Ops: Speed, Convenience Drive Cable Modems - Multichannel

Ops: Speed, Convenience Drive Cable Modems

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Chicago -- Cable operators and content providers got into a lively debate
over the value of exclusive content on high-speed-data networks, with operators
arguing that faster speeds and the "always-on" aspects of cable-modem service
continue to drive subscriptions and content providers insisting that the next
wave of customers will crave content they can't get anywhere else.

While many industry pundits have stressed the future value of exclusive
content, AOL Broadband president Lisa Hook said exclusive games and
entertainment take a backseat in customer preference to safety and security.

She said AOL Broadband was introducing a package of security software
embedded in its high-speed add-on service.

"There is a retention aspect to content, but [customers] don't purchase
[broadband] service for content," Hook said at the CTAM Broadband Opportunity
Conference general session.

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

He said in Cox's Las Vegas system, about 7% of broadband customers take a
slower speed and 70% take a higher speed.

Banc of America Securities cable analyst Doug Shapiro said that while Wall
Street believes exclusive content will be a driver of additional broadband sales
in the future, investors wouldn't be thrilled to see cable operators investing
heavily in 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 will 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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