A Bullish NCTA Can't Hide Bearish Issues

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The National Cable Television Association staged a convention last week that extolled the industry's broadband prowess while attempting to camouflage its shortcomings.

Oh, excuse me — the trade group's changed its name to the National Cable & Telecommunications Association.

Or maybe it should be called the National Cable & Trucking Association. That's because the way that convention speakers liberally used the term "broadband" to herald all manner of new businesses, you'd think cable might as well try trucking too.

Despite lower attendance, the Chicago convention presented a positive public image, largely due to the broadband promise of video, voice and data — not to mention talk of monitoring your thermostat, lights and refrigerator.

Cable operators could proudly thump their chests because cable's broadband potential is on the rise, prospects for the digital subscriber line industry are going down, and Rupert Murdoch's bid for DirecTV Inc. was hanging in the air.

Financial analysts presented glowing forecasts for large MSOs and media conglomerates, with Rich Bilotti — the provocative managing director at Morgan Stanley Dean Witter — declaring, "Cable is entering a golden age."

We were told that digital churn is not an issue, at least in the opinion of AT&T Broadband president and CEO Dan Somers.

The regulatory environment, we were repeatedly told, is better than ever. Heck, the chairman of the Federal Communications Commission even did a somersault for the audience.

NCTA president and CEO Robert Sachs proclaimed, "We've made the word broadband part of consumers' vocabulary and made broadband a serious part of their lives."

Well, broadband is a part of many people's lives, although I doubt you've heard your neighbor say, "Man, I had some good broadband today, and I'm thinkin' about getting some more broadband tonight."

When the grand pronouncements fade away and the rubber meets the road, companies find that new businesses like high-speed Internet access, interactive TV, telephony and home networking are difficult to execute.

As Ted Turner — who's absence from the convention seemed to be symbolic of the times — might say: "It ain't as easy as it looks."

While the "broadband" buzzword connotes a totality of video, voice and data, cable operators and content companies are struggling to integrate competing business agendas, technologies and operational demands.

Inside many companies, the business sometimes isn't "cable & telecommunications" — it's "cable vs.
telecommunications." Until there is greater convergence, television and telecom can be strange bedfellows.

The convention exhibitors want to be part of this broadening landscape, but they must come to grips with a consolidated industry in which only seven or eight MSOs really matter. For this year's Western Show, organizers are offering to pay major operators to attend and mingle with exhibitors.

And for all the gilded talk of broadband, there was no hiding the uneasiness among many exhibitors about whether MSOs are willing or able to aggressively deploy new services.

It's a similar feeling as to when one of your friends — who is overweight and set in his ways — tells you he's changing his image and going on a diet. You tell him, "Good for you," then wait to catch him eating an éclair.

Certainly the industry looked like it was on a diet because, at the convention, thin was in. There were thinner booths, as well as thinner floor traffic, thinner amounts of tchotchkes and big parties and a greater reliance on "thin-client" set-top solutions.

The thin boxes could enable operators to deploy many advanced services more quickly. Both operators and consumers have shown substantial interest in such applications as video-on-demand, personal video recording and walled-garden content.

But AT&T Broadband's recent retreat from "thick" set-tops led people to question — as Los Angeles Times
reporter Sally Hofmeister asked panelists — whether we will see advanced services "in our lifetime ever?"

Jessica Reif Cohen, a managing director of Merrill Lynch, noted Hollywood's reluctance to provide on-demand movie rights. She said VOD is "still 10 years out." I hope that's within in our lifetimes.

On the exhibit floor, one of the attractive new examples of real-world ITV applications was ESPN Today, a "virtual channel" providing sports-news and advertising capabilities. It was recently deployed — on DirecTV.

In order for cable operators to roll out ITV more aggressively, they want clear business models and an easy pathway to deployment. Advanced boxes will become an asset, but for now the industry needs to keep it simple, stupid.

Perhaps the biggest issue to rear its ugly head is rights and the attendant costs and complexities in acquiring them — whether they're rights for programming, interfaces, applications or technologies.

The issue goes beyond mere price negotiations. It encompasses larger corporate power plays. For example, a fight over rates between ESPN and Charter Communications Inc. escalated into a squabble over broadband streaming. Welcome to cable & telecommunications.

FCC Chairman Michael Powell, who followed his somersault with a level-headed speech, noted cable's catbird position, but challenged the industry.

"Will you snatch defeat out of the jaws of victory?" he asked.

Put that in your broadband pipe and smoke it.

Craig Leddy can be reached at LeddyColumn@aol.com.

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