Cable TV's Digital Transition a Patchwork of Progress
Many major cable distributors have almost crossed the finish line on full digital conversion of their analog signals, but digital transition progress for smaller operators is more of a mixed bag, said companies and industry experts. Most small to midsize cable operators will go digital, or even transition to IPTV, within a decade, American Cable Association President Matt Polka told us. "We want to get there," he said. "We need to maximize our networks to be more efficient so we can reclaim more bandwidth [for broadband]. The issue becomes one of complexity, size, technology and available resources."
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The transition to IPTV likely will start in earnest for major cable distributors in 2017 or 18, Dan Dodson of IBB Consulting told us. Full deployment of IPTV likely will happen within the next five to 10 years, Dodson said. Among the major cable operators, most have been working on digital transition for years, driven initially by HDTV and now by the push to free up spectrum for broadband traffic, Dodson said, saying a few "still have analog channels lying around."
At Mediacom, 93 percent of its operations have converted to all-digital, with that expected to hit 99 percent by year's end, the company told us. Cox began a digital transition in 2015 and is through most of its markets now, with the company saying it expects to be done by the end of the year. Altice's Optimum property -- formerly Cablevision -- has been digital for a number of years, and a large percentage of its Suddenlink markets are all-digital, the company said.
Charter Communications' Time Warner Cable and Bright House Networks markets will be fully digital by 2018, with two-way set-top boxes as part of that, said CEO Tom Rutledge in an earnings call this month. The digital conversion also will let the company expand its self-installation and self-service operations, cutting truck rolls, he said.
Among small and midsize cable operators, the pace of digital transition runs the gamut, Polka said. "I'm literally talking complete extremes," with some companies working on analog to digital and others working toward IP, he said. "There is no one particular path, one particular method. It comes down to the unique systems."
MCTV has been all digital since 2009, and "continued our progression by transitioning to MPEG-4 to recover even more bandwidth," President Robert Gessner emailed us. The company also started its transition from quadrature amplitude modulation to IP, in what will be a multiyear effort including gigabit-capable passive optical networks overlay and fiber drops to all customers, he said.
Smaller cable operators may not follow the same route, Dodson said, pointing to small operators partnering with TiVo, Cox adopting Comcast's X1 platform and Layer3 acting as a cloud-based distribution platform for cable operators. "There are degrees of being in the video business and there are degrees of getting out of the video business," he said. He said major cable operators went from analog to digital to switched digital and now are converting to MPEG-4 and thinking about IPTV, but some smaller operators will go straight from analog to IPTV "and cut out all those steps that were relatively expensive."
Polka said the FCC set-top box rulemaking could slow the digital transition because companies could be forced to reallocate spending for upgrading headends to comply with set-top rules. Polka acknowledged he couldn't say if any cable operators delayed digital transition because of the set-top proceedings. But he said “the amount of investment in general has been sidelined over the last year or so," starting with Chairman Tom Wheeler's Title II regulation of cable. With ISPs facing possible rate regulation in the form of business data service rules, Polka said, "Investment money is being put on the sideline to see how all this shakes out."