internet" via targeted advertising through specific advertisers and ad content, said company CEO Steve Starr.
ChoiceStream, which develops personalized systems to find what consumers' moods and interests are, develops high-quality profile data on consumers, with its business model being licensed software and consulting services. "We develop personalized TV planners, listings, IPG, e-mail, targeted advertising and promotions using aggregated information for modeling," said Steve Johnson, CEO of ChoiceStream.
Move Networks takes video with proprietary architectures and puts it into Web-centric form via "IPTV style control with quality of service over the Internet," described Bob Bryson, the company's VP of business development.
Mobile services is early-stage company Ventego Network's play in the cable space, with IMS solutions that will enable cable operators to add mobility to their services. Its product, UniCell, is a dual-mode handset controller that allows for "seamless mobility between cellular and PacketCable," said company CEO Ron Reiss.
It can also support IMS (IP Multimedia Subsystem) and non-IMS applications, he added.
Monetizing a network's infrastructure is the business model for Visible World, which can design customizable ads and leverage the infrastructure, maintained Seth Haberman, CEO of Visible World.
"We can build an ad for local viewers and customize the message to various audiences and are working on ads targeted at individual households using data right down to the household. It's intelligent advertising, and it's now a reality," Haberman concluded.
The reality for the six presenting start-up companies will be how much additional funding they can generate and just how their technologies will fit into the cable space. —CK
Simply providing VoIP will not be enough in the long run. Cable operators getting into telephony will have to figure out ways to differentiate their service. Participants in the panel "Talk About a Choice: The Remarkable Rise of Cable Telephony," were confident they will be able to do just that.
The initial value is being able to provide a bundle of voice, video, and data, reminded Joseph Varello, VP of digital voice products management at Cablevision Systems Corp.
When it comes to the triple play, the panelists believe cable has the upper hand at the moment. "The incumbents are spending billions of dollars just to gain parity," said Mark Sakalosky, VP of field marketing and sales at Time Warner Cable. "I see them applying band-aids, and throwing stuff at the wall to see what sticks. Last year Verizon tried VoiceWing, and clearly, it didn't stick," he said, referring to Verizon's in-house VoIP product.
Competition with the telcos has not begun in earnest, the panelists said. Cable hasn't attracted away enough customers to catch the biggest phone companies' attention just yet, except in spot markets. "When we start stealing phone lines in a big way—that's their cash cow," said David Pugliese, Cox's VP of product marketing and management. "When we start biting into that huge EBITDA, that's when they'll get frantic."
Will the telcos compete on price? Hard to say, the panelists said. They are already giving away DSL at what Pugliese said Cox has calculated to be close to cost. "We have three RGUs, soon to be four," Pugliese said, referring to the revenue-generating units of voice, video, data and wireless. "We have the room to price creatively. If I can get $150 a month out of a customer, I can afford to give them a break on one RGU."
With a concerted response from the telcos looming, plus Internet-based providers like Vonage, and like Skype—which is providing connectivity for free—cable operators have to provide something new, different, and attractive.
Cable operators have been talking about providing caller ID on the TV screen for years; operators are finally beginning to offer it. "It sounds simple," Sakalosky said, "but in markets where we've rolled it out, it's being met with great satisfaction." He said it's a feature that prevents price erosion; but isn't a revenue generator.
Tom B. White, VP marketing at Comcast, said wireline-wireless integration is going to be a very important means of adding value. It will simply take a lot of work to accomplish that, he said. —BRS
If cable companies don't make video easily portable at an acceptable price, third parties will do it and start eating into cable company profits, and soon. So said participants of the panel titled, "The Profit, Promise, and Peril of Portable Media."
The issue of portability is a direct outgrowth of convergence. Handheld devices keep combining functions; video is one of them. "All media are coming to the phone," said David Del Baccaro, president and CEO of Music Choice. "You think people won't watch video on the small screen? I think they will."
An example would be if someone were watching sports on TV but had to leave the house. With video on your phone, you can leave, but still watch the end of the game.
Not only will people watch TV on the small screen, but production companies are shooting video specifically for it. "We'll shoot things three times," Del Baccaro said. "One for each size screen, for the phone, the Internet and the TV. One version is developed for the two-inch screen to work on the two-inch screen."
The fact is, people are already watching on the small screen. "It will blow your mind how much of last night's TV is available on [Apple] iTunes today," said Dan Sheeran, SVP of music & video at RealNetworks. "And in that market today, the cable industry has almost no role."
Bob Green, SVP advanced services at Starz Entertainment Group, the company behind the new Vongo service, observed that cable operators can't push the ability to move video around simply because the "contracts they have with content providers don't give them the rights to do it."
The content providers and cable operators will have to work together on this because the alternative is that consumers will find a way to get video in a manner that cuts both out, just as consumers started file-sharing music before legal download services were established. "For MSOs to sit back and wait would be a mistake," Del Baccaro said. "You can't afford to have kids 20 years from now looking at the cable company as the company that provides video only on the TV."
The panelists also discussed whether consumers would be willing to pay for content multiple times so that it plays out on different devices. "If you try to charge me two or three times for the same thing, I'm going to go to piracy," Del Baccaro observed.
Green observed that people already pay for movies once at the theatre, again at a rental store, and again when it appears on cable. The trick, he and Sheeran agreed, was not to charge too much. —BRS