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 Interviews
CenturyLink: Building the Case for NFV

12|19|14   |   02:14   |   (0) comments


At the 2020 Vision Executive Summit, James Feger, VP, Network Strategy & Development at CenturyLink, talks about how the US operator is approaching virtual network functions from an operational and business case perspective.
LRTV Interviews
Liberty Global Sees Business Goldmine

12|18|14   |     |   (0) comments


Steen Sorensen, VP of business services for Liberty Global, explains where the giant international MSO sees growth potential.
LRTV Documentaries
EE: The Road to 5G

12|16|14   |   16:02   |   (1) comment


Andy Sutton, the principal network architect at UK mobile operator EE, explains how his company is using Wembley stadium as a wireless test bed and how that's helping EE to plan the evolution to 5G.
LRTV Huawei Video Resource Center
Highlights of Huawei's NFV Open Cloud Forum 2014

12|16|14   |     |   (0) comments


Huawei hosted its inaugural NFV Open Cloud Forum during the SDN & OpenFlow World Congress 2014 in Düsseldorf, Germany. The Forum brought together technology thought leaders, senior executives and telecom professionals from global carriers, industry associations, as well as other partner companies in the ecosystem, to exchange views on and collectively explore how ...
LRTV Custom TV
Realizing Operators' Digital Vision

12|16|14   |   5:23   |   (0) comments


Leveraging technology is fundamental to digital transformation but understanding customers and serving them really well is at the heart of digital businesses. TM Forum lists the following as the strategic pillars of the digital business: business agility and rapid innovation, operational agility and effectiveness, IT and data centricity, plus customer centricity. ...
LRTV Documentaries
US Cellular Injects Analytics Into LTE

12|16|14   |   2:57   |   (1) comment


US Cellular's Mario Vela explains how the operator uses analytics for network planning and what comes next as the carrier looks to eke more value out of its metrics.
LRTV Interviews
How Cox Biz Plans to Keep Growing

12|15|14   |     |   (2) comments


Steve Rowley, SVP of Cox Business, details how the third-biggest US MSO intends to boost its revenues to $2 billion and beyond over the rest of the decade
LRTV Huawei Video Resource Center
Interview With Bill Zhang, Director of SoftCOM Product Management, Huawei

12|15|14   |   2:50   |   (0) comments


Bill Zhang elaborated on Huawei's open philosophy in NFV solution development and network architecture design at the SDN & OpenFlow World Congress 2014.
LRTV Huawei Video Resource Center
Event Highlights: Huawei at SDN & OpenFlow World Congress 2014

12|15|14   |   3:43   |   (0) comments


Huawei joined the 2014 SDN & OpenFlow Congress as one of the key sponsors and contributors. At the event, Huawei reinforced the openness and flexibility of its network infrastructure strategies, and provided updates on its SDN and NVF innovations. Through participations at the exhibitions, forums and speeches, Huawei encouraged the industry to "think bigger and ...
LRTV Interviews
How Cable Biz Services Hit $10B Mark

12|12|14   |     |   (1) comment


Cable operators reached $10 billion in annual business services revenues by delving deeper into their vertical markets and expanding beyond the smallest firms.
LRTV Documentaries
Mediacom Aims to Test Connected Tractors

12|11|14   |   05:07   |   (3) comments


Cable business service provider is taking its services to the 'agribusiness' sector in partnership with farm equipment specialist John Deere and is getting involved in Gigabit Cities developments.
LRTV Interviews
TWC Business Looks Beyond $3B

12|10|14   |     |   (0) comments


TWC Business Services chief Phil Meeks explains how his unit has reached $3 billion in annual revenues and what its plans are for next year.
Upcoming Live Events
February 10, 2015, The Westin Peachtree Plaza, Atlanta, GA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Hot Topics
T-Mobile, BlackBerry Flirt With Reuniting
Sarah Reedy, Senior Editor, 12/17/2014
1-Gig: Coming to a Small Town Near You
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 12/17/2014
Comcast Launches 4K Streaming Service
Alan Breznick, Cable/Video Practice Leader, 12/18/2014
US Carriers, You're Going to Cuba!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 12/18/2014
T-Mobile Lights Up 27 Wideband LTE Cities
Sarah Reedy, Senior Editor, 12/15/2014
Like Us on Facebook
Twitter Feed
Webinar Archive