Orlando, Fla. -- Major MSOs still are grappling with
fundamental operational, strategic and economic issues as they push to expand their
offerings of digital video, high-speed data and phone service.
Top cable-company executives speaking at last week's
Society of Cable Telecommunications Engineers' Cable-Tec Expo '99 here said
their systems are dealing with considerations ranging from being able to provision new
services sufficiently to hashing out the economic models created by the deployment of
complex new digital set-top application software.
Those challenges come in addition to short-term imperatives
such as completing upgrades, rebuilds and corporate mergers while selling their base
advanced-service portfolios of digital video, high-speed Internet access and, in most
cases, cable telephony.
"The opportunities are there for us to grow in double
digits for the next five to 10 years. The question is: How do you make that happen?"
Comcast Corp.'s Comcast Cable Communications Inc. president Stephen Burke said.
"We have to get better in terms of service, product development and marketing."
Burke and other participants in a panel kicking off the
Expo's Engineering Conference detailed their progress in rolling out the "big
three" new services. But they frequently indicated that there were a lot of questions
remaining about how to offer other products enabled by advanced digital set-tops, such as
video-on-demand, data multicasting and electronic commerce.
One key issue is customer behavior. Burke and others said
that in some ways, the muscular new capabilities of what is available technologically are
ahead of the operators' sense of the best way to offer it to customers.
"The issue isn't what can be delivered as much as
what to deliver, to whom, to what place in the home and on what device," MediaOne
Group Inc. CEO Jan Peters said. "There's the issue of how quickly the change can
occur in terms of what customers can learn, and the technology may get ahead of that
Bill Fitzgerald, chief operating officer at AT&T
Broadband & Internet Services (formerly Tele-Communications Inc.), indicated that
early versions of General Instrument Corp.'s "DCT-5000" set-top that the
MSO will deploy in the first quarter would offer new functionality, but it would be basic.
"One of our greatest goals is to get e-mail to the
home through one of these devices," he said. "We're still working through
all issues of what consumers' expectations are and weighing those against a rational
That economic model is a big issue, with operators
pondering advanced services that will typically ride on top of software provided by
vendors that want a royalty cut of the business.
Revenue-sharing models for areas such as interactive
advertising and e-commerce also remain an open question, CEOs said.
"The dilemma we have is trying to figure out a
business paradigm where we're going to get a little nick to our [profit-and-loss] for
all of these things," Cox Communications Inc. president Jim Robbins said. "I
challenge our guys to show me the model where we get a little revenue from all of these
CEOs also are dealing with more down-to-earth issues such
as creating new support systems for advanced services. Fitzgerald admitted that in its
early cable-telephony efforts, AT&T Broadband had to jury-rig some support systems,
doing what he called "manual work-arounds" for customer care and provisioning
while the company develops a permanent support structure for the new business.
"It's been difficult: There are so many component
parts that need to operate," he said "But we're doing that, and
there's clearly today a strategy of, 'Let's walk before we run.' The
goal this year is to establish the platform -- to get the foundation pieces in
Putting the pieces in place correctly is crucial to
successful execution of the new service deployments, especially as rivals such as
direct-broadcast satellite and digital-subscriber-line telephone services expand their own
offerings and go after cable customers.
"At the end of the day, I think the technology is
going to work," Peters said. "But I worry most about the perception of the
industry in general -- us in particular -- from a customer-service standpoint. If we
don't significantly improve, then I think the rest is at risk."
MSOs have been seeing significant success from basic new
services, the executives said, including telephony where it has been offered.
Robbins -- who said telephony was the hardest of the big
three products to deliver -- added that Cox was averaging more than $50 per month in
revenue from phone customers. And the company has achieved penetration rates in some
neighborhoods of as high as 30 percent.
"Once we've deployed marketwide, I see
penetration in the 20s very easily," he said.
Comcast and Charter Communications executives agreed on
cable telephony's appeal, but they said their early strategies consciously focused on
winning customers with digital video and high-speed data.
"If you're going to spend the kind of money we
all are spending on these platforms, it's obvious that telephony has to be an
important component," Charter vice chairman Barry Babcock said, before his company
announced another two big MSO acquisitions.
"We're just not that far down the road," he
added. "We're not going to do it by ourselves. It's a complicated process
that's going to take a while."
Speaking to a packed audience of cable engineers and
technicians, the executives stressed that attracting and retaining trained employees was
both a challenge and a linchpin of their advanced-services strategies.
They warned that that the industry's current push to
deploy and operate new, technically complex services was occurring during a time of
unprecedented demand for a limited number of technicians."The issue is finding and
training people to help us execute the delivery of these new services," Robbins said.
"We're looking at things like co-op programs with local high schools to get them
interested in going to work in the field. That's how much of a struggle it is to get
Robbins and the others detailed a variety of steps --
ranging from career-development programs to employee stock ownership -- to enhance their
existing work force and to attract engineers, installers and other skilled employees in
the face of industrywide demand for their services.
Burke talked about Comcast's "ComTech"
program, which enables technicians to earn promotions or to move into other positions of
responsibility as they acquire more skills, rather than being kept in a linear career path
with relatively limited opportunities.
Other executives said that besides simply addressing the
need for trained techs, such programs were vital retention tools at a time of significant
job uncertainty caused by cable consolidation.
But they also said consolidation would be good for
operators and employees in the long run.
"Being larger in terms of total size, as well as
having a tighter market footprint by geographic area, is good, because it will put us into
a stronger position competitively," Peters said. "Ultimately, that's good
for customers and employees."
The smarter way to stay on top of the multichannel video marketplace. Sign up below.
Thank you for signing up to Multichannel News. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.