Cable Engineers Call for Faster Pace of Innovation

The cable industry should continue to invest heavily in video and broadband networks, products, services and apps, said Comcast Chief Technology Officer Tony Werner. Operators must keep pumping out new platforms and products at a steady pace to stir subscriber interest. “We'll see which ones have stickiness,” he said, citing Comcast’s recent experiments with Skype on TV, home security and energy management and monitoring, as well as its new X1 cloud-based, Internet Protocol video platform. Werner noted that it used to take Comcast’s group of 400 software developers about 18 months to come up with a new app for one of its legacy devices or products. Now, he said, it takes a team of 12 developers just a few weeks to develop a new app for the iPad or other new platforms. “I think the whole world’s moving faster,” he said. “We have to step it up."

Operators need to find ways to deliver their “full array of content” to every video-capable device both inside and outside the home, said Time Warner Cable Chief Strategy Officer Peter Stern. Currently, content rights contracts with programmers generally restrict cable providers from offering their video lineups outside the home. “People don’t just watch video inside the home anymore,” Stern said. “Thirty percent of viewing now takes place outside the home.” Although he doesn’t view video streaming to other devices as a replacement for traditional TV viewing, Stern also stressed that 7 million of Netflix’s 25 million subscribe get only the company’s streaming service, not any other pay service, potentially costing U.S. cable operators about $45 to $50 per subscriber. “Most of those may have been over-the-tops anyway,” he said. “But every one is a huge, huge loss to the [cable] industry."

Silicon Valley firms and venture capitalists are showing more interest in working with the cable industry on video-related projects and products, after years of favoring mobile services, said Mike Lee, managing partner of Rogers Venture Partners in northern California. “The Valley has been more predominantly mobile-focused for the last four or five years,” he said. “As mobility matures, I think video is next up on the hit list.” The cable industry must still make itself more appealing to Silicon Valley firms, Lee said. “We have to find ways to make it easier to work with us and to be more flexible."

The “biggest piece” for Mediacom has been learning how to innovate on its own without relying on big budgets, large numbers of product developers or outsourcing non-core services, said JR Walden, senior vice president of technology. Cable officials began tackling that issue recently when they decided to develop their own iPad app inside the company instead of turning to vendors to do the job for them. “Before, when we spent money, there was a revenue goal associated with that,” Walden said. “Mentally, we've had to get over that,” he said. “That was a real challenge for us. And we're still not there yet.”

Cable operators have a strong financial reason to take set-top boxes off their books, even though operators still make a few dollars from them by leasing them out to subscribers each month, said Stern. Earlier at the conference, Time Warner Cable CEO Glenn Britt said the end of the traditional cable set-top is on the horizon (CD May 22 p1). For Stern, “if you run the math, it’s not a very good business,” referring to set-tops, he said. “I think it’s one of the greatest single drags on our business. I'd happily walk away from that revenue.” To which Werner jokingly retorted: “I think Google would've wished you said something about that before they bought Motorola” Mobility.