2004 was the first year in a string of 37 in which the industry did not gather for The Western Show, which hung up its spurs for good in December 2003.
The Cable TV and Broadband Expo
2004 is still live on the Web.
click on image to enlarge
Still, the industry had an opportunity to gather and talk about some serious tech. Instead of Anaheim, the location for this event was only as far away as your Internet connection. On Dec. 8 and 9, CED hosted the industry's first virtual tradeshow. The event, offered on the Web, drew more than 1,600 registrants. The live event welcomed about 1,000 unique visitors who spent an average of five hours visiting the pavilions and interactive vendor booths.
The show featured eight panels: High-Speed Data, Voice Services, On Demand/Interactive TV, and The Broadband Home. (Editor's note: A complete archive of the show is available at https://bb.unisfair.com.)
Have no fear…data tiers are here
Cable, DSL and other broadband providers are clearly embracing data tiering strategies. But why has this practice grown in importance over the last 12 months?
As high-speed data customer penetration grows beyond the early adopter stage, it is heading toward a larger group that is more price-sensitive. The trick, of course, is to figure out what will motivate them to take the broadband plunge, panelists explained during a session titled "High-Speed Data: Are you ready for tiers, or tears?"
That's important to realize, because high-speed data penetration is clearly driven by demographics and household income, explained Bruce Leichtman, president and principal analyst Leichtman Research Group.
But how much are consumers willing to pay to make the broadband plunge? According to LRG survey data, just 17 percent of narrowband subs interested in broadband would pay $45 per month. That figure more than doubles to 38 percent with a $30 price point.
DSL has clearly caught on to that trend and has emphasized lower pricing. But cable is responding with tiers of its own.
RCN Corp., among the most aggressive with tiering, launched a 3 Mbps tier in 2002, a 5 Mbps product last year, and, more recently, a 7 Mbps tier. Cox Communications, meanwhile, markets three cable modem products: an Entry Level tier (256 kbps symmetrical), a Preferred tier (4 Mbps down/512 kbps up), and a Premier tier (5 Mbps up/768 kbps down).
How those tiers are sold is just as important as the tiers themselves, said Winston Warrior, Cox's director of high-speed Internet marketing. Cox, for example, trains its CSRs to determine which product package fits the customer's needs by exploring their online behaviors.—Jeff Baumgartner
The broadband pipe: fill'er up
With consumer cable modem download speeds hitting 5 Mbps and beyond, operators are next figuring out how to fill those wider pipes with compelling content, panelists said during the "Taking High-Speed Data to the Next Level: Content" panel.
Broadband "opens up a whole new world for us," said William Allman, SVP and GM of interactive new media at Discovery Communications. Discovery's strategy is to use the Internet to offer extras derived from its lineup of linear programming. TLC, for example, offers "designer's cuts" of its "Trading Spaces" series.
ESPN has used broadband, mobile phones, TVs and videogames to bring the network's content "to the fans wherever they want to view it," said Tanya Van Court, the VP and GM of ESPN Broadband & Interactive Television.
This year, ESPN will roll out a new broadband product that shares the look and feel of a video control room. It will also contain personalization. If the service knows a user is a big Red Sox fan, it will have video or other content ready to go at sign-on.
Road Runner has tried to tap into this treasure trove of content with the launch of a new interface that provides users with easy access to a range of videos, images and even simple text. The trick is to make that interface simple enough for a newbie, but with enough bells and whistles for a techie, said Steven Cook, Road Runner's VP, broadband programming and ad sales.
But where's the money in this?
Advertising is the obvious, first answer. Discovery, for example, sells 30-second and 15-second spots on-air, but they are also applicable—and "clickable"—in a broadband setting. It is also mulling a "download-to-own" service. "We have 70,000 hours of video that we own, and [broadband] is a great opportunity for us to find out how the market might pay for that," Allman said.
One company that has solved the financial puzzle is RealNetworks Inc., which offers Internet-based services such as RadioPass, Music Store, Rhapsody and RealArcade.—JB
Interactive television doesn't necessarily mean VOD, but early indications show that it's very much in demand, panelists said during the session titled "Getting Active with Interactive TV."
Thanks to relative iTV vets like GSN, the cable industry is starting to get a clearer picture on iTV usage and business models. Roughly 85 percent of GSN's interactive viewers also interface with advertisers, according to company VP John Roberts.
Advertisers, of course, want eyeballs. Early studies of usage patterns are looking solid. In Hawaii, as much as 12 percent of Time Warner Cable's digital customers interact with GSN, and 75 percent play along at least twice per week, Roberts said.
ICTV Inc., which has gotten off the mark with deployments with Time Warner Cable and Grande Communications, has found that 78 percent of digital subscribers exposed to iTV use it at least once, and 88 percent come back to use it again. About 75 percent use it five times or more, said Jonathan Symonds, ICTV's VP of marketing and business development.
Another trend: usage patterns remain steady from 10 a.m. to 10 p.m., rather than spike up and down throughout the day like it does with traditional program ratings, Symonds said.
Insight Communications, which has been offering iTV for more than five years, has found that two-thirds of its digital subs use interactive service each month, said Charlie Barnes, the MSO's VP of interactive services.
Buzztime Entertainment, a trivia service, said recent tests with Time Warner Cable and Comcast Cable indicate that operators now feel that the technology is ready for more advanced trials, said Ty Lam, Buzztime's president and COO.—JB
Progressive cable operators are quickly discovering that a solid VOD lineup goes well beyond a slate of movies to include a suite of local content and advertising.
Buckeye Cablevision of Toledo, Ohio is a case in point. The 150,000-subscriber system features traditional VOD, but also includes subscription VOD and free VOD, and recently added a wide range of locally produced content as well. The operator invested in three mobile production trailers and launched the Buckeye Cable Sports Network. It produces between 15 and 20 events, on average, per week, said CTO Joe Jensen, who spoke during the "Tomorrow's VOD Today" session.
"We've shown everything from Ohio State basketball to the local Cub Scout Pinewood Derby finals on that channel," Jensen said. It's that type of localism that has created a buzz in the community and helped Buckeye differentiate itself from competitors like DBS.
Indeed, targeted and telescoping ads (those that offer a viewer to "click" to see more information and then provide access back to the original program) will become a staple of the near future, predicted John Connelly, executive VP of marketing and business development at BigBand Networks.
Ads are already evolving from the traditional 30-second broadcast into long-form ads, and narrowcast ads designed to reach only those who are most interested in particular products. As such, Connelly argues that the best approach to accommodate an ever-growing slate of programming is to adopt the switched broadcast network architecture, which better uses available bandwidth.
Forty percent of all TV viewing will be non-real-time, agreed Stephen Becker, executive VP of marketing and business development at N2 Broadband. He argued that open interfaces will be key to making the technology more affordable. Why? Open interfaces allow operators to mix-and-match hardware, and leverage better pricing and higher levels of innovation, he said.—Roger Brown
During the panel session "Making Sense of the Home Networking Explosion," the consensus leaned toward a continued diverse—and potentially confusing—market, with no one-size-fits-all home networking technology. "We believe that there are going to be multiple technologies that will win out, and eventually there will be multiple technologies servicing multiple devices in the home," said Matt McRae, director of broadband products at Linksys.
Ucentric Systems' CTO Carlton Sparrell agreed, saying the key was to focus on the services delivered, not the network technology. That also goes for the devices, as operators are coming to realize that video content can be distributed into additional outlets in the home.
Given the fact the main home networking devices will not be portable handhelds is an important advantage for wired technologies such as Ethernet over cable. That is especially true of video content, noted Ladd Wardani, VP of business development and co-founder of Entropic Inc.
Of the people attending the virtual trade show "there is probably nobody that can tell me that they are watching video anywhere other than off of a coaxial cable in their house," said Wardani, who also is president of the MoCA consortium backing the technology.
Even more prevalent than coax in the average home is the electrical wiring system, and that is the target for HomePlug powerline players such as Intellon Corp. With the HomePlug 1.0 standard already represented by numerous home networking products, the industry is now awaiting the completion of HomePlug AV, due out in 2005. That standard will be key, given it will support greater throughput for video and multimedia file sharing.—Karen Brown
With cable operators falling over themselves to roll out voice-over-IP services these days, the issue of how to knit together a coherent backbone network produced several bits of advice from experts in the panel session "VoIP: Putting Some Muscle in the Backbone."
While cable operators may be interested in creating a more efficient VoIP conduit, that probably won't result in an IP voice-only network, noted Phil Jackson, vice president of business development at Level 3 Communications Inc.
"It certainly seems very unlikely that voice would normally have sufficient traffic to justify a stand-alone deployment, so in building a network we typically have to consider the requirements of data, voice and video," he said.
Cable operators also need to think about the type of VoIP service they field and how it differentiates from the standard switched phone service most people still use, according to Tom Kershaw, VeriSign Inc.'s vice president of VoIP services.
"The reality is if all we are trying to do is just the same old thing but over a packetized network, then we might as well just stick with what we have," he said. "So the real key to this is not just to drive cost out of an existing solution but to build a new form of communications with these services."
To get to that point, operators need to fill in some missing pieces to allow VoIP services to flow from caller to receiver over an entirely IP connection.
In many IP backbone systems, session border controllers are used to govern this handoff. As a provider of these controllers, NetRake therefore sees a place for its products in creating a logical traffic flow, noted NetRake CTO Robert Maher.
The session control "really eliminates the need for gateways or PSTN access in every single zone," he said. "The border controller manages sessions between trusted and untrusted boundaries and domains, and it proxies all of the CMS to CMS communication."—KB
VoIP: In-house or off-the-shelf?
Cable operators interested in tapping into the lucrative voice services market are essentially faced with two, basic decisions: to build the network infrastructure and add on the piece parts needed to deploy voice; or contract with a turnkey third-party vendor who can do it all for them.
The first thing a cable system operator should do is honestly assess the market and customer needs, then balance that against the cable system's resources and skill set, said Mark Dzuban, vice chairman at Cedar Point Communications, who kicked off the "Home-grown or store-bought: How to get into the VoIP game" session.
The advantages of "buying" a voice service from a provider like Sprint or Vonage are obvious: faster time to market, simplicity of deployment, lower capital costs, managed e911 and CALEA, as well as minimal "system integration" risk.
On the other hand, building a network improves the cash flow and margins, gives an operator better pricing flexibility and branding control, among other things, Dzuban says.
Regardless of which approach is taken, 2005 will be an "active year" as cable operators ramp up voice deployments to help fend off competition, said Mike Smith, Director of Business Development for Sprint Corp.'s Cable Solutions business unit. He further predicted that cable operators will garner a "meaningful share" of the market.
Smith adds that a major attraction for cable operators is the prospect of adding a wireless telephony product as well—an approach Sprint is encouraging.
Meanwhile, there's also a role for Internet-based, best-effort voice services like the one provided by pioneer Vonage, noted Phil Giordano, the company's VP of business development. The "true" Internet telephony provider has helped prove VoIP's business case by signing up more than 300,000 users in just over two years.
For cable operators, Vonage offers a turnkey private label deal and sells the service for roughly $26 a month. Consumers are drawn to Vonage because they can choose which area code they want, they can access their accounts via the Web and they get a full suite of calling features as well.—RB
The growing importance of cable's relationship with the consumer electronics sector took center stage during the "Broadband Nuptials: Cable and the Consumer Electronics Industry" panel.
But when it comes to high-definition television, seeing is believing. However, it's difficult to understand how good HD can look if the source material isn't offered in all of its hi-def glory. That's been a top marketing challenge for consumer electronics stores—they sell HD sets, but they don't often have the rights to show HD video.
"It's hard to sell a $5,000 HD set when [the seller] is not using native HDTV content," said Leslie Russell, VP of sales and marketing for the Comcast Media Center.
To stem that issue, the Comcast Media Center embarked on a 60-day "narrowcasting" pilot last year, delivering a customized HD feed over satellite to a number of SoundTrack stores.
According to Russell, the pilot doubled the conversion of customers who bought HD sets during the timeframe of the pilot. Additionally, 74 percent of the customers noticed the in-store display, and 38 percent said the program influenced their decision to buy Comcast's HDTV offering.
Another CE-related hot topic for cable is Plug & Play, an FCC-approved agreement for unidirectional set-top-free Digital Cable Ready (DCR) televisions.
A primary component of that agreement is the CableCARD, a removable security module that plugs into the set and provides the customer with service authorization. Cable operators were mandated to stock CableCARDs and make them available as of July 1, 2004.
Charlie Kennamer, the vice president of digital engineering at Comcast Cable, likened the date to a "non-event" because, as expected, cable operators were not suddenly flooded with Plug & Play devices. In fact, cable operators were probably the best customers for such devices in the early going.
"For the first time, we were dependent on a device we may not have ever seen until we entered the consumer home," Kennamer said. "We had no specific knowledge [of the set], unlike a set-top, which we're very familiar with."
And that bred some initial operational glitches. In some cases, TV manufacturers had to download patches to non-performing CableCARDs. Operators, meanwhile, spent hours on some installs. The cable and CE manufacturers have ironed out many of these problems since, Kennamer said.
To harness the power of retail, cable must be aggressive. "Don't wait for people to ask for the CableCARD," said William Luehrs, corporate EVP & president, Americas, at Advanced Digital Broadcast (ADB), a digital set-top vendor.
The next step in the Plug & Play evolution is a two-way agreement that supports services like impulse pay-per-view and video-on-demand. Although talks on a final agreement remain sluggish, it's expected that it will be supported by OCAP.
OCAP "is intended to create an open environment at retail so CE companies can compete," explained Timothy Wahlers, CEO of Vidiom Systems, a leading OCAP developer. With more of the CE braintrust in the mix, it's also expected that OCAP will speed up product development and innovation, he added.—JB
For the full, unedited version of this article, see this month's issue at www.cedmagazine.com.