A Plan for Broadband Battle2/24/2006 7:00 PM Eastern
DirecTV Inc. and EchoStar Communications Corp.'s Dish Network are now two of the four largest “multiple-system operators.” Telephone companies are spending billions to build their own broadband video networks. Internet services are putting up as many hours of video as they can put their hands on.
But only cable has a $100 billion broadband network of networks already built out, both for TV and Internet access. Here's how a rededication to innovation will enable cable operators to ride the waves of change.
Retain customers, don't just recruit them. Initiate loyalty programs, giving free months of services to loyal customers. Market the value you're already giving, to quiet the “a la carte” clamor.
Give customers control of technology. Cable operators could provide a $100 to $300 rebate to manufacturers who bundle digital-cable subscriptions with the purchase of a high-definition TiVo digital recorder or Hewlett-Packard multimedia PC, for instance. Operators also should work with Microsoft Corp. and Sony Corp. to build access to cable programming into the Xbox 360 and the PlayStation 3, and ensure any popular media device in the home can hook into cable. Cable should focus on broadband services, not the set-top box business.
Expand digital cable's retail presence. Leverage CableLabs' successful Go2Broadband back-office system to expand retail distribution to Wal-Mart, Target, Costco and Sears. Offer up ad inventory, promotional opportunities and even dedicated shopping channels to entice the biggest retailers to push the sale of digital services.
Send now, let the customer watch later. Using “push multicast” technology, send out the most popular 50 movies at one time, to all subscribers' digital recorders. You capture the on- demand revenue without unnecessarily burdening the network.
Take localism to a new level. This is the hallmark of cable: Comcast Corp.'s trailblazing video-on-demand initiatives and community-access channels; Cablevision Systems Corp.'s News 12 and Mag Rack services; Time Warner Cable's regional news channels. Partner with local broadcasters or newspapers to create cable-exclusive local interest channels. Find even more innovative ways to disseminate localized news, weather, sports and community information to younger demographics accustomed to the Web.
Capitalize on “t-commerce.” TV-based commerce can be more powerful than e-commerce. Cablevision's Optimum Autos channel demonstrates the Web isn't the only competitor to newspaper classifieds. You can craft special-interest channels and tie into deeper VOD content on specific topics — and advertiser-produced material.
Get into WiMax before the satellite services do. Comcast, Time Warner, Cox and Advance/Newhouse have already forged a joint venture with Sprint Nextel Corp. — the leading supplier of broadband wireless services under WiMax technology The other big WiMax player is ClearWire, controlled by Craig McCaw. McCaw's original family business was … cable. Work with Sprint and ClearWire to give them crucial local marketing support — and have them help you provide high-quality mobile video services and additional last-mile bandwidth.
Cable can conquer the broadband battlefield. But winning against satellite and telephone companies will require moving quickly and creatively. Most of all, it will require cable to connect with the customer better than anyone else in the business.