Broadband 50 - December 2004
Take your seats ringside, and welcome to the fourth edition of CED’s Broadband 50, our list of the broadband champs and top contenders–the companies, technologies and people who we think have shaped and influenced the broadband sector in 2004, and those who are challenging to do so in 2005.
In a new twist this year, each item on the list is accompanied by a +/- marker to tell you how many spots a particular company or technology rose or dropped in the rankings since we went through this process a mere 12 months ago. The icon will tell you if a particular item is new to the list.
Back again is Area 51, a place reserved for those just on the cusp of greatness or still in the “alien technology” category. As in years past, the 2005 installment was assembled (and championed by) the editors of CED. If you think we missed the mark on something, just drop us a line and we’ll be sure to share your thoughts in an upcoming issue.
1. Comcast Corp
Still No. 1
Comcast was number one last year, and it is number one this year. Its not because we lack imagination, but rather because there is no getting around Comcasts massive gravitational pull in the cable universe. Not only did it successfully swallow AT&T Broadband with less operational indigestion than seen in past major cable mergers, but now it also is eyeing an aperitif as Adelphia Communications unwinds..
On the content side, Comcast recovered from its failed bid to buy Disney by joining Sony Corp. in a coalition that bought Metro Goldwyn Mayer for $2.9 billion. For its reported $300 million investment, it gained access to Sony and MGMs combined video libraries, potentially boosting its VOD offerings from 1,500 to more than 10,000 hours of programming.
2004 also saw Comcast roll out video-on demand to about 80 percent of its markets, and it supplied about 200,000 HD set-tops to customers in the third quarter, the latter backed by a growing lineup of local and network HD programming.
Comcasts high-speed data business saw a record third quarter, pulling in a whopping 549,000 customersthe highest new sub count ever posted for the MSO. It also is making its presence known in various home networking technologies, backing the Multimedia over Cable Alliance (MoCA) as well as joining the board of the HomePlug powerline networking group. And it has reunited its cable telephony plans, with Voice-over-IP trials under way in at least three markets. Karen Brown
2. Time Warner Cable
Everything across the board
Now that the company has recaptured its name and is getting its financial house in order, the nations second-largest cable operator is quietly going about its business. That may not sound like much, but when Time Warner Cable goes to business, it goes full-bore. Last year, we wrote about how the company was aggressively rolling out VOD across all its divisions, complete with high-definition content and, in many cases, with digital video recorders as well.
We also alerted everyone to TWCs impending massive rollout of VoIP, perhaps a key linchpin to the long-awaited foray into voice services by cable operators.
Now, the rollout has begun. And true to Time Warners across the board strategy, the service is slated to appear in every division the company has.
Not to be left behind, the company has kept pace with others in the high-speed data tiering world, having upped the speed of its RoadRunner service.
And finally, the company threw its weight behind OCAP when it announced it was working with Comcast to develop the middleware through an organization called OCAP Development LLC. Roger Brown
3. EchoStar Communications Corp.
Dishing out competition
The cable industrys most visible foeif not the one with the most subscribersEchoStar Communications Corp., continues to bedevil cable operators. After recovering from a protracted programming squabble with Viacom Inc. earlier this year, EchoStar has bounced back, adding some 350,000 subs in the third quarter as it continues to eat into cables customer base. The Dish Networks popularity is reflected in the annual J.D. Power and Associates annual Residential Cable/Satellite TV Customer Satisfaction Study, which this year put EchoStar at the top of the provider heap.
Technology-wise, EchoStar is also putting pressure on cable operators. This year it rolled out the DISH 322, a two-tuner set-top that can funnel programming to multiple TV sets in the homethereby torpedoing one of cables competitive arguments against the satellite service. It also has been steadily adding local programming to markets nationwide, with the count standing at 151 markets, at last check.
And it continues to cozy up to telco providers eager to add video to their cable-competitive bundles. Although it dropped plans to partner with flawed Qwest Communications International, it has maintained a healthy partnership with SBC Communications Inc. and CenturyTel, and most recently added Pennsylvanias deal with Commonwealth Telephone Enterprises Inc. to the list. KB
4. News Corp.
Ruperts Death Star, redux?
While moviegoers cheer the return of Darth Vader at the summer 05 premiere of Star Wars Episode IIIRevenge of the Sith, cable operators will be doing just the opposite when News Corp.s DirecTV moves ahead with its interactive version of the Death Star.
With DirecTV in hand, Rupert Murdoch finally fulfills the wish he could not complete years ago with EchoStar Communications: A U.S. DBS service he can call his own. The only question heading into 2005 is not whether DirecTV will be aggressive with iTV, but what form it will take. Many are wondering if DirecTV will simply use OpenTV software to clone most of what has been done with BskyB, and apply that to the U.S. market, or embark on a different path. JB
Fibers big dog
While the fiber-to-the-premise (FTTP) movement has enjoyed some onesie-twosie deployments in recent years with small, independent telcos, Verizons decision to roll it out to 3 million homes by the end of 2005 has given the technology the legitimacy it has coveted.
The reasons behind Verizons fiber ambitions are obvious. It, like other telcos, live in fear that their bread-and-butter business (telephony) will be stolen away by cable operators and other competitive forces. With fiber, Verizon hopes to turn the tables with video services, thanks in large part to a set-top and headend relationship with an old hand in the video biz: Motorola Broadband. Jeff Baumgartner
Video on deck
If Verizon (see #5) is the telecom bellwether, SBC cant be far behind. This RBOC is a formidable force, and can define markets all by itselfwhich is a scary thought, now that the company is beginning to shed some light on its broadband strategy.
The key part of that strategy is Project Lightspeed, its multi-billion dollar fiber network development, over which it plans to launch an IP television service in late 2005, according to company executives.
The companys accelerated deployment plan for the fiber network calls for reaching 18 million households (or roughly half its serviceable homes) by 2007, with capital expenditures projected to be $4 billion. SBC execs said that the company intends to become the second-largest video provider in its fiber footprint within the next five years by capturing 20 percent marketshare. Hows that for ambition?
And SBC is banking on huge returns. Video alone is expected to generate at least $550 million annually, and the company intends to garner a 50 percent data market share, with revenues increasing by nearly $300 million in 2007. RB
7. Cox Communications
Pretty good privacy
Cox is in the process of going private. Thats apparently going to result in some good financial news for the companys shareholders. It might not serve as great news for us humble journalists. Thats because Cox, as a private entity, will no longer have to reveal whats under those financial britches every quarter...or have a financial motive for showing off the great work it is doing until after products are ready to be rolled out and marketed.
Our feeling, however, is that Cox, even a private one, will continue to be a leading voice for the cable industry, if history is our lesson. It has shown the industry the power of the bundle, has been the poster child for successful cable commercial services, and has created a guiding light for cables early entry into telephony.
Next, well be keeping our eyes on Coxs interactive television plans, led by its interest in the so-called OnRamp to OCAP, a middleware platform for legacy, pre-OCAP digital boxes.
We can only hope that the company will choose to be as sharing in the future with the press and its cable colleagues, as it certainly has been in the past to the benefit of all parties. JB
8. Scientific-Atlanta Inc
The overlay play
Motorola may have been the big winner in the Verizon fiber-to-the-premises sweepstakes, but Scientific-Atlanta is well positioned to steal some business from its primary set-top and headend rival.
S-A is also doing what it can to make people forget about Sony Passage as an option for a second conditional access (CA) system.
With overlay, S-A has created a way for cable operators to deploy Explorer set-tops, including those outfitted with digital video recording and high-definition capabilities, on cable systems originally based on Motorolas CA or anyone elses CA, for that matter.
At press time, Time Warner Cable was the only MSO to announce overlay deployments, but its clear that other operators are interested in the technology, as well.
S-A is also a strong player on the transport networkeither through in-house innovation or via partnerships. On the commercial services end, its BroadLAN platform will also enable cable operators to run lucrative T-1 services over their HFC plant.
So, whats next? S-A has opted to stay on the leading technology edge by investing in and partnering with other vendors. But we wouldnt be surprised to see S-A take a cue from C-COR Inc. and go an on acquisition binge of its own to fill any holes in its technology portfolio. JB
9. Motorola Inc
Cable, telco, wireless, whatever
While it suffered setbacks in the delay of its two-tuner HD DVR as well as backing away from a digital TV development deal with Moxell, Motorolas Broadband Communications Sector is still humming along nicely in 2004.
This year, Motorola took a significant step toward supporting all-digital with the introduction of the DCT-700, a sub-$100 box that sports only a digital tuner. Canad-ian cablers, including Cogeco, have latched onto the box, and other MSOs are considering it as a possible means to support future all-digital programming packages.
An upswing in digital set-tops also supported a 31 percent jump in third-quarter revenue for Motorola Broadband, which shipped 400,000 HTDV set-tops and just shy of 200,000 HD DVR boxes.
It also is active on the telco TV front, most notably inking a deal with Verizon Inc. in November to supply headend equipment and digital set-tops. After buying Quantum Bridge, Motorola also is keeping its finger firmly on FTTPs pulse.
On the data side, Motorola also maintains a healthy lead in cable modems and embedded multimedia terminal adapters. It also is distributing the Ojo video telephone for WorldGate Communications.
And lets not forget Motorolas other little side business in cellular telephones. Motorola has created a Seamless Mobility Initiative that bears watching, as it mixes wireless with Wi-Fi and wired systems that could open a new wireless service option for cable operators. KB
10. Liberty Media
What the @&$# is Dr. Malone up to now?
It is sometimes hard to tell exactly what John Malones Liberty Media is up to, but this media octopus has so many tentacles intertwined throughout the cable and television food chain that it exerts a major influence overall.
After an acquisition spree, it now holds a significant interactive TV presence in OpenTV, and that gained even more oomph with the addition of former Time Warner Cable and MystroTV maestro Jim Chiddix as its chairman and CEO. This year OpenTV inked major deals with Motorola Inc. and Sky Italia, and it settled a tiff with Disney Corp. inherited from its ACTV acquisition, including a licensing arrangement with the movie and entertainment outlet.
Liberty also was busy refining its holdings, starting with the January acquisition of a 9.15 percent voting interest in News Corp. In November it initiated a bid to increase that stake to 17 percent, prompting rumors Liberty would seek a hostile takeover.
In July it swapped assets with Comcast, buying back 120.3 million shares of its common stock from the MSO in exchange for shares it held in Encore ICPP Inc., which oversees E! Entertainment Television, International Channel Networks and TCI Music assets.
Elsewhere in programming, Libertys stakes in Starz Encore Group LLC and Discovery Networks continue to bear fruit.
The breadth of its international holdings now concentrated in spinoff Liberty Media International is also impressive, ranging from Japanese broadband provider Jupiter Telecommunication Co. Ltd. to Telewest Communications in the United Kingdom and satellite operator UnitedGlobalCom. KB