Policy

ACA Summit: Broadband, Business Services Reshaping Industry

O'Rielly pledges effort to overturn Open Internet rules, streamline FCC process 3/30/2017 10:32 AM Eastern

Washington, D.C. -- "High speed data has years and years before showing signs of maturity," Cable One executive chairman Tom Might declared here Wednesday during a panel at the American Cable Association Summit

Echoing a growing view that over-the-top content is replacing traditional linear TV as a favored video source, especially among younger viewers,  Might said, "Were making more money on video today than we were five years ago," noting that about half of Cable One’s subscribers are focused on high-speed data service (HSD).

"We think over-the-top content is a great complement to our HSD-centric strategy," he said during a panel on "Leveraging Disruption in the Video Market." Might noted that Netflix service is integrated on Cable One’s TiVo boxes, but he admitted that "those are tough negotiations."

Might cited conversations with other independent cable operators here during ACA 24th annual Summit, with many of them skeptical about pulling back from linear video carriage. He said that Cable One applied Nielsen analytics to its services package starting about five years ago and found that "customers in some categories were not as profitable." 

"The psychographics of our own customer base" was surprising,  he confessed, but the company recognized that traditional customers were "largely going to competitors or satellite."  Moreover, about 10% had completely cut the cord.

With those findings, Cable One "had this Eureka! moment when we identified the value of different kinds of customers," he explained.

Might also said that with its digital plant in place, the company is better able to serve enterprise customers.

"Business services have grown at a steady rate and have a long road of opportunity ahead," he said.

Moderator Mark Robichaux (editorial director of NewBay Media's Multichannel News and Broadcasting & Cable) pointed out that in the last three quarters, "cord cutting is up and network ratings are down," observing that those factors may be contributing to operators' decisions to focus on broadband delivery services and "no longer pushing video."

RELATED: NCTC Accelerating OTT Content Packaging for Cable Ops

Dwayne Benefield, VP and head of Sony's PlayStation Vue, confirmed that he sees "a symbiotic relationship" between cable operators and OTT providers such as his.

By streaming Netflix, games, live TV, music and other services, "it helps drive acquisition for partners at a local level," Benefield said. He acknowledged that Sony is "talking to many companies in this room." 

Since PS Vue is not strictly tied to the PlayStation console for distribution, Benefield focused on the opportunities for cable delivery of its content. He claimed that, "We have more than 90% customer satisfaction levels."

RELATED: PlayStation Vue Bites Into Apple TV

Michael Smith, another panelist and professor of Information Technology and Marketing at Carnegie Mellon University, advised that operators could "look at marrying their brand to Vue, especially to reach the target demographic of 18-34 year olds."

Smith also recommended "not to think about Netflix as another channel."

"It is fundamentally a different business," he said. Smith is co-author of Streaming, Sharing, Stealing: Big Data and the Future of Entertainment, a new book that delves into Netflix role in the evolving market.

Too Many Commercials?

As for legacy video providers finding new roles in the evolving digital marketplace, Elisabeth Sami of NBC News identified a major challenge as "how to keep strong brand connections."  She also cautioned about the growing ad load on linear TV.

"The ad load today is harming our collective business as we compete with OTT services," said Sami, SVP-global strategy and business development of NBC News Group. "We need to reinvent what an advertisement will look like in the future.  There's talk about shortening ad pods by 30% and doing more target advertising. We're having to think about that a lot internally," she explained.

Although viewership on NBC's cable news as well as broadcast newscasts has climbed -- substantially due to interest in recent political developments -- Sami said that the networks "don't have a one-to-one connection" with viewers. 

"We're establishing them [viewer interactions] digitally," she explained, citing social media components that are now integrated into NBC News programming.

O'Rielly Seeks Operator Input  

Earlier in the program, FCC Commissioner Michael O'Rielly  focused on Open Internet/net neutrality, Business Data Services and policy reform. 

"I hope we can reopen the decision," O'Rielly said of the Title II ruling of the previous FCC majority. He said he disagrees with prioritization, noting that it was "incredibly problematic on how it tried to bifurcate the industry." 

O'Rielly characterized FCC Chairman Ajit Pai's efforts to "remove barriers" via process reform as "near and dear to my heart” and describing the effect of over-regulation as having "a unique and disproportionate effect on small businesses," which resonated well among the audience of small, independent cable operators.

During his onstage discussion with ACA president and CEO Matt Polka, O'Rielly (making his first-ever appearance at an ACA Summit) invited cable operators to tell the Commission, "What can we change to make your life easier - things that don't cause other industry segments to have a heart attack."   

O'Rielly said his goal is "to reduce the economic cost [and] to modernize our rules."

"Hopefully in this Commission, things will improve,” he said, and he smiled benignly when Polka reminded the Commissioner that he's now in the new majority.

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