BOSTON – In its younger days, the cable industry moved, for the times, at a pretty good speed on the technical front. While operators in the 1970s, ’80s and early ’90s concentrated on signing up subscribers, delivering clear signals, and then launching an ever-increasing number of new channels, they were heavily reliant on just a couple of big suppliers and their engineers for their most important network systems.
General Instrument (Jerrold before that and now known as Google-owned Motorola) and Scientific-Atlanta (now Cisco) were the two dominant players for ages. There were lots of other suppliers of many other things, but no one else was even close in size or importance of those two biggies. Others tried – and mostly failed – to break through the duopoly of cable headend and set-top box technology. Cable engineers in the 1980s and 1990s were constantly trying to improve their systems but in the end were irrevocably tied to the development timelines of one of the two big suppliers (invariably, a cable company was either a GI-house or an SA-house, and in many ways, still are). Those development cycles seemed – and were – fast enough in their day. New set-top-boxes were often pre-released at the SCTE technical show and then officially launched at the NCTA’s Cable Show a few months after that. Later, ready upgrades like new electronic program guides or other rudimentary software for the new digital boxes/cable systems, were released on development schedules that were many months long.
For a time it was all very orderly: Consumers were happy with more channels and a better way to navigate their TV listings, new technology was planned and deployed and while MSOs always complained about the costs associated with having a single supplier, everyone grew.
Then, the Internet happened. Power has shifted heavily and quickly away from what was known and comfortable to an explosion of possibilities, challenges and fears. It didn’t happen overnight but it seems like it sometimes.
Even just two years ago, North American cable executives preoccupied themselves with trying to manage their customers’ shifting preferences to get everything now and from the web, with protecting expensive legacies like their deployed base of set-tops, the existing business models and “shareholder value.” Instead of seeing the new way of doing things as opportunity, the cable guys saw threat. They weren’t alone there.
But no more, it would seem. This year’s Cable Show saw some very optimistic cable executives pushing their employees and their cable friends to innovate as quickly as possible, however possible, using whatever methods possible (well, almost). American MSOs are pushing TV Everywhere harder than any other product they have, so that customers can take their Comcast or Cox or Time Warner Cable or Cox or Flow experience with them wherever they go.
To help that along the cablecos here have announced a national WiFi partnership (this could be done in Canada, one hopes!), are experimenting with anything WiFi, really, are pushing business services and interconnection wherever possible, choosing partners unheard of before and generally trying everything to keep customers happy, because they’ve found that the more places subscribers can get video or Internet or voice, the better it is for everyone. Cords are not cut when you deliver what customers demand, for a decent price.
Of course, the legacy systems and the customers happy with their old gear are still important, but what’s driving the American industry today is making sure customers can get their content from their provider however they wish to get it, no matter where they are. The executives have come to realize limitations are bad and freedom is good, especially for their bottom lines.
“Most heavy data usage is WiFi and not cellular,” said Time Warner Cable chairman and CEO Glenn Britt during Monday’s opening session. “That’s why we’re building WiFi like crazy.” (Which is perhaps why in Canada Shaw is building WiFi like crazy, too.) The more people watch, the more they want to remain as a subscriber, the more broadcasters can pursue advertising, the more great content gets made, new channels and brands created – it’s all a virtuous circle.
With TV Everywhere “this is exciting… the business model really works,” said Discovery Communications president and CEO David Zaslav. Along with HBO, Discovery had held back most of its content from IP distribution for a number of years “because there wasn’t a business model.” But Discovery and other broadcasters are actively participating in TV Everywhere. In fact, this new world has allowed Discovery Communications to boost its spending on content by $100 million last year and by another $100 million this year, too. Despite all the change “Our core mission is still the same: great quality content,” said Zaslav.
THE END OF THE SET TOP BOX itself, as has been mused for some time now, is also on the horizon “although people from Cisco and Motorola probably don’t want to hear that,” Britt said on Monday. “The world is coalescing around IP standards … and all devices are being made to those standards.” Indeed, all cable operators want to see more vendors produce IP-based gateways like Arris's (currently being deployed by Shaw), which may one day end up on the outside of consumers’ homes, rather than near the television. A rumour on the show floor said Rogers is more than interested in deploying the same Arris gateway, and soon, that Shaw has rolled out with its EXO branding – while the big American cable companies are applying heavy pressure to other suppliers to come up with something similar (did we mention the cable industry has had its fill of single vendors?)
Time Warner Inc. (the TW that oversees HBO and its many other media properties) CEO Jeffrey Bewkes (pictured with his session host, CNN's Piers Morgan) went further. After Cox Communications president Patrick Esser insisted that the industry has to focus on the “importance of search and access across all platforms and not just one,” Bewkes explained TV Everywhere has deployed and proliferated faster than video on demand, faster than digital video recorders and faster than high definition, so he wondered why the cable industry has to stick with its notoriously clunky on-screen guides, for example, at all.
“We have to focus on the interface… we have to let consumers use the interface they want,” he said. Why not give over the guide to Silicon Valley? Who cares if Apple’s iTunes is the interface people like and use, as long as the cable company and broadcasters are delivering the content to paying customers? “You’ll still have your subscriber relationship,” Bewkes said Wednesday.
Cable should be able to harness the power of the applications coming from Silicon Valley and their many thousands of developers “and let those interfaces make the fundamental strength of your distribution system get more powerful… don’t hold them back,” he added.
This isn’t to say everything is an open highway, however… “If we don’t keep our networks tight and respect the fact there are rightsholders… and they need to get reimbursed for their content… then it goes away. Content doesn’t get produced for free,” reminded Esser.
Which brings our final point about The Cable Show 2012 to the forefront – that not all is well, of course. The issue of bit caps, network limitations and crushing usage is still a very sore spot for many, and those frustrations were voiced by Rio Caraeff, CEO of online music video portal VEVO during Tuesday’s general session.
While saying it’s reasonable to ask customers to pay for what they use and he recognizes there is finite capacity within networks, clamping down hard on bandwidth usage, especially when it seems indiscriminate, will hurt cable operators. Hard caps, said Caraeff, “retards usage and slows adoption and is not good for anybody. Kicking people off because they hit their cap is not great.”
While the operators on his panel defended themselves, saying they send “consumer-friendly reminders” when people approach their data limits, and that consumers need to be educated on what’s going on in the network, Caraeff was unbowed. “Consumers should never have to really understand what a gigabyte is,” he said. They just want to know if they watch a movie on Netflix, will that put them over?
“I’m happy to pay more, but… I may not watch a movie because I may or may not be near my cap,” he added.
Back in the days of GI and SA, there was no such thing as bit caps and gigabytes were not something applied to TV. The video spigot was just always on, no matter what, but you had to be at your sink (the TV set) in order to watch. Pressure from consumers, in love with how they can drink in the Internet wherever they are have forced cablecos to learn to spray content through a new multitude of spigots spread far and wide.
American cablecos are racing and adapting at a pace unfathomable even a few years ago, because they realize being flexible for change is the only road to success.
