So, Which Rules Should Be Broken?

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Jim Robbins was looking for a level playing field. David Barrett was looking for a partnership to carry digital broadcast-TV signals. Robert Clasen was looking for new platforms to break existing programming models. And Lee Ann Champion was looking for an edge in delivering converged services.

Those four senior executives, from Cox Communications Inc., Hearst-Argyle Television, Starz Entertainment Group and SBC Communications Inc., respectively, converged at the U.S. Telecom Association’s annual convention (Telecom ’05) in Las Vegas last week, for a live verbal demonstration of the new video, voice and data battleground.

Despite representing the telephone industry’s chief competitor — and less than three months from his retirement — Cox cable-unit president Jim Robbins didn’t mince words with the USTA audience.

'DON’T TILT THE FIELD’

“A level playing field in the fight for customers is a critical component to ensuring a truly competitive marketplace,” the cable company chief told the telco audience. “But don’t try to tilt the field through the regulatory process.”

“I admire your deep pockets and leagues of lobbyists, but I don’t agree with your stance. It’s not OK to have two wildly differing sets of rules for people in the same, highly competitive business — like video.

“We’ve seen Texas pass a blatantly discriminatory piece of legislation that guts much of the local franchising process for video providers — except, if you’re a cable company, you’re stuck with the old rules and regulatory burdens.”

Robbins called for cable and telephone companies to operate by the same rules on the telephone side. “Competition does not mean that voice providers — whether circuit-switched or Internet-protocol based — should ignore certain universally recognized social responsibilities, such as E-911 and CALEA (Communications Assistance to Law Enforcement Act),” he said. “So, interconnection rights of facilities-based voice providers must be protected because we must access your ubiquitous telephone network to complete our customers’ calls.”

Barrett, the Hearst-Argyle Television CEO, proposed a partnership between television broadcasters and telephone companies intent on entering the video business.

“The timing of your entry into the video-distribution business could not be more opportune,” Barrett said. “Just as you are revolutionizing the way local television signals are distributed to viewers, broadcasters are revolutionizing the content of local television programming” through HDTV and multicasting, he said.

Barrett emphasized that “a local television station can now offer HD programming and multiple standard-definition streams within a single digital signal.”

Telephone companies that build fiber-to-the-premises platforms have room to carry broadcasters’ multicast signals, and as cable is reluctant to carry those extra channels, telcos can use that programming to differentiate their video services, Barrett said.

While Barrett called on broadcasters and telcos to unite in Washington on multicast signal carriage and on striking down local-franchising regulations, the TV station chief also sought to redefine the must-carry debate.

“The term 'must-carry’ is the relic of an analog age,” he said. “We should discard it. Digital multicast streams are carried within — not in addition to — a single 19.4-Megabit digital television signal. We are not asking distributors to carry additional channels. We are simply asking cable to carry our digital signal in its entirety and to prohibit cable operators from blocking or stripping out streams they feel may be too competitive with cable programming. So what broadcasters really want might be better termed an 'anti-content-stripping’ rule.”

Other content providers also are hopeful that new platforms, like IPTV, will expand program choices and development.

“The video experience in the new, on-demand era will be as different from traditional linear TV as broadcast television is from radio,” Starz CEO Clasen said. New technology across all platforms means content providers won’t be bound by traditional 30- or 60-minute programming formats, he said.

“To speed the transition from linear to on-demand television, Starz has developed new navigation tools for on demand and new forms of programming tailored for the on-demand experience,” he said. Those include special introductions to movies and the “Bunny Shorts,” in which animated bunnies condense a movie into a 90-second short.

Instead of competing on price, Clasen urged telcos to use unique features of their platforms to develop new content and experiences.

“Your goal should be to create an entirely new form of communication,” Clasen said. “Only then will you be able to generate the 'wow’ factor that will make consumers sit up and take notice, talk about you at the water cooler and feel that your new service is something they must have.”

AUSTIN TRIAL DONE

Lee Ann Champion, senior vice president for IP operations and services at SBC, said the telco had completed its IPTV trial in Austin and looks toward a controlled deployment by year-end.

She emphasized that SBC wants to tie IPTV services to phone and wireless applications to serve customers and differentiate itself in the marketplace. For example, subscribers could view photos on their TVs, PCs and cell phones, or they could use them to program their digital video recorder or change parental control settings.

The same set of phone numbers and e-mail addresses could be used for the Internet and wireless-phone platforms. And subscribers could create a user profile for specific stock, news, sports and weather information, and have it delivered to any device via SBC’s network.

“Integration will change everything for our consumers,” she said.

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