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Policy

Cable Can Prosper by Playing Well With Others

7/16/2012 12:01 AM Eastern

NEWPORT, R.I. — Key executives at top cable operators
Comcast and Cox Communications put a little different
spin on the “challenge-versus-opportunity” theme
at an industry conference here, saying cable can benefit
from disruptive technologies if the industry can learn
to partner with companies outside the usual ecosystem.

They also said the
multichannel-video
business is in need of
more creative packaging
to give consumers options other than the all-youcan-
eat expanded-basic offerings consumers find too
expensive and restrictive.

“We’ve got to respond to what the consumer wants,”
David Cohen, executive vice president at Comcast, said
during the opening panel session at the New England
Cable & Telecommunications Association’s annual convention
here. “We have a very good ability to be able to
design more choice for consumers, but that still makes
the economics work for the content producers.”

Comcast, he said, has begun rolling
out a “My Choice” offering, with
a 55- to 60-channel package supplemented
with additional “modules” of
channels in themes such as news and
information, kids, entertainment or
movies.

Joining Cohen on the panel were
Cox Communications president
Patrick Esser and Jim Bruder, the
chairman and CEO Harron Communications.

Esser and Bruder agreed cable
companies need to be able to package
video offerings differently. Bruder
said Harron’s $75 expanded-basic
offer is headed toward $100, with
rising costs for cable and broadcast
channels, “and that’s a tough pill to
swallow.”

Asked by CNBC host Ron Insana
if cable will need to offer popular
shows on an a la carte basis, Esser
said: “I just don’t think it’s either-or. I
think there are packages that can be
done in thoughtful ways. We do need
to give our customers more choice.
They want more choice on top of access.”

As for Apple’s expected entrance
into the TV-device and possibly
multichannel-video service sector,
Bruder said that could help his business
if it got more customers to buy
Harron’s high-speed Internet service,
which is only being purchased by about 30% of potential
customers (or homes passed), he said.

Esser and Cohen both said the Apple product could
be complementary to cable — depending on what that
product is, of course, when and if Apple introduces a TV.

Esser said the likeliest scenarios for an Apple TV
would include “a relationship or partnership that would
exist between the content providers, ourselves and Apple.
They need the network, they need access, they need
capability, they need capacity. Now, whether we’re good
at partnering or not, we’d have a little learning curve to
work our way up.”

“The biggest challenge for us may be partnering,” Esser
said at another point. Integrating outside forms of
content into the cable platform — something consumers
want — requires working with companies cable operators
aren’t used to dealing with, at a faster pace of
innovation than cable is used to.

“Learning how to work with these industries is a new
skill set for us,” he said. “But our door is open.”

Cohen said Apple’s solution, in the end, will be
“device-driven,” because that’s what Apple does: It
makes popular gadgets and powers them with popular
applications. The device will need broadband, something
cable’s happy to provide. Similar to how Netflix
is complementary to cable, he said, a device-driven approach
from Apple presents more opportunities than
risks to cable.

Working in cable’s favor, Cohen said, is the reality
that producing high-quality content relies on the business
model that has evolved from the fees and advertising
revenue generated by multichannel-video packages.

“Video-content producers are bound and determined
not to make the same mistake that newspapers made,
that music made,” Cohen said. “They want to preserve a
business model that will permit them to be able to generate
the kind of content that your daughter wants to
buy on a transactional basis,” he added, responding to an
example Insana gave of his 14-year-old daughter saying
she’d rather just buy a subscription to shows she wants,
rather than 200 channels put together in a package.

September