Cable Show: Fries: Netflix Exposed ‘Functionality Gap’

Cable Bridging The Gap With Products Like Horizon & X1, Liberty Global Chief Says

Los Angeles – Cable industry execs here generally dismissed that the rise of Netflix exposed a failure of the cable industry, but one acknowledged that the streaming giant has at least taught the industry a valuable lesson.

Netflix “exposed that we have a massive functionality gap,” Mike Fries, Liberty Global’s president and CEO, said here at The Cable Show during the tech-focused portion of Tuesday’s general opening session.

Netflix, he said, showed the world that there’s a  simpler, cooler way to find and navigate content and to receive video recommendations, noting earlier that online video and its rate of consumption “has impacted every aspect of our business.”

The cable industry, he added, has begun to bridge the gap with products like Comcast’s X1 and Liberty Global’s own product, Horizon -- both next-gen video platforms that feature fancy new interfaces and the ability to reach not just TVs and set-top boxes, but mobile devices as well.

“My kids spend more time on X2 than they do on other environments,” Fries said, referring to the new generation of the X1 platform that Comcast rolled out earlier this year.

But Liberty Global has become somewhat a fan of Netflix, which is opposing Comcast’s proposed acquisition of Time Warner Cable.

Virgin Media, Liberty Global's U.K.-based subsidiary, offers access to Netflix on leased boxes that run the TiVo platform.

“You don’t have to leave our environment,” Fries said of the combination's benefits to consumers. “We may do that in other markets.” Liberty Global, he added, might also launch its own over-the-top services as well.

Fries also addressed the specter of network neutrality rules. Although Liberty Global, which operates primarily in Europe, faces a different regulatory environment than U.S. operators, Fries said net neutrality is “all about video,” whether the discussion is about providing a broadband “fast lane” or volume-based billing of high-speed Internet services.

Netflix is playing “an important role in our future,” Phil Lind, executive vice president of regulatory and vice chairman of Canada-based Rogers Communications, said.

He called Comcast’s recent paid peering deal with Netflix “a breakthrough on how the Internet will be treated.” Verizon Communications and Netflix confirmed Monday that they had inked a similar interconnection deal.  

Earlier on in the panel, moderator Betty Liu, the editor-at-large and anchor of Bloomberg Television’s In The Loop, asked panelists to address why authenticated TV Everywhere services have not been adopted by consumers as rapidly as the industry might like.

While the authentication process is one of the easy culprits to blame, CableLabs CEO Phil McKinney said the overall issues are far more complex, and reach not just into technology but distribution rights as well. The cable industry and its programmers have been “catching up” on both fronts, he said.

CableLabs, McKinney added, has TV Everywhere-pointing projects that are looking to iron out the authentication issues, with the aim of making it “insanely simple.”

Although putting video on tablets, smartphones and other connected devices is now important, the “big screens are alive and well,” Fries said, noting that 85% of video is still consumed on TV screens. “For the cable industry, that’s good news, I think.”

One company that has all the screens covered is Rogers, the rare provider that operates its own cable and wireless networks, and factors both into how the company approaches mobility, Lind said.

And Rogers also has a different attitude on WiFi than some of its cable peers. “We offer WiFi, but not as a competitor to ourselves. We just offer it.”

Liberty Global, meanwhile, has been deploying WiFi and tackling mobile services through reselling partnerships with carriers. “Mobile is a big piece of our business,” Fries said.

Panelsits also dug into the wired broadband topic, particularly into DOCSIS 3.1, a new platform that will be capable of providing multi-gigabit speeds and, starting soon, will be linked to a new “Gigasphere” consumer brand.

McKinney said he expects to see prototype DOCSIS 3.1 gear this year, product certifications following in 2015, and broad deployments by 2017.

“We’ll roll it out as soon as it’s ready,” Fries said of DOCSIS 3.1.  He said the average Liberty Global subscriber gets speeds of 50 Mbps (downstream), while most new customers are taking 100 Mbps tiers.