News

iPad: Broadband Booster

4/05/2010 2:42 AM Eastern

Here comes the iPad
touted by Apple’s marketing mavens
as a “magical” device that
is perfect for watching TV shows
and movies at home.

The latest heavily hyped Apple
gadget joins a flood of other
Internet-connected consumer
electronics, including high-definition
televisions, Blu-ray players
and gaming consoles. Some pundits
portray these as threats to cable
TV services, given their ability
to provide alternate means of distribution
for content owners.

But for now, cable providers see
the device explosion as a boon to
their broadband offerings, potentially
even driving customers to
upgrade to higher-speed tiers.

Comcast chairman and CEO
Brian Roberts, asked by an analyst
on the company’s February
earnings call whether the iPad
was “friend or foe,” replied: “I
don’t think people wanting more
content on more devices is anything
but a good thing for our
company … Folks want to consume
more bits in their home.”

Cable operators are happy about
their competitive position with
DOCSIS 3.0 cable modem technology,
which can blast 160 Megabits
per second downstream and even
more, compared with around 24
Mbps for the fastest telco DSL connections
available.

“Not only are our customers
going to want faster speeds, but
they’re also going to want a provider
who can deliver a quality
network that meets their needs
for the long run,” said Seth Hogan,
Cox Communications
vice president of data
product management.
“That clearly favors
DOCSIS 3.0.”

For excited new owners
of an iPad (starting
at $499 for the
Wi-Fi-only version), a
faster broadband connection
means faster
video downloads and
better-quality streaming
video. Apple said
the iPad’s battery life
lets users watch up to
10 hours of video, on a
9.7-inch, LED-backlit
display.

“There’s nothing
like watching video
on iPad. The high-resolution
display brings your favorite
HD movies and TV shows
to life, like no device has before,”
according to an Apple promotional
video — evidently referring
to handheld devices, given
that HDTVs provide much larger
screens.

Apple’s main strategy on the
video front is to drive people to its
iTunes Store, which offers more
than 50,000 TV episodes and
8,000 movies including at least
2,000 in HD.

Several cable networks also released
iPad apps with video features,
including ESPN, Disney
Channel, MTV Networks, Discovery
Channel and The Weather
Channel (see Coda). The
iPad doesn’t support Adobe Systems’
Flash media player, which
is used by many video sites, including
Hulu.

It’s not clear how big a video
platform the iPad ultimately will
prove to be, said Bruce Leichtman,
president of Leichtman
Research Group. He noted that
video sales on iTunes have been
relatively unsuccessful, and the
Apple TV set-top has been an uncharacteristic
dud.

In any case, Internet-distributed
video has simply not fueled
a rash of cable-TV cancellations.
The iPad and other Web video services
are “not an alterative to a video
subscription,” Leichtman said,
pointing out cable, satellite and
telco TV providers added 2 million
video subscribers in 2009.

While so far there hasn’t been
widespread cord-cutting, the TV
industry is still in the first inning
on Web-delivered video, said Will
Richmond, industry consultant
and editor of VideoNuze. “Consumer
behaviors are changing
rapidly, and many chapters have
yet to be written in how this plays
out,” he said.

For the next few years, anyway,
cable companies are hopeful that
the iPad and its kin push people to
slurp down even more bandwidth.

Cox has been steadily expanding
its rollout of DOCSIS 3.0, offering
the “Ultimate” 50-Mbps
package. Today, though, Hogan
said the majority of the Cox’s subscribers
take the Preferred tier,
with 15-Mbps down.

“I’m not suggesting all of our
customers are going to upgrade to
DOCSIS 3.0 tiers,” Hogan said. “But
we do hope there’s healthy pressure
on upward tier migration.”

VYING FOR VIDEO

Sales of video-capable broadband devices
are expected to surge:

Apple’s iPad will sell 8 million to 10 million units in 2010 (Morgan
Stanley forecast)

Roku expects to ship 1 million Internet-connected set-tops in 2010

Internet-connected video devices including HDTVs and gaming
consoles will reach 376.5 million unit shipments in 2013, up from
80.5 million in 2008 (iSuppli)

SOURCE: Multichannel News research

September