Cable companies move into superior content delivery
EmptyHere's an analogy that's certain to get the attention of anyone who's ever waited for a slow Internet connection to load: What broadband is to dial-up, wideband is to broadband. And widespread use of wideband is not that far off.
As the cable industry gathers in New Orleans this week for the National Cable & Telecommunications Assn.'s 2008 Cable Show, cable providers are beginning the rollout of next-generation high-speed broadband, which is expected to launch a new era in content delivery. And over the next two years, cable operators will upgrade existing broadband architecture to wideband, or DOCSIS 3.0 (Data Over Cable Service Interface Specifications).
Cable technology consortium CableLabs is expected to announce the first certification for the higher-speed DOCSIS 3.0 modems around this year's cable show. DOCSIS uses "channel bonding" technology to more efficiently deliver video, Internet and voice services through cable lines. This will not only vastly increase Internet speeds, allowing users to download high-definition movies in minutes, but also provide a more flexible platform for new cable interactivity, video delivery and other applications yet undreamed of.
"It's a platform for a generation of new and more capable delivery of content," says Mitch Bowling, senior vp and general manager of online services for Comcast.
The upgrade to wideband comes as cable competitors expand their broadband offerings through faster fiber-optic services and wireless broadband. Verizon already offers superfast Internet through its fiber-optic FiOS service, which delivers broadband at download speeds up to 30 megabits per second. And Time Warner and other cable companies are also expected to upgrade their broadband offerings.
In April, Comcast launched its competing wideband service in Minneapolis with download speeds of 50 Mbps, substantially faster than its previous top speeds of 16 Mbps. Comcast plans to offer speeds up to 160 Mbps to 20% of its customers by the end of 2008, with the full rollout completed by 2010.
The push into wideband could help cable extend its broadband lead. At the end of 2007, 57% of broadband subscribers had cable, according to research firm Convergence Consulting Group. "This is a long-standing plan that the cable guys have been at work on," Convergence president Brahm Eiley says. "Their crowning achievement is the move to DOCSIS 3.0."
The DOCSIS 3.0 architecture also could enable cable companies to reach customers through IPTV delivery, which until now has been the domain of AT&T and other telcos using it for their competing digital television services. But over the last couple of years, cable companies have started to consider how they could use IPTV with cable since the IP architecture could allow for faster introduction of new services at a lower cost, says Kip Compton, Cisco senior director and general manager of video and content networking.
The next generation of cable boxes will be capable of receiving IP video, and Compton says he expects cable companies to use IP with the existing cable infrastructure. Since IP is used on a number of other devices from game consoles to mobile phones, it could also allow cable operators to deliver TV to customers in more places. "Operators are thinking of delivering services to consumers,
not devices," Compton says. "They already deliver this experience to a digital set-top, but if you're an HBO subscriber and on a PC, why can't you watch it on a PC?"
The higher speeds, along with the move to digital cable next year, will also free up analog channels so that cable companies can offer more HD channels. "All these guys will be able to ratchet up and offer more HD programming as soon as DOCSIS goes in," Eiley says.
While the move to wideband is settled, the industry is still grappling with wireless broadband and how it will compete in mobile Internet. Rumors in March that Comcast, Time Warner and Bright House Networks would partner with Sprint for a WiMax service have yet to move beyond that. "This is one of those things where we've been doing laboratory work on it, and we're now making decisions on how to deploy it," says CableLabs president Dick Green.
The show will also shine its spotlight on the move to the interactive technology Tru2way, which will allow for interactive TV programming guides, voting by remote control and other advances that allow viewers and programrs to interact directly through the cable box. "All those things are beginning to add to what people expect from television now," Green says.
Now that these new technologies are becoming reality, the pressure could turn to the cable networks to figure out ways to introduce services that take advantage of the increased bandwidth and interactivity.
"I wouldn't be surprised if the attention this time around shifts away from distribution and toward content," says Sanford C. Bernstein & Co. analyst Craig Moffett. "The last couple of years everybody's been wringing their hands over how cable can compete with satellite and telcos. The burning issue this time around may turn out to be, How are the cable networks going to turn all of this digital traffic into money? I don't think anybody's started to figure it out."
Leaders of the Pack
Disney's Anne Sweeney and Showtime's Matt Blank receive the NCTA's Distinguished Vanguard Awards for Leadership
Co-chair of Disney Media Networks and president of Disney-ABC Television Group, Anne Sweeney
By Rebecca Ascher-Walsh
As co-chair of Disney Media Networks and president of Disney-ABC Television Group, Anne Sweeney's mantra is simple: "Be really brave." "I have a little plaque on my desk at home that says, 'Imagine what you would attempt to do if you knew you couldn't fail,'" she says.
In her case, there's no need to imagine. In the 2007 fiscal year, Disney Media Networks' revenue was up 7% from the previous year to $15 billion, while the broadcasting operating income was up $228 million to $703 million. In addition, the Disney Channel is currently seen in 90 million U.S. homes as well as by an additional 500 million people in 127 countries.
Sweeney is embracing the new as the first executive to sell shows on iTunes as well as to stream her network's content online. And she's currently turning her keen eye abroad, where she has watched Asia, Europe and Latin America enthusiastically embrace the Disney Channel. "Continuing to grow internationally is a great challenge to us," she says.
Showtime Networks chairman and CEO Matt Blank
By Kimberly Nordyke
Under Showtime Networks chairman and CEO Matt Blank, the premium network has been building buzz with original programming like "Weeds," "Dexter" and "The Tudors." And now -- following the announcement that Showtime isn't renewing its output deals with Paramount, Lionsgate and MGM -- original programs are set to become an even bigger focus.
It's a strategy that so far has been paying off in a big way. Showtime added 1.3 million new subscribers in 2007 alone for a total of 15.5 million. Under Blank's leadership, Showtime Networks has grown from three premium networks to include 27 digital channels and has become an early adopter of technologies like high-def, subscription VOD and digital platforms.
Next up is the debut of "Secret Diary of a Call Girl," and Blank is high on the pilot "The United States of Tara" from DreamWorks TV. "Our No. 1 priority is to get the very best original programming on the air," he says. "Every indication we have from our subscribers is that is where Showtime can most benefit in the future."