As cable operators begin to grapple with competition from myriad sources, one thing has become abundantly clear: they have to effectively market their service. When cable was the only game in town, marketing took a back seat to network operation and maintenance; with deregulation came competition — and to stay one step ahead, cable systems have to tout their advantages and educate consumers.
As a result, some cable systems are re-thinking an old concept: whole-house service. With it, a cable operator can offer the entire spectrum of video channels, data services and music without a set-top box. This is appealing because TV/VCR combinations are easier to wire, consumers can use their own remote controls, and features like picture-in-picture are restored.
Consequently, systems like interdiction and broadband descrambling schemes are getting a new look from companies that may have dismissed the very same technology just a few years ago.
James Reynolds, president of Mid-Hudson Cablevision in New York, is one new convert. "Quite frankly, we were nervous back around the time we decided to go with interdiction because there weren't that many people using it," he says. "And the economic model doesn't make sense to an accountant when he compares it to an analog set-top model, but interdiction is a good competitive weapon against services like DirecTV."
Reynolds currently has about 200 miles of his 600-mile hybrid fiber/coax plant interdicted and has been using the technology for about 18 months, he says. In addition to reporting greater pay lift, a reduction in piracy, tremendous operating cost savings and reliable hardware, Reynolds says his customers are ecstatic.
"I never realized how many subscribers think set-tops are a nuisance," he says. "I didn't think they'd care that much how the signal was delivered to them."
By being able to remotely turn service on and off, Reynolds has been able to redeploy his service staff to upgrade and troubleshoot the plant instead of doing installs and downgrades, too. "The full suite of interdiction's benefits don't become clear until after it's installed," he says.The "old" story
Industry veterans will recall that interdiction achieved some minor success several years ago in places like Williamsburg, Va. and Elgin, Ill., when Warner Cable and Jones Intercable trialed the systems. Consumers gave the technology a "thumbs up" because of its convenience, and the operators reportedly enjoyed reduced maintenance and service costs because the system was 100 percent addressable and therefore remotely configurable.
But three large obstacles, other than simple inertia, conspired to keep interdiction from supplanting the ubiquitous analog set-top.
First, the hardware was more expensive, per home, than a set-top. It was also necessary to cover an entire service area with the system, as opposed to the "pay as you go" approach that set-tops offered. In other words, an operator had to spend capital on every home he passed, whether the home subscribed or not.
Second, the system required significantly more power to run than a traditional system. With an interdiction unit that serves several homes, the operator not only needed more power supplies than a conventional system, but he had to foot the bill, too.
Finally, and perhaps most importantly, MSOs were enjoying significant revenue from remote control rental and additional outlet charges. In the case of large operators, remote control rental revenue amounted to tens of millions of dollars annually and would be reduced to zero if interdiction was installed.
As a result of these factors, plus a few others, the technology never caught on beyond a few niche applications like multiple dwelling units, hotels/motels and other highly transient areas.
"The 'old' interdiction story was that it was consumer-friendly, it saved operators (operating) expenses and eliminated the possibility of pirate boxes," recalls David Alsobrook, director of interdiction for Scientific-Atlanta. "The key roadblocks were its high capital costs and the remote control revenues."
Today, the technology hasn't changed much — number of other things, including market forces, have.
Most MSOs now have more addressability in their systems than they did at the beginning of the decade. Also, operators are installing, on average, 1.8 set-tops in every subscribing home, according to Alsobrook. Combine that with some technology updates (more passband and the ability to scramble more channels) and a pricetag that is actually less than it was five years ago, and suddenly, interdiction makes a compelling economic story. "That's a huge, huge swing factor," notes Alsobrook.
Although the arguments for interdiction are perhaps more compelling than in the past, the fact is that it doesn't work everywhere. The economics play out best in areas of high density, including apartment complexes and other MDUs.
Already, several private cable companies are buying into interdiction as a way to distinguish themselves from both traditional cable TV and DBS providers, says Bob Palle, executive vice president at Blonder-Tongue, the New Jersey-based manufacturer that competes with S-A in interdiction. "These companies have systems that are separated by many miles of 'drive time', and the economics of interdiction blow everything else out of the water."
After finding success in the private cable industry, Blonder-Tongue is preparing to evangelize on interdiction's benefits to traditional cable operators, where the same economics can play out in some locations. "We want to say in a very loud voice that we're ready to deliver our system," Palle says.
To prove his point, Palle notes that Pacific Bell Video Services chose B-T's interdiction system over similar technology from both S-A and AT&T (now Lucent) following a thorough evaluation. And although it appears PacBell's video plans have been halted pending the merger with SBC Communications, the contract provided a huge shot in the arm to the company.
B-T has also found success in the private cable market, deploying systems to about 18 operators of varying sizes, including Cable Plus Co. of Washington, which just signed a five-year, multi-million dollar order. Why are they signing on? Because those operators have to compete with established traditional cable operators, and they need a differentiator. Interdiction, with its customer-friendly features and addressability, provides the competitive leg-up those operators need, Palle says.
Palle and his crew are now hoping for a chance to prove themselves to a traditional cable MSO. "If the people sit down and really listen to what we have to say, we have a fighting chance," he notes.
As for the technology's detractors, Palle has a few responses:
- Regarding power, he concedes that the units do need power to run, but notes that with side-of-home units, the consumer pays for it.
- Unlike his competitor's product, Palle says his company's system is a unity gain device and is therefore less intrusive and simpler to install because it doesn't require a complete system rebuild.
- Is the system prone to theft because signals are sent in the clear and then denied at the port? "This makes me laugh," Palle says. "You'd have to invade the feeder lines, and that's a pretty brazen thing to do. That seems pretty far-fetched to me."
"I don't think any of those arguments make sense anymore," sums up Palle.Broadband descrambling
A technology that offers similar benefits, yet is radically different was shown in Motorola's booth during the National Cable Show in March. Dubbed "HomeClear," the system provides each home with the full spectrum of services, but unlike interdiction, scrambles each channel at the headend (see sidebar).
Based on technology from Multichannel Communication Sciences Inc., Motorola's system is presently being field tested to a small number of homes in Time Warner's nearby San Diego cable system. Although the test will soon be expanded to include more homes, it shouldn't be assumed that Time Warner is ready to purchase the technology, says Roger Kramer, vice president of engineering in San Diego.
However, that doesn't mean the MSO isn't interested, either. In fact, Kramer says such a system would be beneficial for serving large apartment complexes. "The technology has proven itself," says Kramer. "There are no technical impediments" to using it, he adds.
"There's a demand for a consumer-friendly approach," agrees Jeff Huppertz, director of broadband video systems in Motorola's Multimedia Group. "And operators want to solve that in a way that makes sense, even with a digital set-top."
Huppertz describes operators as quite interested in the whole-house concept. "The response (to HomeClear) has been very solid," he says. "We're finding that cable operators are being very careful and examining just how it could fit into their overall strategies."