Independent Cable Operators Eye Opportunities from Digital Transition

Executives from Small Operators Talk Strategy at Independent Show Breakfast

By Linda Moss -- Multichannel News, August 1, 2007

Monterey, Calif. -- Independent cable operators agreed that they need to have a voice and a role in the looming digital-TV transition, but they haven’t reached a consensus yet on exactly what their strategy should be.

That was the message at a breakfast panel discussion, “The Digital Transition and How It Affects the Consumer,” at The Independent Show here Wednesday, the last day of the joint conference of the National Cable Television Cooperative and the American Cable Association.

“While our role is not defined and we seem unwilling or unable to define it for ourselves, there are forces at work that are trying to define our role for us,” said panelist Bob Gessner, president of Massillon Cable TV in Ohio and NCTC chairman.

“If we don’t define our role, someone else is going to define it for us, and it will be to our detriment rather than our benefit,” he added, referring to the Federal Communications Commission and the National Association of Broadcasters.

Small and midsized cable operators, such as Massillon, appeared to agree that they can benefit and gain some leverage via their ability to deliver the digital signals of broadcast stations to analog-TV sets come Feb. 17, 2009.

Cable can do that via set-tops, by just plain wiring homes and by converting digital signals back to analog. The 2009 date is the cutoff when broadcasters will have to offer all-digital signals.

But cable companies have differing views on what the best way is for cable to assist in the transition and when its opportunity to take advantage of that digital transition will evaporate.

“The first step is getting consensus among independent operators about what is the best solution,” panelist Patrick Knorr, ACA chairman and general manager of Sunflower Broadband, said at the breakfast, which was hosted by Multichannel News.

Gessner proposed a transition plan, called “Save Our Sets,” in which multichannel-video providers would hook up anyone who is not a current subscriber free-of-charge and provide, for up to seven years, the primary signals of every TV station.

Broadcast-only consumers would surrender $40 government-issued coupons, meant for them to buy boxes to convert digital signals to analog, to the multichannel provider, like Massillon, which would then return them to the federal government.

In exchange, the multichannel-video provider would receive free retransmission-consent for the local TV stations for seven years.

“We think that’s a reasonable trade to make sure that every television station continues to appear on every television set in every home,” Gessner said, acknowledging that his plan would need legislation passed to make it work, in terms of retransmission consent.

Panelist Dom Stasi, chief technology officer for TVN Entertainment, said of Gessner’s proposal, “It makes eminent sense, and I think it may be the salvation.”

But some independent cable operators have expressed concerns about Gessner’s plan, namely the cost and maintenance of hooking up nonpaying customers, according to Knorr.

“For some operators, this can be a very elegant and good solution,” Knorr said. “But some operators are also concerned about [the fact that] there’s a lot of expense involved in supporting a connection. I think some operators are still concerned about that equation.”

The ACA is in conversations with the FCC and members of Congress on the digital transition, according to Knorr, and it also needs “a seat at the table” with the Consumer Electronics Association.

“There are several proposals that we are looking at as an organization to work on behind-the-scenes,” he said. “We are working on getting cable’s voice heard.”

Panelist Megan Pollock, the CEA’s manager of public-policy communications, said, “None of us is going to be able you do this by ourselves because all of our pieces have to fit together.”

Knorr and Gessner disagreed about when cable’s window of opportunity, with the most leverage potential, will end.

Gessner pointed out that Congress has expressed concern about consumers’ analog-TV sets being rendered useless. “We can use that concern, at crisis, as a fulcrum for our leverage,” he added. “But that leverage disappears and could disappear very quickly.”

Knorr disagreed, saying, “There is a series of windows of opportunities.”

At the breakfast, cable operators also voiced additional concerns about the 2009 digital transition: that some would not be able to receive digital signals from TV stations over the air in remote cable systems, a worry expressed by NewWave Communications’ Tom Gleason; that they don’t know if they can convert digital signals to analog, also cited by Gleason; and that there are no standards to convert a broadcaster’s HD digital signal to standard-definition.