ATLANTA – Major U.S. cable operators are counting on a continuing wave of paranoia to motivate them and carry them through another very challenging period for the industry.
Speaking at the SCTE Cable-Tec Expo convention here this week, senior executives from Comcast, Time Warner Cable, Cox Communications and Bright House Networks said that such a strong sense of paranoia is at least partly driving them to test new technologies and develop new products and services, just as it drove them in the past.
Indeed, Comcast CTO Tony Werner said the MSO’s recent push to create and update products "in days and weeks, not months and years," is stoked by a familiar feeling of paranoia about the threat that competing service providers could pose. “We were paranoid that the satellite guys would kill us," Werner said. "There were things we were afraid of that we didn't need to be afraid of, and there were things we weren't afraid of that we should have been."
Time Warner Cable CTO Mike LaJoie agreed that “a little bit of paranoia is healthy.” He cited the familiar saying: "Just because you're paranoid doesn't mean people aren't out to get you."
Besides being driven by paranoia, MSO officials said they are pursuing such new products and services as network DVRs, multi-screen video, video communications, home security and monitoring, and commercial services because they see huge growth potential in each sector. “The opportunities we see far, far outweigh the risks,” LaJoie said.
LaJoie pointed out that the industry’s traditional multi-channel video services already generate less than half of Time Warner Cable’s overall revenue. "That's not because the business is dying, it's because we have more growth in these other products," he said.
To cite one example, new Cox Communications CTO Kevin Hart, who was formerly the chief information officer of Clearwire, noted that the MSO's commercial services unit still expects rapid growth, with wireless backhaul a big piece of that pie. Bright House president Nomi Bergman thoroughly agreed. "Business services are 10%, maybe 20%, of the revenue for any MSO," Bergman said. "There's so much potential for wonderful growth there."
Similarly, LaJoie sees great potential in the continued expansion of cable broadband services. "This industry invented broadband… Without that invention, I think we'd all still be using ISDN," he quipped, referring to the Integrated Services Digital Network technology deployed by telcos in the 1990s.
In addition, LaJoie said cable operators are well positioned to expand their wireless-backhaul businesses, thanks at least partly to the rise of 4G wireless services. "Everybody talks about the wireless revolution, but the truth is a very, very small percentage of a wireless session travels over the air," he said. "Most of it is over the wire."
At the same time, senior MSO officials still see plenty of potential for expanding their traditional video businesses. Werner said Comcast is "investing in and building out, for the lack of a better term, the digital ecosystem."
LaJoie agreed. "The future of multichannel video is robust,” he proclaimed. “There is a programming function that survives. That business is going to continue to grow and to change."
Bergman argued that cable operators have genuine opportunities to capitalize on new video services. She cited the Digital Entertainment Content Ecosystem (DECE) consortium's UltraViolet digital-rights locker, which would allow an MSO to offer movies for purchase on VOD that could then later be streamed on another display device.
"That's a great example of where the technology is there,” she said. “But I think the business negotiation has to move along at the same time."
Alan Breznick is a Toronto-based senior analyst at Heavy Reading, part of the Light Reading Communications Network at UBM TechWeb. He covered the 2011 SCTE Cable-Tec Expo for Cartt.ca.
