Small Cable Operators See Large Opportunities

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Washington -- On-demand services, providing networking for schools and homes, digital-video recorders and commercial phone service all present lucrative opportunities for independent cable companies, several small operators said Tuesday.

During a breakfast session at the American Cable Association’s 14th Annual Washington Summit here, several panelists also tried to downplay the competitive threat of telcos such as Verizon Communications launching a quad play of voice, video, high-speed data and wireless.

Steve Brookstein, executive vice president of operations for Bresnan Communications, said he wasn’t so sure that a quad play was really “a killer app,” as it’s portrayed by phone companies.

Addressing opportunities for independent cable companies at the panel, which was sponsored by Multichannel News, Jim Gleason, CEO of NewWave Communications, said that although his company is not currently offering video-on-demand, it probably will by the end of the year.

“I think it’s going to be a huge part of our business,” Gleason added.

The cost of on-demand headend gear, at $125,000-$150,000 is coming down, and NewWave is interconnecting headends, which will make VOD feasible and affordable, according to Gleason.

A second panelist, Jim Riley, executive VP of TVN Entertainment, said his company is launching a turnkey VOD operation, VOD Complete, aimed at smaller cable companies, which it will formally unveil at The Cable Show next month in Las Vegas.

According to Gleason, NewWave also found a profitable niche providing fiber networks for educational customers, namely schools and school districts. In Bell County, Ky., for example, NewWave was paid more than $300,000 by a school district to create a nine-site fiber network, he added.

“It’s a nice business for us,” Gleason said, adding that NewWave has partnered with other cable companies, such as Mediacom Communications, on similar projects.

He sees a similar opportunity for cable companies to do home networking for customers -- a task the telcos won’t take on -- even in the small rural markets he serves.

Both NewWave and Bresnan said they’ve struck gold with their DVR penetration. Gleason said his DVR penetration is about 20% of his digital subscribers, and he expects that the figure could hit 30%.

Bresnan’s DVR penetration is about 25% of its digital customers, according to Brookstein, who also said his company is rolling out commercial phone service. He expects to get 25% of small to midsized businesses signed on.

When moderator Tom Steinert-Threlkeld, editor in chief of Multichannel News,raised the issue of Verizon launching a quad play, Gleason wasn’t worried about the immediate impact. He noted that “at some point,” cable companies will be partnering with wireless providers.

“People are looking for a change from the same old telephone company,” he said. “[The telcos have] got a lot of rebuilding to do before they talk about a quad play.”

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