Dolan Eyes $500 Per Month From Cable Subs
By ROGER BROWN -- Multichannel News, 4/2/2000 8:00:00 PM
New York-Cable operators that invest in network upgrades and deploy new services can make those platforms pay off handsomely, according to chief executives at some of the nation' s largest MSOs that are deploying digital-video, voice and data services.
For example, tomorrow' s "average" cable customer will easily spend a combined $150 per month for entertainment and communication services, including roughly $40 for analog and digital video, $30 for high-speed data and another $80 for voice services, according to Cablevision Systems Corp. CEO James Dolan. He spoke at Kagan Seminars Inc.' s "Broadband Technology & Finance" conference here last week.
Dolan didn't stop there. "What we' re looking for goes well beyond $150," he said, adding that he expects income from electronic-commerce transactions, Web hosting and myriad other services to climb to sky-high levels. "It' s not unrealistic to assume that you could see $500 per month [per subscriber]," he added.
To get there, Cablevision is upgrading its network to two-way capability and focusing on the New York area, using its The Wiz electronics outlet to push into retail and preparing to deploy a sophisticated digital set-top box that one day will control all appliances in the home, Dolan said.
His lofty forecast was immediately called into question by other panelists, including Rick Westerman, chief financial officer at UnitedGlobalCom Inc., who said he didn't think revenue of $250 to $500 per subscriber, per month, "is anything close to reasonable," adding that consumers would balk at paying such a massive bill.
Dolan countered that such a number would be considered "absurd" for a traditional supplier of entertainment video, "but if you go beyond that and view [yourself] as a credit connection, $500 doesn' t sound bad at all."
Operators with smaller systems outside of New York would be pleased to see more modest revenue gains, and are concentrating on rolling out digital set-tops and Data
Over Cable Service Interface Specification modems to get them.
"All I want is $60," said Rocco Commisso, chairman and CEO of Mediacom Communications Corp., the country' s eighth-largest operator, with roughly 750,000 subscribers.
Mediacom is busily deploying digital-video service in 17 markets, and it plans to have that service available to 60 percent of its subscribers by the end of the year, Commisso said. Meanwhile, the MSO is working with SoftNet Systems Solutions Inc.' s ISP Channel to provide high-speed data in 13 markets.
Cablevision already considers its data offering a success. Dolan said his company "proved that the retail model worked" last year when it began offering 3Com Corp. modems at The Wiz stories for about $150 each. He noted that 90 percent of customers successfully installed the modems themselves on the first try, and only 5 percent ever required truck rolls.
On the digital-video front, Dolan reiterated Cablevision' s plan to scrap all of its current set-top boxes and deploy 4 million Sony Corp. digital boxes to its 2.7 million customers in 2001-a plan that will cost the company roughly $1 billion on top of the $4 billion being spent on the network upgrade.
Dolan, who called the box a "digital computer," said it will be a thin-client unit, making it easy to upgrade via software. It will support interactive services and serve as the brain for in-home networks.
"This is the last box I'm going to buy," he proclaimed. "We intend to be the one operating system within the home."
Meanwhile, operators like Insight Communications Co. Inc. are busily consolidating headends, launching high-speed-data services and deploying less-sophisticated digital-video devices.
Insight, which operates mostly suburban systems, will construct 10 "superheadends" that each serve about 100,000 subscribers," president and CEO Michael Willner noted.
To date, the company is experiencing 20 percent penetration with digital video, which is now being offered in three markets on a node-by-node basis. Next year, it expects to achieve 5 percent penetration for data service and 10 percent for voice service, which Insight will deploy under the AT & T Corp. brand name, Willner said. which Insight will deploy under the AT & T Corp. brand name, Willner said.
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