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 Huawei Video Resource Center
Interview With Rick Talbot, Principal Analyst, Current Analysis

10|31|14   |   2:12   |   (0) comments


At the NFV Open Cloud Forum 2014, Rick Talbot shared his positive feedback about the holistic and open approach that Huawei adopts for SDN and NFV. He also found the open sharing at the event valuable as it features different perspectives from Huawei experts, telecom operators, industry analysts as well as security experts.
LRTV Huawei Video Resource Center
Interview With David Snow, Principal Analyst, Current Analysis

10|31|14   |   2:24   |   (0) comments


David Snow talked about his understanding of Huawei and its SoftCOM strategy at the NFV Open Cloud Forum 2014, saying that Huawei's wide approach combining IT and CT expertise, introducing big data and analytics into solutions and contributing to the OpenStack community particularly resonate with him and make the company stand out in the industry.
LRTV Huawei Video Resource Center
Interview With Roz Roseboro, Senior Analyst, Heavy Reading

10|31|14   |   3:13   |   (0) comments


Roz Roseboro commented on Huawei's data center capabilities and NFV solutions at the NFV Open Cloud Forum 2014, saying that in addition to covering all three key domains of compute, storage and networking, the company also emphasizes the importance of management capabilities and professional services, which are essential in making NFV a reality.
LRTV Huawei Video Resource Center
Interview With Michael Howard, Co-founder & Principal Analyst, Infonetics Research

10|31|14   |   5:25   |   (0) comments


Michael Howard talked about SDN, NFV, and OpenStack adoption at Huawei's NFV Open Cloud Forum 2014. Particularly, he pointed out that Virtual Enterprise CPE is the top NFV use case that operators plan to invest in over 2014 and 2015 to deliver new enterprise services through virtualized functions.
LRTV Huawei Video Resource Center
Interview With Jerry Caron, Senior Vice President, Current Analysis

10|31|14   |   3:11   |   (0) comments


At Huawei's NFV Open Cloud Forum 2014, Jerry Caron from Current Analysis said that orchestration and management are key to realizing SDN and NFV for global carriers, and the approach that Huawei is taking, with its FusionSphere Cloud OS at the core, is in the right direction to address the challenges.
LRTV Documentaries
Broadband Battles

10|31|14   |   01:39   |   (0) comments


This year's Broadband World Forum featured a number of show floor battles focused on access gear, components and coffee.
Jonestown
Mobile Backhaul: Going to the Dark Side?

10|30|14   |   2:26   |   (1) comment


Heavy Reading's Patrick Donegan shares his view on a dark trend that bubbled up at Light Reading's annual backhaul conference in NYC.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview With CEO of SwitchCom

10|30|14   |   4:13   |   (0) comments


SwitchCom, an IT company based in Angola, recommends a variety of Huawei solutions and hardware to their customers in the energy industry.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview With Ethiopia's Ministry of Water Irrigation & Energy

10|30|14   |   4:08   |   (0) comments


Gosaye Mengistie of Ethiopia's Ministry of Water Irrigation & Energy discusses the collaboration with Huawei in that country.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview with Dongfang Electronics Corporation

10|30|14   |   5:46   |   (0) comments


Dongfang Electronics Corporation, headquartered in Chengdu, China, is one of China's largest manufacturers of power generators and contractors of power station projects.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview with Zimbabwe's Customers

10|30|14   |   3:31   |   (0) comments


Representatives of Zimbabwe's Ministry of Power and Development discuss the energy needs of their country as well as new areas of improvement due to enhanced ICT capabilities.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview With Colbún Chile

10|30|14   |   4:29   |   (0) comments


In Chile, an aging energy infrastructure was in dire need of a modern update. Claudio Valenzuela of Colbún discusses how Huawei's ICT solutions continue to provide crucial information to improve the grid and how an in-country engineer is a cricial asset.
Upcoming Live Events
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
May 6, 2015, McCormick Convention Center, Chicago, IL
May 30, 2015, The Westin Peachtree, 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
Microsoft's Skype Embraces WebRTC on IE
Sarah Reedy, Senior Editor, 10/27/2014
FTC Slaps AT&T With Throttling Lawsuit
Sarah Reedy, Senior Editor, 10/28/2014
Wheeler Gets Down With OTT
Mari Silbey, Independent Technology Editor, 10/29/2014
China's MVNOs Hit the Wall
Robert Clark, 10/27/2014
Let's Not Kill SDN & NFV With Silos
Francois Locoh-Donou, Senior VP, Global Products Group, Ciena, 10/28/2014
Like Us on Facebook
Twitter Feed