CED's Broadband 50: The Biggest Deals In Cable
You take your chances with Howie Mandel, but with the eighth Broadband 50, it’s nothing but winning deals – the 50 most important trends, technologies and people of 2008. And we guarantee most of them are going to remain highly pertinent right into 2009. An exhaustive list of candidates is compiled by CED’s seasoned scribes. We share that list with our panel of consulting engineers – about as eminent a group as you could wish to find in the cable industry – and with their input we pare down the list and rank those who make the cut.
Here they are, CED’s Broadband 50, (1-25). Enjoy. See (26-50 here ).
1 DOCSIS 3.0. The gloves? Off.
DOCSIS 3.0-powered broadband services got out of the starting blocks this year with deployments by J:Com, Vidéotron, and then Comcast.
J:Com is said to be kicking telco butt in Japan with 3.0, but in the U.S., the approach is far more measured. The Big Rollout isn’t really going to start until 2009.
This year started with Comcast CEO Brian Roberts pledging to have DOCSIS 3.0 enabled in 20 percent of its footprint by year’s end; word is it may exceed that goal.
Comcast rolled out wideband, channel-bonded services first in the Twin Cities of Minneapolis/St. Paul, and then in its New England region, parts of New Jersey and its home base of Philadelphia. Comcast competes with both Qwest and Verizon in the above regions, and it makes sense to deploy the faster tiers where competition is keen.
DOCSIS 3.0 can achieve downstream broadband speeds of up to 160 Mbps by bonding 6 MHz – or in the case of Europe and some parts of Asia and Latin America, 8 MHz – channels together.
Current requirements for DOCSIS 3.0 call for equipment to support channel bonding on at least four upstream and four downstream channels, although the platform gives operators the flexibility to bond as few as two channels to meet market needs and competition.
Also of note this year: In May, the first group of cable modem vendors made it through CableLabs’ DOCSIS 3.0 certification wave after none made it last December. – Michael Robuck
2 Targeted ads: No more identity crisis
Targeted advertising is looking more and more like the endgame for video providers. More and more, the television set is starting to look and feel like the instantly gratifying Internet. And the Googlicious method of targeting advertisements to consumers based on their demographics, as well as their search and page-viewing habits, has inspired the reality of targeting TV viewers similarly, down to specific set-top boxes – even down to guessing which family member is probably sitting in front of that box.
This reality is thanks, in large part, to the tru2way technology (see #15). Meanwhile, Canoe Ventures (see #6) is working on making the still-fragmented cable market look like a monolith. What can make fractious MSOs play nice? Their cooperation is thanks, in large part, to the revenue opportunities that cable ops know this technology will bring, the revenue that has recently been funneled to the Web.
As we keep hearing, consumers want what they want, when they want it, and advertisers want to reach consumers wherever they are, and whenever they’re there. And this makes targeted VOD advertising particularly coveted – especially since for the first time, in terms of a disruptive technology, every constituent in the value chain benefits. – Traci Patterson
3 nDVR. Go. Stop. Go. Stop…
Networked DVR was proposed by Cablevision, nixed in court in 2007, but revived by an appeals court in 2008. If the Supreme Court in 2009 agrees that networked DVR (aka remote storage DVR) is legal, then nDVR could be a godsend.
Instead of distributing set-tops integrating expensive hard drives prone to mechanical failure, service providers could forgo expensive DVR boxes in favor of comparatively simple and inexpensive set-tops, and still provide all the benefits of a DVR.
Legal constraints dictate a remarkably inefficient implementation. No matter how many subscribers buy access to a single title, a service provider will be compelled to store a separate copy per subscriber. From a technological standpoint, that’s idiotic, but if that’s what it takes to make the system allowable, then hallelujah, storage is cheap and always gets cheaper.
Cablevision says it’s been getting its systems ready to rollout the capability since the appellate court ruling, pending the Supreme Court decision perhaps as early as January. Time Warner Cable is poised to follow – the infrastructure that supports Start Over should be able to support nDVR pretty quickly and easily. The economics are so compelling, other operators will almost certainly follow suit as soon as they can. – Brian Santo
4 Customer retention: Spreading the love
The bigger the bundle, the stickier it is. That’s wonderful when stealing customers away from a competitor, but the flip side is that customers lost tend to stay lost. Win-back is possible, though the process can be breathtakingly expensive; we’ve heard estimates that it costs eight times as much to attract a customer who’s strayed than it does to entice a new subscriber. Retaining customers is now an active endeavor.
Competition is creating a new impetus to not cheese off subscribers, or, in the case of some cable companies, to stop cheesing off subs. That means service providers, who of late have been emphasizing the introduction of new services and technologies, are shifting some of their attention back to operations.
That includes plant monitoring and maintenance, service technician training and monitoring, improved test and measurement, pushing CPE vendors to make provisions in their products for monitoring and control, and network monitoring for quality of service (QoS) and quality of experience (QoE). It’s desirable to play good offense and good defense.
And yet, glitches happen. And sometimes customers are simply determined to be disgruntled. In response, rival MSOs and telcos are instructing their call center reps to do everything within their power to keep customers. – BRS
5 Digital transition: Oy vey!
It’s almost here! But not almost over.
Anticipating a mess, the American Cable Association (ACA) has been lobbying arduously for months for a “quiet period” for carriage negotiations between cable ops and broadcasters during the transition.
In early November, FCC Chairman Kevin Martin supported a rulemaking to establish one. But Martin favors a start date in mid-January, a few weeks after Dec. 31, the expiration date for thousands of current broadcast carriage deals, leaving the industry open to carriage disagreements and possible service disruptions.
And this on top of the reception and technical complications that are expected (any hollow or hill has the potential to defeat a signal), and all of those consumers that are still unaware that in some cases a converter box alone isn’t going to be enough – and that is assuming they’re aware of the transition at all.
And what about all of those over-the-air consumers that cable expects to snag? It will be interesting to see how it all plays out. And it’s almost here! – TLP
6 Canoe makes a splash
With former ad agency wunderkind David Verklin at the helm, and former Bright House Networks exec Arthur Orduna signed on as CTO, Canoe Ventures is now ready to run the uncharted waters of creating a massive advertising platform.
Canoe Ventures officially formed in June, while CEO Verklin started work in the Manhattan headquarters on Aug. 4.
Verklin and Canoe Ventures are working on a plan to create a nationwide platform for addressable, or targeted, advertising (see #2), which should in turn stem the flow of advertising dollars to the Internet. Canoe Ventures will not only benefit cable operators, but also programmers, ad agencies, and even the consumers in front of the TVs who might actually want to watch ads specific to their interests.
Bright House Networks, Time Warner Cable, Comcast, Cox Communications, Charter Communications and Cablevision reportedly put $150 million toward Canoe Ventures when it was first conceived as Project Canoe more than a year ago.
While earning back some of the advertising money that has been bled off by the Internet is a goal worth pursuing, Canoe Ventures does have a lot of ducks to get in a row before it can cash in. – MR
7 DTAs: Let ‘em dongle
OK, raise your hand if you knew what digital terminal adapters (DTAs) were at this time last year?
The industry as a whole seems to know about DTAs now, particularly after Comcast became smitten with the devices that allow it to convert digital signals back to analog by connecting them to TV sets.
Comcast is relying on the adapters to reclaim spectrum that is currently being used by analog video subscribers. The DTAs are a cheaper alternative to digital set-top boxes, but while they convert the digital signals back to analog at the TVs, they don’t provide other digital cable features such as video-on-demand (VOD).
As we all know, cable operators are looking at going all digital to reclaim bandwidth in order to offer more high-definition (HD) channels, or to enable DOCSIS 3.0 wideband deployments.
Comcast has DTA deals in place with Thomson, Motorola and Pace Micro Technology.
Cable operators can reclaim between 250 MHz and 300 MHz in each system that goes all digital. If a typical cable system has 79 analog channels and the operator decides to move 59 of those channels to digital, while perhaps leaving 20 or so as a life-line analog service for some select markets, it would reclaim 354 MHz. – MR
8 Home networking: Gimme shelter
Consumers want it, but no single approach cuts it in all situations. The cable industry crowned Silicon Image’s approach of embedding connectivity in CE the best product idea at CableLabs’ summer Innovation Showcase. Tony Werner, Comcast’s CTO, has said that if all goes right (which it rarely does), Silicon Image products (what the cable industry considers “the HDMI of multi-room connectivity”) would be ready for field trials late in 2009. So far away! And still to be completely fleshed out are content security, interoperability issues and a common industry vision.
Cable might want to hurry. Verizon is using MoCA and deploying its whole-home DVR, and AT&T’s rollout of its Total Home DVR is already complete.
Meanwhile, keep an eye on the ITU; it’s doing something hush-hush that may turn the whole HN segment on its ear. – TLP
9 Cablevision: New York ’tude
Okay, so the Dolans couldn’t quite pull off going private. So what? They’re still getting away with laying out millions as they follow their own path, and what an interesting path that is. You can practically hear Fleetwood Mac wailing “Go Your Own Way” in the background.
Cablevision is championing networked DVR (see #3) all the way to the Supreme Court. The company is standing up to FiOS.
It’s beginning to blanket its area with Wi-Fi, at a cost of $350 million. It instituted a scheme to provide movies on VOD on the same day they come out on DVD (buy the movie online, and you can get the film on-demand before the disk shows up).
Cablevision’s beefing up its content arm, having purchased the Sundance Channel for $496 million. In an era when some pundits (not us) are declaring the Death of Print, Cablevision bought Newsday for $650 million and is experimenting with ways to make ads in cable and in print amplify each other.
Its business services operation, Optimum Lightpath, is humming and just purchased a New Jersey fiber network company to extend its reach.
The Rangers are winning and – hold on to your hats – as of this writing, the Knicks are a playoff possibility.
Sell to Time Warner Cable? Nuh-uh. The Dolans are having way too much fun. – BRS
10 Google: It’s Googlicious
Competition in the communications industry is typically framed as cable versus telco, with satellite companies hanging around to make things interesting. But Google is out there, and if targeted advertising is the endgame, these guys are pulling a nifty little end-around.
They’re already doing targeted advertising with Internet search. The company was preparing to do it on YouTube, and then it recently came out that some studios are looking to put full-length movies – complete with ads – on YouTube.
Plus Google’s got the Android OS, which got designed into several mobile phones that began to hit the market this year. Android, of course, supports advertising, and with mobile phone users you’ve got the perfectly defined target, inasmuch as you can be certain you know who’s using it – and furthermore, you can practically guarantee that user is paying attention.
And Google’s not stopping there – it’s one of the major investors in the Clearwire that Comcast, Time Warner Cable and Bright House are also supporting.
That’s the insidious thing about Google. They play nice. They’ll collaborate with anybody the Justice Department allows them to (sorry, Yahoo). They don’t want to own everything. They just want to take a small percentage of whatever they’re doing, aware that a wee percentage of billions and billions of transactions adds up nicely. – BRS
11 You down with VOD? Yeah you know me!
To paraphrase an old car commercial, it’s not your father’s video-on-demand service anymore. Thanks to standards such as SCTE 130, VOD is poised to make money for cable operators through dynamic pre and post rolls, as well as addressable and telescoping ads.
And this year also marked the debut of a VOD service from DirecTV, as well as more increased competition between cable operators, satellite and telcos on HD VOD offerings.
Also this year, Comcast reached its stated goal of offering 1,000 HD VOD choices before the year was out. – MR
12 CE and cable: Odd bedfellows
It doesn’t look as though the Consumer Electronics Association and the cable industry will ever be BFF, but there did seem to be a thawing in the relationship this year, starting with Comcast President and CEO Brian Roberts being invited to the CES show as a keynote speaker.
Several major consumer electronics companies more than warmed up to cable when they signed a memorandum of understanding (MOU) to use cable’s tru2way technology, including: Sony, Samsung, Panasonic and LG Electronics. On the cable operator side, Comcast, Time Warner Cable, Cox, Cablevision, Charter and Bright House Networks also signed the MOU to support tru2way. – MR
13 DBS: Pushing limits
DirecTV, which in 2008 became the first video service provider to offer 100 HD channels, is indirectly responsible for pushing the HD liftoff button last year when it said it would have 100 HD channels by the close of 2007 (um, it came close). Dish Network also announced a first this year: The first video service provider to offer all-MPEG-4 programming. The satellite ops’ VOD can’t compare to cable, but it does work, and so far they are outpacing cable ops with iTV apps, and they still pose a threat by partnering up with telcos. Satellite sub counts may have been down in Q3, but that doesn’t mean that cable can count satellite out. – TLP
14 FiOS: Formidable
Dish and DirecTV are not to be taken lightly, but when it comes to full-bundle competition, there hasn’t been much until FiOS. FiOS is successful, and Verizon cannot roll it out fast enough. The EBIF feature Verizon stealthily introduced for the Olympics (written by Ensequence) was nifty, and Verizon promises more EBIF apps to come.
The competition with FiOS, and to a lesser extent, U-verse, is already forcing MSOs to improve nearly every aspect of their business. Cable is confident that with DOCSIS 3.0 and the option to use GPON or some other fiber-to-the-home solution, cable wins. Cable still has to prove it, though.
AT&T’s U-verse is a me-too product, with severe bandwidth limitations, but that’s not compelling enough of an argument to dissuade people from trying it, or from liking it. – BRS
15 Tru2way sells out
If ever a technology epitomized the engineering credo of “crawl, walk, run,” tru2way has to be near the top of that list.
Tru2way flooded vendors’ booths and sessions at both The Cable Show and the SCTE Cable-Tec Expo this year. Then in October, Panasonic announced it was selling tru2way-enabled TVs in select retail stores in Comcast’s Chicago and Denver markets.
Tru2way started its long shelf-life as part of the broader OpenCable initiative that CableLabs launched in 1997 to promote the deployment of interactive services over cable. – MR
16 Bandwidth caps: Go ahead, use 250 GB
Rogers began to place caps on the amount of Internet usage by its subs this year, and the Canadian op charges extra for limit breakers. Comcast caps monthly usage for its subs at 250 Gigabytes. And Time Warner Cable and AT&T are trialing to figure out appropriate caps. It’s only a select few subs that fit into the “limit breakers” category. But bandwidth is precious (see #24), and so it seems obvious that the trend of consumption caps will continue to combat those greedy outliers. – TLP
17 Comcast Media Center tunes up EBIF, tru2way
The Comcast Media Center (CMC), along with various vendor partners, created a laboratory of sorts this year that was designed to develop and spread EBIF and tru2way applications.
Launched in May, the CMC’s HITS AxIS is a centralized platform that was designed to support advanced interactive application developers, while also facilitating the launch of these interactive services on cable systems that serve small- to mid-size markets.
The CMC collaborated with Vidiom Systems and TVWorks on the AxIS service, which also supports product development for other companies that are developing interactive applications. – MR
18 Show mergers: Soufflé or sludge?
Show proliferation was apparently keeping execs on the road too much, so the response is to smoosh them all together. The shows, not the execs.
In April, Washington, D.C., will host the NCTA’s The Cable Show, CableLabs’ conferences and the SCTE Conference on Emerging Technologies (ET), all at once.
And in October, CTAM Summit, the SCTE Cable-Tec Expo, the Cable Center Hall of Fame Dinner and a CableLabs seminar will come together in Denver.
Fringe benefit – in a sinking economy, travel budgets should shrink. It’s a sigh of relief in a busy world and an ever-more struggling economy. The potential downside? Could be too big, too exhausting, and it could all degenerate into noise. – TLP
19 ActiveVideo Networks: Up to something
What used to be ICTV has renamed and repositioned itself. The company specializes in blending Web-based content with video, and making the whole shebang interactive. The company is attracting new talent, and among its new hires is CTO John Callahan, ex Time Warner interactive guru, which kinda makes you wonder if maybe Callahan is thinking of finishing at ActiveVideo what he started with Mystro over at TWC… – BRS
20 Big 10 fracas: It’s always somebody
Up until mid-2008, there was a lot of resistance toward the carriage of the Big Ten Network. Comcast and Charter consistently refused to put the network on their basic tiers, with Comcast citing a Big Ten tax for all subscribers as the main reason. But then, in June, Comcast launched the network on its expanded basic tier in most Big Ten states. And then Verizon inked an agreement with the network; then Time Warner Cable, Charter and Mediacom. Sports networks are known for being die-hard negotiators, and in this instance, the Big Ten Network won. Who’s next? – TLP
21 DVRs continue to boom
OK, raise your hand if you knew that digital video recorders have become a staple in customers’ homes instead of the exception to the norm? This year, various DVR vendors added more memory for HD or showed off their tru2way-enabled DVRs at industry shows.
DVR pioneer TiVo played both sides of the fence this year by cutting deals with Comcast and Cox Communications for TiVo-interface-based DVR trials and deployments, while at the same time hooking up with Netflix to deliver its movies to subscribers. – MR
22 Internet TV
More Americans watched Katie Couric’s interview of vice presidential nominee Sarah Palin on CBS.com (and other Web destinations, such as YouTube and Hulu) than when the interview aired live on the “CBS Evening News.” Similarly, more Americans watched “Saturday Night Live” alum Tina Fey’s impression of Palin’s interview online than when the sketch aired on SNL. Enough said.
Until the TV set can offer the immediacy of the Internet, Hulu and YouTube will keep on rockin’. Comcast’s Fancast.com site (based on Hulu) is a start, but cable has a ways to go before it can provide instant gratification. – TLP
23 It’s the economy, stupid
Like the Joad family in John Steinbeck’s “The Grapes of Wrath,” the cable industry must continue to forge ahead in the face of a devastated worldwide economy because there’s simply no other choice…
Actually, even with Wall Street’s tendency to undervalue cable operators’ stocks, cable might weather the current downturn better than most industries as families choose to stay home in front of their TVs.
And cable operators need to stay focused over the coming year to insure that they don’t lose subscribers to the telco and satellite video services (see #4). Move customer care to the top of the to-do list. – MR
24 Bandwidthmanagement: Same old, same old
Bandwidth management has been one of the top three candidates in the BB50 for years. Is it any less important this year? No. It’s just that having to manage bandwidth is about as integral to the business as video compression – it’s done as a matter of course.
It’s always something, but this year the squeeze is coming from trying to shove more HD down the pipe. It’s just a matter of rummaging in the tool box (remember the tool box? Lots of tools in there) and going to work. So, expect more switched digital video implementations, but since SDV doesn’t always make economic sense, the rollout will continue to be gradual. And, oh yeah, the digital transition is coming (see #5); analog reclamation will provide some temporary breathing room. – BRS
25 Calling converged services
Converged services took hold with cable operators and their customers this year, namely in the form of caller ID on TV applications.
Cox Communications and Comcast launched caller ID on TV services to their customers this year, while Vidéotron and Liberty Global-owned VTR followed suit by using Integra5’s platform.
Cablevision launched caller ID on TV last year in November, and then said in March that it had surpassed one billion caller ID messages on customers’ TV screens.
Next up for converged services? Some service providers have already deployed caller ID on PCs, while Integra5 has added socialization elements to its platform. – MR