Need for Ops to Develop Content Stirs Debate

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Cable operators and content providers got into a lively debate here over the value of exclusive content to high-speed data networks.

During a panel session, operators basically contended that faster speeds and the "always on" aspects of cable-modem service continue to drive subscriptions, while content providers insisted the next wave of customers will crave content they can't get anywhere else.

Many industry pundits have stressed the future value of exclusive content, but AOL Broadband president Lisa Hook said that in terms of customer preference, exclusive games and entertainment take a backseat to safety and security. AOL Broadband provides a package of security software embedded in its high-speed add-on service, she added.

"There is a retention aspect to content, but they [customers] don't purchase [broadband] service for content," Hook said at the Cable & Telecommunications Association for Marketing Broadband Opportunity Conference general session last Sunday, held in tandem with the National Show.

Speed sells

Cox Communications Inc. executive vice president of operations Patrick Esser said speed is still the No. 1 driver of high-speed data sales, adding that tiering — offering slower speeds at lower prices — has shown some surprising results.

Esser pointed to Cox' Las Vegas system, where many fewer broadband customers who opt for a data tier take the slower speed for a reduced rate, as an example.

Cox also offers a higher-speed tier in Las Vegas, along with standard cable-modem service.

"The big opportunity is in a higher-speed model, with services that haven't been created yet," Esser said.

But Cox, which has been a bit burned by a costly local-cities content offering that was ultimately scaled back by majority owner Cox Enterprises Inc., doesn't see the need to spend heavily on creating those new services or content itself, Esser indicated.

Content debate

Though Wall Street believes exclusive content will drive additional broadband sales in the future, Banc of America Securities cable analyst Doug Shapiro said, investors don't want to see cable operators investing heavily in it.

"It [content] is a very important driver," Shapiro said. "But we wouldn't like to see a lot of money thrown behind it."

Walt Disney Internet Group president Steven Wadsworth argued that while there doesn't appear to be a big demand for exclusive content now, there figures to be in the not-too-distant future.

"It's a consumer-proposition issue," Wadsworth said. "There is value to having higher-speed and always on, but [consumers] need something to grab onto, not just technology."

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