Anaheim, Calif.— In his public debut as CEO of the new, vastly enlarged Comcast Corp., Brian Roberts urged everyone — especially his employees — to tour the show floor and see the many vendors that spent time and capital trying to improve the cable business.
But he was talking to a much smaller audience than in years past. The 9,947 people who registered for last week's Western Show here and took Roberts' advice found plenty of products that promised to make networks better, faster and less expensive to operate. Last year, attendance was some 17,000 versus 33,000 in 2000.
Though the Western Show was substantially smaller than recent years, the confab will finish in the black.
"We'll actually make a profit," said California Cable Telecommunications Association vice president Jerry Yanowitz, chief planner of the show.
The association trimmed expectations, as well as expenses, and discounted admissions, so the goal this year was to break even at about 10,000 attendees, Yanowitz said. He attributed the profit to a rush of Thanksgiving week registrations, and the 192 exhibitors that eventually signed on for show-floor space.
For some, smaller proved better. NBC Cable was among the show participants pleased with the CCTA's downsized show, dubbed "Broadband Plus." Executives on hand to sell mun2 — NBC-owned Telemundo's channel for young Hispanics — manned one of the few programmer booths.
Networks — especially basic channels — had complained loudly in recent years about the high price of booth space, paired with shipping and assembly costs. In the past, executives had joked they'd just as soon buy a house for the CCTA to remove the logistical headaches.
But the smaller trade show also meant less of an outlay for exhibitors. For instance, NBC Cable spent $100,000, plus shipping and set-up fees, for its booth at Western Show 2001. This year, the cost was a more budget-friendly $20,000, plus the aforementioned logistics.
And despite the diminished attendance, all the key MSO executives were in Anaheim, said NBC Cable senior vice president of marketing and e-business Mark Hotz.
Sony stir
On the product front, Sony Corp. made some of the biggest waves on the show floor. The consumer-electronics giant not only trotted out four new digital set-top boxes, but it vowed to break the conditional access duopoly held by Motorola Inc. and Scientific-Atlanta Inc.
Sony boasted that its Passage technology (see story, page 2) can allow for two or more conditional access systems to coexist in a headend. That could potentially free operators from choosing only Motorola or S-A's control system.
Lab tests with several cable operators have been completed, and field trials could begin as early as this spring.
The four new box designs, meanwhile, are Sony's first attempt to reach out to operators aside from Cablevision Systems Corp. In addition to offering a high-definition digital box, Sony is now hawking a unit that combines HD and digital video recording capability; a basic, less processor-heavy version of its original Cablevision box; and Digeo Inc.'s Moxi multimedia gateway.
Sony is the third box manufacturer to step forward and license the Moxi reference design, along with S-A and Motorola. Adding a third box — which will be available for testing in first-quarter 2003 and for shipment in the third quarter — is yet another step in the drive to create a multimedia gateway product, according to Peter Kellogg-Smith, Digeo's vice president of marketing and programming.
"It gives them entry into the cable market and it gives us entry into retail, though that is down the road," Kellogg-Smith said.
On the data and telephony side, there was no shortage of products aimed at bolstering the economic argument for rolling out telephone service.
Broadcom Corp. hit the show floor with its new BroadVoice two-line voice-over-Internet protocol chip and software package. Using Data Over Cable Service Interface Specification 2.0-based technology and some souped up voice codecs, the package promised to boost performance while slashing bandwidth by half.
Though a telephone call takes up a fraction of the bandwidth consumed by a video stream, the sheer volume of simultaneous voice connections in a large-scale deployment could spell trouble for operators, according to John Gleiter, director of marketing for cable-modem and VoIP products at Broadcom Corp.'s broadband communications business unit.
"There's a huge market shift toward DOCSIS 2.0," he said. "If you can get a full DOCSIS 2.0 modem for the price of a 1.1 modem, why wouldn't you?"
Separately, Motorola Inc. debuted a new cable-modem gateway device that offers less, not more. The SBG 900 modem and wireless access router offers the same DOCSIS 1.1 capabilities as its predecessor, the SBG 1000, but cuts out the five-line wired Ethernet port and the Home Phone Line Network Alliance plug.
In similar vein, Terayon Communication Systems Inc.'s new snap-on voice port is also aimed at giving operators the option of adding voice service to existing data customers' service, using a module that attaches to their existing TJ 7200.
Further along in the IP network, the voice-control systems on display also sported additional functions. Syndeo Inc. came to the show with a soft switch that added four new call features, including number portability, dynamic quality-of-service capabilities, Communications Assistance for law Enforcement Act support and flexible dialing plan management.
"These are the final pieces we need to get to deployment," said CEO Ted Griggs.
Not to be outdone, rival Cedar Point Communications Inc. came to the show with a reverse GR-303 gateway addition to its Safari C3 media-switching system, effectively allowing cable operators to funnel existing switched telephony traffic and new IP voice traffic through the same gateway device.
In the back office, Convergys Corp. and Cisco Systems Inc. teamed to provide a more automated system for setting up, supporting and billing switched or IP telephony services. The integration project marries Convergys' ICOMS provisioning software with Cisco's Internet OSS for cable platform.
There wasn't as much sunshine for some tech providers. Connie Walters, director of marketing and communications for Arris Group PLC, said the access-gear provider usually has a crowd of visitors three to five people deep in its booth. Not so this year.
"This has been pretty slow," she said. "While we had a regular flow, we haven't been overwhelmed."
Other vendors were more upbeat. Although attendance was down, "the difference is the quality of the people," said James Kelso, SeaChange International Inc.'s vice president of marketing.
Added Clyde Hakim, vice president of marketing at data-monitoring software maker Auspice Corp., "The people are more influential."
Vendors in such hot technology sectors as video-on-demand, broadband software or IP telephony were largely pleased with the show. For others, quality time with just one Comcast executive made the trip worthwhile.
"Tom Hurley is here, and that's all I care about," said a programmer executive, referring to Comcast's senior vice president of programming.
Call for unity
Many at the show talked about gaining back some of what cable has lost in the past year's brutal economic climate. At the outset of his general-session one-on-one interview, Roberts said he hoped Comcast's new 21-million-subscriber base could help "reunify" the cable industry.
"Most of all, I really believe we're either going to succeed or fail as an industry," Roberts told his interviewer, CNBC's Bill Griffeth. "For the last couple of years, the industry, I think, has gone in too many separate directions. If there is one opportunity — big, big picture — that comes out of this deal, it's going to hopefully be to reunify the cable team as a cable team."
Roberts — who, as chairman of Cable Television Laboratories Inc., toured the show floor before the session — pointed to the DOCSIS standard as an example of a successful show of collective will that resulted in consumers knowing what to expect when purchasing a cable modem at retail.
To continue to compete against retail-friendly national satellite competitors, as well as telco digital subscriber line providers, cable needs to display the same unity, he said.
Appearing noticeably calm and poised, Roberts said that far from hunkering down, Comcast plans to "dramatically" accelerate its capital spending to get plant in its former AT&T Broadband systems up to snuff.
He drew applause when he said it was "nothing short of tragic" that only about two-thirds of the former AT&T plant in San Francisco is capable of supporting a cable modem. Comcast plans to invest $650 million in California alone, fixing up AT&T's former Bay Area and Southern California systems.
Comcast has three "job ones," according to Roberts: to rebuild the ex-AT&T systems, elevate cash-flow margins and improve the customer experience. He said Comcast's first financial guidance for 2003 would likely spell out those capital costs and detail a plan to return to cash-flow-positive status by the end of the year, while all but completing those rebuilds.
Such guidance would likely come in February, about 60 days after the merger closed, he said.
With announced asset sales — primarily of AT&T Corp.'s holdover stake in Time Warner Entertainment L.P.— Comcast is on a path to trim its debt load from $30 billion to about $25 or $26 billion.
But when asked he felt like king of the world, Roberts quipped, "We're king of the borrowed world, I guess."
"In the end, I think the model works," Roberts said. "The cable model works. And investor confidence will come back around, as long as the industry keeps focused on the right things and executes properly."
He repeated a statement he made at September's Walter Kaitz Foundation dinner in New York.
"The cry for free cash flow from Wall Street right now, which is fine and is appropriate at some level, should not impinge on the technological development that this industry has the opportunity to grasp," said Roberts.
Kent Gibbons and Linda Haugsted contributed to this report.
