It's a challenging and exciting time for MediaOne
Group Inc. chief technology officer Bud Wonsiewicz, the man charged with linking the
MSO's technology decisions to its corporate strategy. Besides dealing with the
ongoing digital rebuild, expansion of telephony and exploration of new enhanced services,
Wonsiewicz will be on the front lines of integrating his company's technology with
that of AT&T Corp. once their merger is completed sometime next year. Just as MediaOne
and AT&T (which trumped Comcast Corp.'s earlier merger deal with MediaOne) were
about to announce their merger agreement, Wonsiewicz talked with Multichannel News
senior broadband editor Bill Menezes about the progress of MediaOne's technology
initiatives, how customers have reacted to advanced services and what's just around
MCN: How is your sphere of operations affected by all of
the potential change that has emerged as a result of the merger discussions, first with
Comcast and then with AT&T?
BW: I would say people are working full blast with a
lot of enthusiasm because the opportunities are so great in the industry right now. That
would be high-speed data, telephony and advanced video services, as opposed to the
heritage of the industry, which is broadcast, one-way cable.
Having said that, they're also pretty up in the air
about what's going to happen, so we have no idea. People kind of settled down when it
looked like it was going to be Comcast and thought through that.
And actually, there was a fair amount of excitement --
particularly in the technical community -- about Comcast, because one of the things they
had let us know was that they were particularly interested in upgrading their technical
They saw the merger as a way to move from a traditional
cable company to a truly broadband company. So the folks at MediaOne Labs and the
technical people here generally felt pretty upbeat about that.
MCN: Comcast indicated that it viewed MediaOne as more
advanced in those types of services?
BW: They thought we had resources they didn't
would be the way to put it. They don't have quite the deployment of high-speed data
that we have, although they're doing it. They've held back on telephony, so
we've got quite a few more customers than they do. And in general, we've got
more technical-strategy people than they do, and we were in pretty heavy conversations
with them about [Digital Video Broadcasting] and that move. [MediaOne plans to deploy
DVB-based digital set-tops.]
Frankly, we probably wouldn't have [chosen DVB]
without the support of Time Warner [Cable] and Comcast that was reflected in our
announcement. That was one of the things that impressed them.
Also we've been working together on negotiating
telephony agreements with AT&T -- Cox [Communications Inc.], Comcast and ourselves. I
think that negotiation also made it clear to Comcast that they were going to really need
to beef themselves up, so the folks who felt like they were going to be part of the
beefing up felt really good.
A lot of other people here felt not so good at all because
of the stated intent to basically eliminate about 5 percent of the jobs.
The short summary is that the mood is very upbeat from a
technical-possibilities standpoint, [but people are] pretty concerned from an
organizational, 'Who am I going to be working for?' standpoint. The kind of
people we have working here probably could all get three job offers in a week if they
MCN: With this industry going so strong, is it tough to
retain people in that environment?
BW: Yes, we're concerned about that. Right now,
we're doing pretty well on retention. But that's obviously, as a manager,
something that's foremost in my mind.
MCN: Is there the same sense of excitement regarding
BW: When we announced the Comcast agreement, there had
been a lot of dialogue with the Comcast folks, and that sort of came out over the last few
weeks. We just announced the AT&T agreement, so we haven't heard any of that
There are lots of questions about what do they value, what
don't they value, what's going to happen. I expect all of this to be settled in
a scale of weeks, though, not months. That will help everybody.
MCN: Let's talk about the advanced-services area.
What's the status of your upgrades now? I know you were shooting for 70 percent
completion of your digital upgrades by year's end.
BW: We're on track for that, and we've been
very pleased with the quality of the two-way plant we've been delivering lately. As
you may know from talking with people in the industry, it's easy to say you're
upgrading, but it's hard to actually go in and roll out telephone service,
high-speed-data service or interactive service on the plant.
MCN: You're planning your second and third digital
launches by the end of this quarter. Will those deployments include the Philips Consumer
Electronics Co./Canal Plus/DiviCom Inc. DVB boxes you announced in February?
BW: It's our goal to have a DVB launch in the
second quarter. We're working real hard, and the signs are real encouraging. I just
visited Philips and Canal Plus last week, and I was really amazed by what I saw. It
confirms my feeling that DVB is going to be quite an amazing innovation in the industry.
MCN: What are the types of things it's bringing to the
BW: The main thing it's bringing is the fact that
it's a world standard, so I think there are in excess of 5 million set-top boxes
deployed. The leading American manufacturer has on the order of 1 million, 1.5 million.
The relative scale of DVB is much higher.
In the electronics industry, anything that's dominated
by silicon is dominated by the number of units produced. And you have a worldwide market
that includes satellite, cable and direct-broadcast [satellite].
I also saw OnDigital in England, their
terrestrial-broadcast system, and they're using a DVB box. You now have the ability
for very large scale. That allows you to create new generations of chips very quickly, and
to introduce pretty amazing new functionality and lower cost. It's more like the
dynamics of the PC [personal computer] industry.
But specifically, you would see electronic program guides
that were very sophisticated, very graphic- and video-oriented. You'd see the size of
the circuit boards having dropped in half, and the costs generally being proportional to
the area. You'd see the ready integration of TiVo [Inc.] type disk storage, so
you'll be able to time-shift movies and store your favorite shows without much
programming and no tapes or whatever.
That has very big implications for the cable industry, and
it has implications for VOD [video-on-demand]. I believe the local storage on your set-top
and the storage in our nodes will be complementary. But that would be a great example of
something that's already up and running in Europe in prototype. They're just on
a much faster innovation track than our domestic units.
So I'm very excited about DVB in the long run because
the worldwide scale is going to allow a level of integration and functionality, and it
will bring amazing benefits to our customers. The OpenCable standard has to get that kind
of volume. Otherwise, we will be continually disadvantaged with respect to satellite or
terrestrial, which is on that curve.
We no longer have a monopoly on multichannel, and our
ability to compete really crucially depends on our ability to get PC-industry-like
dynamics on the set-top box.
MCN: Do you see the scale DVB has speeding the quantity of
boxes to market?
BW: Yes. The key manufacturers are already producing
very large quantities for both the satellite and terrestrial and the international cable
market. In a sense, it's another example of how the world shrunk. We pursue two
proprietary domestic standards at our peril.
The thing that's getting really obvious is telephones,
cellular telephones. Having just spent a week in Europe, I am astounded by the GSM [Global
System for Mobile Communication] phones. They're basically one-half the size of our
best domestic phones. Somebody at a meeting flipped out this phone -- it's a Nokia
[Inc.], but it flips open, and it's got a beautiful high-resolution screen
that's good enough to get a fax on and a keyboard that's a little bigger than
the pager keyboard Motorola [Inc.'s] got. And it's a phone and a speakerphone.
And it's all just numbers of units. It isn't
incredible technology or anything: It's just the fact that you've got the whole
world buying to a standard, so that just crunches the cost of the silicon. I see DVB as an
incredibly strategic move for the industry.
MCN: Has anybody started to follow your lead? General
Instrument Corp., for one, said it would be working with you on an OpenCable type of box.
BW: They're committed to a DVB, OpenCable
implementation. I'm using DVB a little loosely because we're using their
conditional access, but we're using the rest of the North American electrical
standards. It isn't a pure DVB box. The precise way I try to say it when I write it
is DVB/OpenCable. We've had a number of discussions with other firms about pushing
the standard forward. We're pretty optimistic that you'll be seeing significant
MCN: What's your sense about other major cable
operators? Are they interested?
BW: Absolutely. We wouldn't have made the choice
if we were the only operator. You saw this in our announcement endorsement from Time
Warner and Comcast. Since then, we continue to have encouraging discussions with them and
other key major cable companies.
We've all got to negotiate with the vendors
independently. But they've been very supportive of that as a standard, and we're
pretty optimistic. A real key will be when the first city is up and running. A lot of
folks are waiting to see that happen.
MCN: When that happens, will it be with the DVB box as the
BW: It'll be DVB/OpenCable, and this implies that
it's 'Simulcrypt,' which would allow multiple conditional access on it. For
example, if GI produces a DVB-compatible box with their proprietary conditional-access
system, Simulcrypt can support that. So in fact, that's one of the discussions
we're having with them -- that we would like them to produce boxes that could be
deployed in the first DVB city.
Similarly, a requirement on them is that in the city, they
do that by date-certain -- support other manufacturers' conditional access on DVB.
All of this is demonstrated: You can go see it in Europe,
so it isn't pie in the sky. There are complete mixtures of systems and conditional
access running on cable systems there, and it works very well.
It's a common encryption scheme, so the video signals
are all encrypted by one DES-style [Digital Editing Solutions] encryption system, where
the conditional access varies by how the key is passed and the technique by which the key
So that's how you can run several different
manufacturers' things, provided they're running a chip that does the basic
encryption. Any domestic manufacturer that wants to sell internationally has got to have
that encryption in their chip.
The big surprise for us was when GI said, 'We can do
DVB/OpenCable for you.' The reason why they were able to do it was because
they'd already had that incorporated in their chips.
MCN: Have they already produced trial boxes for you?
MCN: When do you expect those?
BW: I don't think I'm going to give you that
date. It's the subject of a lot of heat right now. But I would think that as soon as
that's settled, we'd be talking about it, because that's a key industry
MCN: What are the types of services you'd like to have
enabled right off the bat when you start deploying the advanced set-tops?
BW: Let's take them by category. For entertainment
TV as we know it right now, the imperative is to match satellite in quality, quantity and
choice. Digital services are just per sea very important event for the operators.
So we're seeing very rapid take in Detroit of our digital service, and the other MSOs
are all seeing a lot of demand for it, because it provides the user with greater variety,
better signal quality and a good EPG.
Right behind that, in my opinion -- but not yet tested --
is video-on-demand. We're very bullish and aggressive on video-on-demand. I think the
advantage we have over satellite is our ability to have interactivity. So the user is in
control of what they see. In other words, I want Titanic now, I want to see Casablanca
now -- the phone just rang, I want the movie stopped.
Video-on-demand, from a technical and economic standpoint,
seems to have crossed over, so the business cases look very positive. There are a number
of trials going on across the industry, and we're tracking them very closely.
MCN: Are you doing your own trial?
BW: Yes, we haven't announced the trial, but we
intend to do a trial very shortly.
MCN: Can you tell me whom you're using for the trial?
BW: No, and that's because we're still
fighting about it.
MCN: There seems to be a consensus that the business case
is now very bullish for VOD. What has been the biggest challenge in terms of being able to
actually roll it out?
BW: I think it's recent that the economics have
turned around. It's been Moore's Law working its magic on the cost of the video
store. It's been maturity on those video pumps. Now there are several manufacturers.
There have been challenges on negotiating reasonable business conditions -- some of them
have business models we don't find very attractive.
And then there's the stuff people like me usually
don't think about -- a fair amount of back-office work to be able to bill movies
properly and make sure movies are easily installed, and so forth. The manufacturers have
been coming up with systems that have been more robust in that respect.
MCN: Are you finding that high-speed-data services are
having a big impact on your customers?
BW: We did some detailed ethnographic studies of some
of our first-time MediaOne Express users, and we asked permission to come in and spend a
day with the family after they got the service and got used to it, to record what they
were doing, every key click and stuff. And then to come back in a couple of months after
they really had a chance to adapt to it and spend another day with them.
The people who did it were ethnographers, or
anthropologists. They see things marketing people and technical people don't see. For
example, this family rearranged its furniture. Being "always on" moves the PC
from the den to the living room. And they changed the way the family interacts. For
example, instead of going to the bedroom and closing the door, the always-on machine is
moved to the place where the family hangs out.
And sometimes the place where the family hangs out is
changed. One mom moved it into her kitchen so she can cook, the kids can do their homework
on the table and the Web is right there, so it's all shared.
Another family had kind of a little place where the kids
did their homework, and they moved the PCs there.
Another had a room in the family that was kind of
dad's den, and the deal with the wife was that she wouldn't clean it and
wouldn't complain about how it looked. It turns out that because the high-speed
connection comes in there, the wife has moved a TV in and a couch, and the whole family
hangs out there while dad's working.
Most of the use of the service has not been the person who
bought it, and who has typically been a computer-literate person -- it's been the
kids and the spouse who, in general, had no use before.
It's transformed by always on, meaning you just walk
up to the machine and you type "CNN," or you type "Weather," or you
type "Disney." You have no perception that you're on the Internet, and you
have no perception that it's high-speed data: It's just like opening your
refrigerator and getting some milk.
That's what the huge breakthrough is, and it's
something we did not anticipate. But we think it will lead to a mass market, and
we're already seeing very high penetration, so that's the next consequence of
MCN: When is Internet-protocol telephony likely to begin
making its commercial appearance? Is that a function of equipment or crossover revenue
BW: A little bit of both. The most bullish people say
it's a year away. Other folks say it's three to four. I'm not that bullish.
It's pretty tricky. I would not be totally surprised if in a year, there's
viable IP, but I wouldn't want to bet on it.
We're basically taking a "We'll do it when
it's ready" attitude, but we're being pretty aggressive about it because we
think it fits well with the rest of our strategy. So it isn't like we're sort of
hoping it doesn't happen -- we'd like to see it happen as soon as possible.
But in the meantime, it's very important that we get
phone service out if for no other reason just to demonstrate to the regulators that we are
a viable alternative to the monopoly phone service. I think that's very important to
us as an industry -- that we do this and do a good job of it.
MCN: Will your initial advanced set-tops incorporate cable
BW: We will be offering some set-top boxes with cable
modems, and independently, we're going to be pushing cable modems very hard. My
opinion is that these things may be more separate than convergent. Things we see people
doing on their PC or laptop are very different from the things they do in front of their
TV. The difference is between a "lean-forward" environment versus a
"lean-back" entertainment kind of thing, which is often a group activity.
If you live in a family, I don't think it's real
likely that you're going to be reading a lot of e-mail on your TV. Most dads have
already ticked off people enough with their use of the zapper, and if they start taking
over the screen, as well
Similarly, I don't think a lot of people are going to
be watching Titanic on their PC at home. To some extent, I think the idea that
everything is going to converge, and that you won't be able to tell your TV from a PC
-- that just isn't going to happen.
And it hasn't happened in other areas. People thought
your washing machine was going to do your dishes. They had all kinds of visions, and it
turned out that specialized appliances are usually better.
MCN: What else have you learned from your consumer
BW: One thing the industry needs to recognize is that
we're in a race for survival with DSL [digital subscriber line] and the phone
industry. There's going to be a split between how many homes take what, and it's
very important that we succeed in that competition.
One of the elements we can see from our studies that is
going to be very important is the ability to be mobile once you're in your home. I
think wireless connections are going to be very important.
We're thinking real hard about that, trying to think
about ways to test that and to bring it to our customers as soon as possible. We're
members of the MIT [Massachusetts Institute of Technology] media lab, and that's been
very fortunate for us, because most of them are MediaOne Express customers.
As a cable guy, I'm not used to having people say,
'Wow, you work for MediaOne? You've changed my life.' But that's what
happens when I walk down the halls of MIT, because all of a sudden, people have always-on,
megabit data service that works and is affordable. It literally has changed their life.
Some of them have wireless local-area networks in their
home, and they say that's been the next big "change my life" kind of thing
-- now you're not stuck to wherever the thing is because you can be doing whatever
you're doing anywhere. You could be watching the TV and reading your e-mail.
MCN: Whom else are you working with on this?
BW: We're working with a number of players -- both
folks who are directly in the wireless industry and other people who might integrate what
they're doing. We've been really active in that.
MCN: That touches on the whole home-networking area. Is
this something you're looking at as part of your service offering even before the
wireless applications are widely available? For example, is MediaOne starting to sell some
of the home-phoneline-networking kits that are out there?
BW: We're looking at all of that. We think the
home-networking problem is crucial, and it will be one of the determinants of whether DSL
or DOCSIS [Data Over Cable Service Interface Specification] ultimately gets most of the
MCN: How so?
BW: I see a world in which there isn't just one PC
per home, and it's not that far off. We already see sub-$500 PCs. I think a decade
from now, they might be like calculators. It will be a while before Web access is in that
form, but it's not that unreasonable to think about a Web-access machine per member
of the family and possibly per function. I don't think that's very far-fetched.
The cable industry is just emerging from an era of
scarcity, where we didn't have enough bandwidth to carry the channels we wanted, to
one of great abundance. A shift from broadcast to interactivity, which is still in the
future, will really radically change the use of our networks. Because anything that's
interactive and aimed at you, I can recycle that bandwidth on the same node for a totally
different purpose. Anything that's broadcast, I have to use the bandwidth for the
same purpose throughout the city.
We're at 500-person nodes. Let's imagine it turns
out that you want to get most of your entertainment on-demand, instead of when it's
scheduled to be broadcast to much of the city. So you want to watch the fly-fishing
channel, but the node you're on is being occupied with that spectrum.
The Internet is a similar kind of thing: Only the traffic
that's aimed for you and the other people on the node is carried on that spectrum --
the rest of the city is being carried on other nodes. This is a huge advantage over
something like satellite, which illuminates either a continent or, at best, a region --
say, Longmont to Pueblo, Colo.
To do interactivity there, they have to use that bandwidth
up over that whole region. In our case right now, it's a neighborhood, and we can
also economically subdivide that by splitting our nodes even further into very small
So we believe that cable is the method of choice for
carrying very large amounts of interactive bandwidth. And it's a perfect match to
what's happening both on the Internet and in video-on-demand and other kinds of
MCN: How has the relatively small number of DOCSIS
certifications so far affected your modem strategy?
BW: We're patient on that. I'd like to see it
all go faster, but DOCSIS is a key part -- that's interoperability, that's
scale, that's worldwide standards for chips. So we see the Europeans now adopting
that for satellite and boxes -- all of that is very good news for the consumer. We see
DOCSIS having a lot of features that are going to be very important to us -- particularly
the ability to regulate and charge for the speed and the quantity of material that's
MCN: Does certification affect the use or deployment of
your vendors that have not gotten certified yet?
BW: We're clear that our future is DOCSIS, so we
will be a DOCSIS system as quickly and economically as we can do that.
MCN: So as certified product becomes more readily
available, the legacy stuff will be replaced?
BW: That's kind of a detailed business decision.
But what you'll see is that because the growth is so amazingly fast, we'll go
from 10 percent DOCSIS to 90 percent to 99 percent in a very short period of time, because
all of the new stuff will be DOCSIS. How we phase out the proprietary stuff is sort of a