Rearranging the Broadband Puzzle

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The cable industry convenes in New Orleans this week at the annual National Show challenged by increasing competition across its three main business categories – video, voice and data.

At the same time, it has a plethora of business opportunities it can cultivate to meet the growing threats from satellite and telephony companies.

On the video side are further enhancements to the VOD platform, the continued rollout of HD and DVRs, and the introduction of interactive TV.

On the data side of the house are the introduction of tiering, the addition of alluring broadband content on high-speed portals, further advancements in speed, and the prospects of adding WiFi hot spots to make modem service more valuable.

On the phone side is the highly anticipated introduction of VoIP, the final mano-a-mano showdown with the RBOCs.

And there is the increasingly important cross-service functionality that goes beyond simple bundled pricing for multiple services.

Things like allowing customers to get high-speed email via voice mail and vice versa, which Cox is doing in Omaha. Things like allowing phone customers to see, on their TV screens, who is calling by hitting a button on their cable remote. Things like home networks where PCs, connected to high-speed cable lines, are hooked up to TVs and stereos throughout the house for video, music and photo exchange.

It's a dizzying array of products cable has at its doorstep. The difficulty will be in choosing which ones make the most sense to pursue.

Probably the best place to see all the possibilities will be in National Cable Television Association's 8,000-square-foot Broadband Home.

The Home Office will feature cable support for telecommuting with broadband video phones, videoconferencing, VoIP and home media gateways.

Home Health will feature broadband-enabled, computer-controlled fitness equipment with interactive training programs.

The Recreation Room will have the penultimate HDTV, online gaming via broadband and interactive television applications.

The Living Room has what's billed as the ultimate home DTV theater with full HD, VOD and DVR features.

The Learning Center showcases cable's ability to enhance the student experience.

The Kitchen will have a smart refrigerator and displays for video phone and video email.

The Bedrooms and Baths will feature second-room DVR and HD displays and will showcase the video home network.

The Garage will feature broadband-enabled "How-To" guides displayed on both the TV and the PC.

And the Back Deck, which will serve as the stage for the show's general session area, will feature a grill and a complement of phone, video and Internet outlets.

That's a lot to choose from, and it leaves you wondering what will be cable's best bets?

It's likely the industry will hone in on services that its competitors can't easily replicate and that the industry can deploy with some degree of confidence.

Home networking is a good, obvious first choice. DBS companies have neither the trucks on the ground nor the inclination to help consumers to that degree. The telcos may have the trucks on the ground, but fewer in-home wiring options to make a strong case for being in the home-networking business.

Home networking is messy and complicated, but it's there for the cable operator to take, starting with the dual-room DVR and moving to the high-speed platform.

A second key area will be offering video enhancements that DBS can't, starting with local HD signals. Notwithstanding the historical differences between cable and broadcasters, cable needs to carry the major local affiliates in their market.

Operators need to improve the VOD platform to make it a viable business for the vast majority of programmers. Getting ratings for ad-supported fare is a must. Disney on Demand, in June, will begin previewing new episodes of new series for its SVOD subscribers 24 hours before the show airs on linear TV. Although it's a small example, it's the kind of innovation necessary to make VOD come alive for more and more subscribers.

And last, cable needs to examine seriously whether it needs a wireless play on the data and phone side. Cable WiFi hot spots are starting to emerge. It's a low-cost way to extend service and a high-speed brand. And operators will need to consider whether it makes sense to partner with a Sprint or another non-RBOC wireless provider for bundled access. SBC sold 40,000 DISH subscriptions in Q1.

The good news is, cable has plenty of options to add to its feature set. The hard part is determining what will be the best bets.

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