The cable industry has changed dramatically in the past 20 years. In 1993, the competitive landscape was different. Satellite television was still in its infancy and OTT was unknown. Today, the video content business is exceptionally competitive with Satellite providers, telcos and Internet players vying for viewers.
Consumers have more choices than ever before; there were fewer than 100 channels 20 years ago but nearly 1,000 today. With services like Netflix, Hulu Plus, and YouTube, the market is crowded. Demographics and viewing habits also change continuously, creating market opportunities that require new approaches and more complexity.
NetCracker Technology, founded in 1993, has had a front-row seat to the past two decades’ ups and downs. Much like the cable industry, NetCracker has undergone a major transformation. From startup to market leader, NetCracker now offers a portfolio of mission-critical OSS, BSS, CRM, and enterprise IT products, solutions, and professional services. From a handful of clients to a worldwide customer base, NetCracker has leveraged its acquisition by NEC to successfully expand its offerings and global presence.
To commemorate NetCracker’s 20th anniversary this October, Andrew Feinberg, CEO, sat down to reflect back on the past two decades and take a look ahead to the changes he sees coming for the cable industry in the next 20 years.
Congratulations on your 20th anniversary. From a small startup to a market leader today, you’ve navigated massive industry and technology changes over the last 20 years including two major market downturns in 2000 and 2008. NetCracker expanded while large established companies failed. What is the secret of your success?
First and foremost, our focus has always been on our customers’ success. Also critical to NetCracker’s success is our singular focus on delivering the most innovative products in the market that solve real-world problems. By listening closely to our customers, we have been able to create and deliver solutions that address the major business challenges cable operators face. Our solutions today cover BSS, OSS, CRM, M2M, Digital and E-Commerce and Professional Services. Underpinning these professional services is our skilled workforce. Their skill and execution have ensured successful delivery of large transformation programs for cable operators in all parts of the world.
What change in the last 20 years has helped to create the greatest new opportunities for cable operators?
MSOs have always been TV and entertainment providers, but now they’ve become much more. They are broadband providers enabling a digital lifestyle – from devices to homes to consumers and businesses.
Their broadband offerings have opened the door to digital content, the emerging M2M opportunities, including Smart Home and business-to-business applications.
These diverse new offerings broaden cable operators’ addressable markets and expand their customer relationships substantially.
Digital content access and consumption is driving changes across the industry. Where do you see the most changes?
Without a doubt, it’s the change in the customer model. Cable operators are moving from a model that is completely home- or premises-based, to one that includes the home or premises, but also has to cater to individuals at a highly personalized level. That’s a fundamental change that digital content is driving. Operators now have to handle everything from user authentication and content entitlements, to billing and payment, to front-line care and support. The impact it has on cable operators’ OSS, BSS and CRM infrastructure is transformative. That’s something we are heavily engaged in helping our customers to address rapidly, efficiently and seamlessly.
Cable operators have targeted new growth opportunities in areas such as Smart Home and the Enterprise B2B market. What gives cable operators a headstart, and what can they do to continue that growth?
Existing customer relationships and outstanding connectivity with guaranteed quality give operators a great foundation to build on. But they will have to be exceptional with their IT capabilities, customer-facing systems and business processes. They will have to leverage the latest in M2M and device management to further enhance their smart home offerings. On the B2B side, they can accelerate growth through vertical offerings for security, logistics, healthcare and other industries that are looking for more than just connectivity.
First, operators need to ensure that their installation and service activation processes are extremely efficient, so synchronizing all of the steps that lead up to device activation, service instantiation, data collection, and billing is critical to the end-to-end offering. From there, they need to manage all of the transactions involved in remote monitoring and have full control over devices on the customer’s network or premises. Those transactions include processes like user authorization, authentication and security, but extend to the many types of data that M2M devices will collect and generate. Customer self-service features are also critical, not only to allow customers to add or change features, receive alerts, troubleshoot everyday problems, and pay bills, but also to restrain, if not drastically reduce, the cost of more complex customer interactions.
Additionally, operators need controls that allow them to leverage and optimize capabilities in upcoming DOCSIS generations, including support for gigabit connectivity and the ability to reconfigure network channels and capacity on the fly. Bringing that kind of dynamic configurability helps operators unleash the power of their broadband networks in ways that enable and support specific applications beyond their Internet-access or regional connectivity services.
What do you consider the top challenge for cable operators in the next decade?
The cable industry faces more competition in its core markets than ever before. We cannot understate the urgency to innovate due to the pressure that low cost and free OTT content have generated. In some markets, such as in the U.S., regulatory constraints limit cable operators’ ability to merge or expand beyond a certain scope. Therefore, rapid growth and scale are not always strategic options. Cable operators must become more efficient in terms of both cost and revenue. The cable and communications industries are each in an era today that is defined largely by complex transactions and customer interactions. Simply put, operators must increase revenue per transaction while reducing cost per transaction and customer interaction.
To seize their new market opportunities and combat competition and price erosion, cable operators have to support dozens of new types of transactions that are integrated into services like digital content, video-on-demand, M2M solutions, remote monitoring, and cloud-based applications. They also need to support more complex payment schemes, covering prepaid, post-paid and most of the real-time payment domain. Each increases scale and cost, especially in terms of new infrastructure and growing demand for customer support.
In a world where cost control is important, how will this impact high CapEx and OpEx areas such as the mobile space? How do you envision cable’s mobile strategy unfolding?
Spectrum represents a huge cost that can be a barrier to entry for facilities-based mobile strategies. In Europe, some cable operators are also mobile providers, and others have pursued MVNO strategies. In the U.S., we have not seen the MVNO plays unfold. But, beyond delivering some kind of 4G or greater service directly to customers, we see all operators initiating other mobile strategies aggressively. For example, operators may be able to enter the mobile space through High-Density Wi- Fi, which can help SMEs and enterprises reduce their mobile broadband cost with more seamless local and regional Wi-Fi networks. We especially see cable operators rolling out mobile and Smart TV apps, which they have had to initiate to take advantage of the multi-screen phenomenon, though it means managing third-party costs and logistics. Certainly the mobile experience is now critical to competing for video subscribers and on-demand video content revenue, but it also plays a central role in how operators facilitate and reduce the cost of sales transactions and customer-care interactions.
How does everything we’ve discussed change cable operators’ approaches to their end-to-end IT strategies?
IT strategy has to lay the foundation that will enable the monetization of a real-time, on-demand, digital age. It must move from a support function to a transformation engine that will enable the business to drive down costs through a broad range of initiatives – from systems consolidation to real-time selfservice. It has to leverage end-to-end platforms that can accelerate revenue generation through better customer management, real-time transaction management, personalized content delivered to smart devices, and greater interactivity and immersive viewer experiences. It has to maximize partner and channel engagement – both for B2C and B2B markets. And it must involve agile platforms that can rapidly absorb the latest in M2M, virtualization and smart devices.
We have spent 20 years building the experience, expertise and the solution offerings that address precisely this challenge for cable operators all across the world.