cable

New cable ad platform — EFIB — set for launch

The cable industry’s advertising consortium, Canoe, is launching its ad exchange and interactivity platform (Enhanced Binary Interchange Format, which it calls EBIF — catchy, huh?) This format will allow TV advertising to be as precise in terms of demographic targeting as in online advertising, and also support viewer interactivity to get more product information or even request contact.

In short, EBIF largely eradicates the difference between what you can get with online ads and what you get with TV ads. This shifts the whole TV/online battle (particularly in video) to the question of who and when you get them. Online video will need to sell itself based on its ability to attract users who aren’t as accessible on TV. On demand is a part of that, but only as long as the cable companies and networks don’t turn more to video on demand (VoD) for the mission. It will take about a year for this to gel, in our view, so there’s some time for the online markets to think up a counterpoint.

Comcast’s TV Everywhere: Credibility with advertisers

Comcast says that it’s no more than 60 days from rolling out TV Everywhere throughout its service area. The project is in trial now and has already signed up 24 networks to supply content. We believe this is a critically important model for streaming video because it has credibility with advertisers, and these guys are the critical ingredient in any video strategy.

We still believe that TV Everywhere would benefit from some non-aligned authentication source, or from a system of federation run by the networks that contribute the content. Still, even in its current form, it offers the first chance at dodging the problem with ad sponsorship in online video—the “too-few-eyeballs-for-interest” problem. This makes streaming content an incremental viewing source to traditional TV.

Fast Internet, pricing policies and the middle mile

Rogers Cable showed how different Canada and the U.S. are with its new DOCSIS 3.0-based offering. The service is 50Mb/2Mb, which is more asymmetrical than the U.S. market would typically offer, and furthermore it has a 175 GB/month usage cap.

In Canada, the notion of usage caps doesn’t generate the hysteria it does here in the U.S., but we believe that the only way caps would be avoided here would be by increasing the oversubscription levels of the middle-mile network, which would mean that users with “fast” Internet wouldn’t get proportionally higher effective speeds.

There is no way to legislate profitability or to set effective speed standards; Congress would never consider the moves, in our view. A realistic usage cap would benefit consumers by helping insure that they gained a real advantage from what’s likely to be an access speed war between cable and telcos.

Comcast launches multi-modal WiMax service in Oregon

Comcast has launched a WiMax multi-modal service in Portland, Ore., that lets customers use either Clearwire WiMAX or Comcast cable for Internet access at one fixed charge. An additional plan offers access to Sprint’s national 3G network.

The plan is aimed at the RBOCs’ success with smartphones in promoting their own data plans for wireless, creating a useful bundle for consumers. RBOCs are also expected to launch femtocell-based services that would directly integrate wireless and wireline. Comcast says it will follow up with similar services in other Clearwire WiMax cities.

DOCSIS 3.0 pushes U.S. broadband speed wars

Cablevision is planning to launch a 101/15 Mbps DOCSIS 3.0 broadband service, which would be the fastest available in the U.S., at a price of $99 per month. The service will launch in NYC suburbs, an area where Verizon has gained strongly with FiOS.

It’s expected that cable will be pushing speed limits up this year, since DSL services can’t begin to match DOCSIS 3.0 performance, and only Verizon among the U.S. RBOCs has the regional demographics to make FTTH widely suitable. This could be good news for equipment vendors, because nothing other than competition is likely to provoke investment in wireline broadband given the low ROI.

Changing video content has benefits/risks

The question of how content gets distributed is getting more complex because the number of “channels,” even in traditional television, is increasing with the multiplication of cable channels and their increasing acceptance by consumers. The cable channels are all boosting programming efforts as television viewers flee traditional network shows for something that’s better suited to their specific interests.

This shift in direction is both a benefit and a risk to the future of content. On one hand, there is no question that the highest profits are obtained by the greatest concentration of consumers in the smallest possible number of shows. On the other hand, the modern world offers enough alternatives to television, including online video, DVDs, etc, that it’s unlikely consumers could be trapped into too focused a set of TV offerings.

Content diversity builds content opportunity overall, even though it reduces per-player profit. What will be interesting to see, as cable networks expand and traditional networks struggle, is whether any content producers see pure online delivery becoming a viable option. There are risks and benefits there as well.

The obvious benefit is that online delivery eliminates a big chunk of the retail distribution chain and its costs, so the content producer keeps more money. The risk is that consumers still want to “watch TV” much more than “stream Internet video,” and the time may not be right to focus completely on online delivery. The Time-Warner concept of allowing for Internet viewing of what you’ve subscribed to in a traditional TV service may well be the most logical choice.

It seems very likely that we are going to see something like a “gated garden” with content, a program that creates a notion that once you acquire content rights, you can exercise them in a number of ways depending on what’s convenient. Even Disney is looking at this sort of thing. Such a shift would have very profound impact on the industry in general, and obviously most impact on online video.

AT&T’s U-verse: The beginning of the end?

AT&T’s new deal with DirecTV may be the beginning of a shift away from U-verse toward the “Homezone” satellite-and-IP/VoD hybrid model, according to rumors we’ve heard.

The problems with U-verse are that the service has an extremely high pass cost—on the order of 4 to 6 times that of cable—and that the limits of DSL in delivery of both content and Internet make U-verse very vulnerable to DOCSIS 3.0 competition. The IPTV model has become more complex and costly over time, and faces its greatest challenges in conjunction with interactivity and HD programming.

We’re also hearing that more EU operators are looking at the linear RF broadcast model of FiOS. Cable has a parallel channel for TV, and competing with cable without that capability is likely to be increasingly difficult no matter where you are in the world. Some cable operators, like Time-Warner, are also now looking at the linear RF FTTH model for green fields, which would be a blow to IPTV supporters.

Cable access caps to stratify broadband users

Cable companies are increasingly interested in bandwidth caps, traffic management or both. Charter has joined the group, and now most of the major U.S. cable operators are in some stage of trial or deployment.

The trend is a critical problem for online growth, and yet it is also the fault of the industry for letting things get to this point. Broadband pricing is increasingly a tax on the underclass of technology users to support the elite. An operator told us that 80% of usage is created by a lot less than the top 20% of users. All of this is a byproduct of the monetization problems, of course.

At the same time, DOCSIS 3.0 interest is rising; Shaw is unveiling the first 100 Mbps service based on it. We also note that companies that are looking at bandwidth caps are also looking at DOCSIS 3.0 services with higher monthly rates, which would be immune from the caps.

Thus, it appears that broadband is going to stratify, with premium users paying more for faster no-cap services. All of this continues to focus investment on access and metro, and on things like CDNs, rather than the core. The fact that over a million Xbox users have activated Netflix streaming tells the tale: Traffic without revenue equals ROI problems, and thus caps on usage. Lack of logic is about to change the industry.

Cable advertising standards and programs

Cable companies’ efforts to create a uniform national ad market are moving forward even as some in the industry hope for an Obama FCC decision to permit further mergers and acquisitions. At the moment, the market share cap imposed on cable prevents further consolidation, and cable operators feel that this may be limiting cable’s potential to create a uniform ad strategy.

The “Canoe” initiative is being supplemented by the SCTE 130 ad platform standard that is likely to be the common mechanism for interactive advertising in cable from 2009 onward. The move is seen as essential in making cable TV more competitive with the Internet, but it will also likely put pressure on the telcos.