Cable Operators

Joined at the Hip

9/16/2005 8:00 PM Eastern

Years ago, the marketing and technology departments at multichannel distributors barely talked to each other. Not any more. The increasing complexity of launching new products, and the onslaught of competition, has created close bonds between those fiefdoms that heretofore have never existed. That’s why Multichannel News has created a new recurring series of special reports, called “CTO/CMO.” Kicking off the series is a look at Cox Communications Inc., which threw in a “bonus” executive to make the interview even richer: Dallas Clement, senior vice president of strategy and development. He joined senior vice president of marketing Joe Rooney and senior vice president and chief technology officer Chris Bowick in a conversation with Broadband Week editor Matt Stump. An edited transcript follows:

MCN: How do Cox’s various departments work together, week in and week out, to get services built, launched and marketed?

Dallas Clement: Ten years ago, product development was upgrade your plant from 350 MHz to 450 MHz, and throw some analog channels on. It was relatively clear and simple.

We then looked at high-speed Internet, digital video, digital voice, which was more complicated than just upgrading your plant, but it was still so obvious that we had to do it. It was a question of doing some analysis and then really good execution, and Cox has been really good at that.

Over the past five years, the world has gotten more complicated. Joe Rooney’s team isn’t just about marketing. There’s product-management involved. My team is not just business development, it’s product development. And we’ve gone back and forth where product support ought to be.

The thing that we have focused on the most over the last two to three years is working really hard to understand priorities. The whole notion of prioritization has been what is new, and that has allowed us to be more aligned, and thus more successful, in rolling out products.

Chris Bowick: It’s more that our products and services become truly integrated as opposed to just siloed products. The more interesting the product-development process becomes, the more linked at the hip all three of us have to be.

We try very hard to insure that the three teams — not just from our perspective, but from those who work in our various shops — stay linked at the hip. That’s the key going forward.

MCN: Do you have regularly scheduled meetings where all three groups sit down and talk about issues?

Clement: More than that. There are various levels. We have lieutenants on each of our teams that get together every other week to talk resource allocation and priorities. We also have members of our teams that meet on a regular basis to talk about the actual implementation of specific priorities.

We also have a regular session with Joe, Chris and myself, where our peers get together and take a measure of how well we’re doing, where are things falling down, where do we need to refocus.

Joe Rooney: When Chris was talking about integrated solutions, he was also speaking to how we look at product-development opportunities. It’s not just Chris, Dallas and I that need to work together very well in an integrated fashion. It’s also what’s new in product development. How is our [high-speed Internet] product better [for you the consumer] because you’ve also got our video product and our telephone product? And how does our digital-cable product really enhance your [Internet] experience? There is opportunity for us to make these products work together better than they do today and to be stickier.

MCN: Where do new products or services originate? Do they come from one or all departments?

Rooney: If you were to stack blocks on each other to build something, you wouldn’t stack them one on top of the other, you would alternate a little bit.

In the case of new product development, engineering and marketing, everyone’s involved all the way along, but somebody has the lead.

In the case of a brand new product, like [interactive TV], it probably starts with research. So marketing is involved in the research side. There’s also the competitive overview. So marketing has an early role. Then you have engineering and new product development taking the lead role in how we bring an ITV product to market. Then I jump in in a bigger way when we’re ready to go to market.

Bowick: It used to be, you’d go to a traditional engineer and he’d say: 'Just give me the product requirements and I’ll build whatever I want.’ These days, that obviously doesn’t work. This has to be a very iterative process. I could go to Joe and say: 'I could build you anything you want. Tell me what you want. What does the customer need?’

And Joe’s going to say: 'How much is it going to cost me?’ And you get into this never-ending impasse. In today’s environment, you can’t really do that. It’s more of an interactive process, creating models that allow us to do what-if scenarios.

What if we need certain speeds from a competitive perspective, and how much is that going to cost us? How does that drive the network?

These ideas for new products don’t just originate in one location. The difficulty that we have is being able to assess the new product ideas from various locations, either from our shops or from our field locations. We’ve got some very, very smart people out in the field with great product ideas.

MCN: When HDTV first came about, it would seem that the technology group would have been the first stumble across it. What was your first-blush introduction to HD?

Clement: With HD, it wasn’t obvious when we should get into it. We started to see more customers taking it, but it was a small minority of customers taking it. There was a little bit of programming available, and the technology solution was kludgy. It was two boxes. It was expensive.

So Joe, with his finger on the pulse of the customer, was saying, 'When should we do it?’ Chris was managing our vendors, Scientific-Atlanta [Inc.] and Motorola [Inc.], as to what’s an effective solution. My team was looking at the economics. Does this make sense?

And finally we all came to a consensus. It looks like the stars are aligning. You have a technology here that’s a one-box solution. The incremental cost over a regular digital set-top box isn’t that much. I got the methods and procedures here on how to roll it out. The price points of HD sets are starting to come down. Joe’s team is starting to get excited that maybe this really does provide table stakes compared to [direct-broadcast satellite]. So it was all starting to look like it was the right time to go.

MCN: Joe, have you ever gone to Chris and said: 'I’m getting killed here in this market, I need something on the technology front?’

Rooney: Oh, certainly. I’ve always been a little frustrated that our vendors on the box side are a little slower to the game than our competitor’s box vendors. I’ve been somewhat of a critic of the closed nature of our infrastructure regarding boxes.

These guys are doing yeoman’s work to open up our platform and allow other manufacturers to come in. We’ve got a good start with digital cable ready. We have a lot of expectations around CHILA [CableCard Host Interface License Agreement].

I want to bring up channel bonding as an interesting example because it’s starts with being technology-driven, with the ability to offer up to 100 megabits, but it quickly raises questions of what do you do with 100 megabits — how do you market, price and package it. How do Dallas and Joe react to 100 Mbps capability?

Bowick: We’ve actually just gone through that process recently. We’ve taken a look at what kinds of speeds we’d like to have in front of our customers going forward. It has been through this iterative process, and we’ve laid down a roadmap.

Channel bonding as a technology is not something that has been selected yet. It is there and ready for us in the event that we need it to meet the speeds that Joe says he needs in order to remain competitive.

MCN: Joe, a marketer would tend to say, if Verizon Communications Inc. is going to have 30 Mbps, I’ve got to at least have 30 Mbps. I have to match the offer, from a PR standpoint. But while you match them, meg for meg, it raises a second question: What do I do with that speed?

Rooney: Our point of view is that we’ve always had the best high-speed Internet product. We’ve always had the fastest product, the most reliable product, the best value for the customer and with the best service behind it. We can’t afford to lose any of those claims. We like to have the best product at the best value.

As our competitors amp up their speed, you’re right; I’m going to go to Chris and say we have to have higher speeds for our services as well. We have to continue to invest in our network. We can’t afford to lose the speed claim.

Bowick: In this case, I don’t think Joe’s going to come to me and say: 'We need this channel-bonding stuff.’ What he’s going to tell me is, 'We need to remain competitive.’ And my team will ultimately decide what the best technology in support of those product requirements should be.

MCN: Have you ever found yourself where two guys are for something, and one against, and the one against saves your butt?

Rooney: One example might be our approach to video on demand. We have been more cautious about our entry into VOD. It’s not just the three of us. This is an operations-driven company, and the field has a big say in what the three of us work on. And the consumer has a big say on what we work on.

When we looked at whether having on-demand services would reduce churn as much as bundling, the answer was no. Bundling reduces churn in a huge way.

Would VOD drive acquisition quicker and deeper compared to getting telephone out in one market? The answer was no, get phone out there as quick as we could.

There was a lot of give and take within our company, where to prioritize on demand versus some of the other known things like telephony everywhere.

MCN: With the integration of applications across the platforms, like caller ID on the TV, is the development the same or different across your groups as previous opportunities?

Clement: As we get further into the integration of bundle 2.0, all of a sudden it’s not just the video folks worrying about making it real. The telephone folks have a perspective on what the experience ought to be and how that fits in the overall [voice-over-Internet protocol] experience. And all of a sudden you’re dealing with voice vendors who generate the caller ID.

The video folks [have a say] in the context of the user interface, making sure it’s rendered appropriately. And then there are some widgets in the back office that need to be there to make it real. And where does that get paid for? Does it get paid for out of platform? Does it get paid for out of voice? Does it get paid for out of video? Fortunately, we have the framework with these cross-functional teams, but the integrated piece just adds another dimension.

Bowick: It adds a layer of complexity to the team dynamics. We can’t develop in silos any more. We end up bringing probably more people into the process than we would have in the past.

Rooney: One of the things is more complicated about those kinds of services is there are more niche marketing efforts behind them as well. Is mass market the best way to describe some of these new products or services — or do we need to find for whom are they relevant and what messages get the features and benefits through most effectively?

MCN: Joe, you mentioned the field personnel. How do they play in all of this?

Rooney: Dallas has a call with the field quarterly, where we walk through where we are on new products. And the GMs and the heads of marketing and engineering in the field are about to say: 'Yeah, but what about this?’ Or 'When are we going to see this? Is it a real product in my system?’ Basically, they get to weigh in.

Bowick: It’s a great idea to bring in field expertise, and we do it all the time. Is this something that can be operationalized? Is this something we can easily roll out into the field? What are the dynamics of being able to do that quickly without disruption to our existing customers? And that’s very important.

September