Light Reading
8:00 AM A U.S. cable operator is said to be exploring a pre-paid scheme that borrows a page from the wireless world

Pondering Pre-Paid Cable TV

Jeff Baumgartner
The Bauminator
Jeff Baumgartner
7/9/2012
50%
50%

8:00 AM -- There's an interesting idea floating about that would give cable an opportunity to offer video services under a pre-paid model that's proved popular in the cellular phone world.

The notion is to sell a simple and inexpensive set-top box at outlets like Walmart, Target and Walgreens and pair them with pre-paid cards (or maybe codes of some sort) that would load services by the hour, week or month. Or maybe it could be taken a step further and let consumers also buy some services individually – for example, an HBO card that's good for a month.

The rumor is that at least one major U.S. MSO is currently exploring a pre-paid model, and, according to a source, would involve a low-cost, two-way box that has yet to be developed. Another source said Comcast Corp. (Nasdaq: CMCSA, CMCSK) looked into this idea years ago, but didn't follow through with it. It's not known which major operator is the one that's looking at it in this go-round.

My first reaction to the idea is that it could let an operator market video services to lower-income households and remove the non-payment risk factor from the equation -- something that Dish Network LLC (Nasdaq: DISH) has had to contend with over the years by tailoring some of its packages for the lower end of the market.

But some other potential usage scenarios were brought to my attention. It could give cable a form of a la carte or a more metered option in which the customer would only buy services during a particular season (i.e., for students and snowbirds that churn out in droves in the second quarter of every year), or long enough to catch a TV series or the NFL football season. Or perhaps it could be made into something that would be attractive to consumers who have never subscribed to cable. Maybe it would make a good Christmas gift for grandma or weird Uncle Charlie. Who knows? There are lots of directions a pre-paid cable TV service could go.

But it's not without risk. Regular, recurring customers that take a cable's full subscription TV packages might be encouraged to drop them in favor of a pre-paid model.

And a lot would need to happen to make this idea go. As I understand it, the discussion also involves a two-way set-top box (so it could support video-on-demand and an interactive guide, perhaps?) that's yet to be developed. And it's not known if just any manufacturer would be allowed to make these boxes, because it's apparent that the cable operator would still be the one pulling the strings. But if the box is to be low-cost, I don't see how that happens using a CableCARD slot and module, which would keep such a device prohibitively expensive.

Digital Transport Adapter (DTA) boxes are dirt cheap (less than $50 per unit for hi-def versions) and use integrated security (thanks to an Federal Communications Commission (FCC) waiver) but are inherently one-way and can't be sold at retail under the current rules. Perhaps a two-way cable device with "removable" downloadable security could be developed that also sidesteps the FCC's current ban on boxes with integrated security. Just a thought.

And cable's billing, provisioning and backoffice systems aren't really setup for this sort of thing yet. So there are still lots of questions about how this would be put together and what a pre-paid cable service might even look like.

But if this exploration turns into something real, it could give cable a new way to establish a retail model for video services and succeed in an area that tru2way did not, and give the industry a new way to target consumers with video services. (See Tru2way: Epic Fail at Retail.)

— Jeff Baumgartner, Site Editor, Light Reading Cable



(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
shygye75
50%
50%
shygye75,
User Rank: Light Beer
12/5/2012 | 5:28:20 PM
re: Pondering Pre-Paid Cable TV


Jeff -- Isn't this a bit of a stretch? The user premises still has to be connected to the cable network for this to work, right?

craigleddy
50%
50%
craigleddy,
User Rank: Blogger
12/5/2012 | 5:28:19 PM
re: Pondering Pre-Paid Cable TV


The pre-paid concept has been kicking around in cable marketing circles for awhile and I recall that some local systems use pre-paid cards for certain services (multicultural tiers, premium services, etc).


There is a sizeable population that purchases mobile and other services in this manner. As Jeff notes, it can be used for seasonal cable subs (college kids, vacation homes) and the large number of people who re-locate each year. The trick is using a cheap box -- and either selling it or making sure you can get it back at the end of the pre-paid period.


Yes, the connection already needs to be in place, but that's not a tall order since most homes and MDUs already are wired. Cable Internet and phone might come into play but at this point I think this is intended for traditional cable TV.          


 

shygye75
50%
50%
shygye75,
User Rank: Light Beer
12/5/2012 | 5:28:19 PM
re: Pondering Pre-Paid Cable TV


There's definitely OTT potential, but the business case for this seems more suited to a company like Netflix.

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:28:19 PM
re: Pondering Pre-Paid Cable TV


Mendyk,


 


This seems like a perfect OTT addon for a cable guy.


 


seven


 

spiral
50%
50%
spiral,
User Rank: Light Beer
12/5/2012 | 5:28:18 PM
re: Pondering Pre-Paid Cable TV


This sounds like a job for ActiveVideo. They could run the whole thing from the cloud to a bare-bones device, and use smartphones and tablets to control the experience.

AESerm
50%
50%
AESerm,
User Rank: Light Beer
12/5/2012 | 5:28:18 PM
re: Pondering Pre-Paid Cable TV


Can you get around the two-way hurdle by pairing the DTA and subscriber with an Android or iOS app? Granted, that narrows the lower income target market somewhat. 

msilbey
50%
50%
msilbey,
User Rank: Blogger
12/5/2012 | 5:28:13 PM
re: Pondering Pre-Paid Cable TV


jtombes- I agree. Why deal with two-way tech and a cablecard when everything's moving in the direction of IP anyway? Especially for on-demand content. A DTA already provides the linear content. How expensive can it be to add IP connectivity to the box to provide access to an interactive guide and VOD? It would be different if the MSOs didn't have another use for those IP assets, but they do. That's not something they'd be building for this service. It already exists, or is in progress. 

Educational Resources
sponsor supplied content
Educational Resources Archive
More Blogs from The Bauminator
Don't expect anything more to pop for a while, but one analyst sees John Malone & Co. as the 'logical, ultimate acquirer of Ziggo' if the price is right
Cable operators will need to free up at least 24MHz of spectrum for Docsis 3.1. But why is that the magic number?
Liberty Media's rumored plan to snag a 25% stake in Charter for $2.5B could aid the MSO's M&A strategy
Top US cable operators lost 1.41 million video subs in 2012, but the bleeding continues to show signs of slowing in a saturated pay-TV market
Aereo streams its 'no cable required' tagline into the video world. Will consumers tune in to the message?
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Using Service Quality to Drive WiFi Monetization

10|22|14   |   6:51   |   (0) comments


Live from the SCTE conference: Heavy Reading's Alan Breznick explores the forces shaping the WiFi opportunity in an interview with CableLabs' Justin Colwell and Amdocs' Ken Roulier.
LRTV Custom TV
Distributed Access Architectures – 2

10|21|14   |   8:51:00 AM   |   (0) comments


ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
LRTV Custom TV
Distributed Access Architectures – 1

10|21|14   |   9:01   |   (0) comments


SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
LRTV Custom TV
The WiFi Road to Riches – 2

10|21|14   |   3:58   |   (0) comments


ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
LRTV Custom TV
The WiFi Road to Riches – 1

10|21|14   |   10:15   |   (0) comments


SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Analysts Warn of Major NFV Gaps
Carol Wilson, Editor-at-large, 10/22/2014
Is Health the Killer App for the IoT?
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/22/2014
Drones Hover Over the IoT Sector
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/23/2014
Meet the Phantom Network for NFV
Ray Le Maistre, Editor-in-chief, 10/23/2014
1959 Newsreel: Make Phone Calls – From Cars!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/24/2014
Like Us on Facebook
Twitter Feed