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Simulcast Can Also Be Competitive Aid

Philadelphia -- Digital simulcasting may be thought of as the preliminary step to an all-digital transition, but according to a panel at the Cable & Telecommunications Association for Marketing’s CTAM Summit here Monday, it not only allows cable operators to free up bandwidth to offer new services, it also neutralizes a key marketing weapon of direct-broadcast satellite.

Charter Communications Inc. vice president of video-product management Barbara Hedges said that at the MSO’s Long Beach, Calif., system -- the first in the country to offer digital simulcasting -- the benefit was almost immediate.

Hedges said digital-penetration rates at Long Beach rose from 67.6% in June 2004 (just prior to the simulcast launch) to 71.4% in May 2005.

“We have seen growth in our other Southern California systems, although the ramp was not quite this high,” she added.

Charter rolled out simulcasting in stages: It launched the first digital-simulcast channels in February 2004 and the last in July 2004. That, Hedges said, was to ensure that customers were not disrupted by the transition.

Customer disruption is a key concern, she added, especially as the MSO moves into phase two of the Long Beach project, which will involve taking the system all-digital -- introducing more services but also forcing customers to allow customer-premises equipment in their homes.

“Phase two is a very scary proposition for all of us,” Hedges said. “The activities that are associated with phase two can have some very customer-unfriendly side effects. For one thing, you’ve got to get a device into the home. And we’ve not only got to get that into the home, but onto every TV in the home.”
The gating factor, Hedges said, will be the availability of low-cost CPE to convert the signals at the TV set.

But don’t expect all operators to use digital simulcast as a steppingstone to all-digital service. According to one panelist, there will always be at least a few analog channels for customers that could be alienated by being forced to upgrade to some form of digital service.

“There will always be 20 or 30 [analog] channels for Grandma,” CTAM senior technology adviser Leslie Ellis said. Earlier in the discussion, when asked when the industry would see the transition to all-digital, she replied, “Not in my lifetime.”

Comcast executive VP of programming Matt Bond said the all-digital transition won’t take that long, but it won’t happen soon.

“Technology has a way of creeping up on you and, suddenly, it’s everywhere,” Bond said. “With OpenCable and with every consumer-electronics company getting into this space, it could be more accelerated than we’re thinking. There’s no question that it won’t be tomorrow, because frankly, it doesn’t have to be tomorrow.”

On the programming side, Disney and ESPN Media Networks executive VP Ben Pyne said the potential exists for tension between content providers and MSOs going all-digital.

Pyne said that in the long term, all-digital provides opportunities for programmers and operators to work together. “From a short-term perspective, it stymies the growth of networks that are not fully distributed and any new ideas [for programs] that we may come to the market with. It just makes it that much tougher over the transition period. There are MSOs that I go into today where we’re not allowed to mention the ‘A’ word -- the analog word. Clearly, there is that kind of tension going on.”