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2:55 PM Can we put the dropping of underperforming cable networks next to switched digital video, analog reclamation and advanced compression?

The New Bandwidth Management Tool

Jeff Baumgartner
The Bauminator
Jeff Baumgartner
12/4/2012
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2:55 PM -- What has your MHz done for us lately?

That seems to be the question Time Warner Cable Inc. (NYSE: TWC) CEO Glenn Britt and Charter Communications Inc. CEO Tom Rutledge were raising Monday at the UBS AG conference in New York, when both execs complained about rising programming costs and said they'd consider dropping poor-performing cable networks.

The cash paid to content makers is "out of whack," Britt complained. "It can't continue that way for another 10 or 20 years."

Charter is "looking at similar kinds of savings," Rutledge said later in the day.

Cable spectrum is a precious resource, so the bean counters are keeping an even closer eye on how many dollars are being spent on a per-MHz basis. If the spectrum occupied by a particular network isn't pulling its weight, then the message seems to be that MSOs will reevaluate their options the next time a programmer's carriage deal comes around for renewal.

Let's face it. Pay-TV is a low-margin service, and broadband isn't.

And operators will be looking for more spectrum to feed the broadband beast. The latest, greatest Docsis 3.0 technology can bond 16 or 24 channels. But from what we've been told, cable operators are already having a hard time scrounging up enough spectrum to bond eight downstream channels. (See Intel's New Docsis 3.0 Chip Guns for 1-Gig .)

Looking ahead, cable operators -- particularly the larger ones -- will be thinking about Docsis 3.1, which will require its own swatch of spectrum. Same goes for EPON Protocol Over Coax (EPoC), a developing Institute of Electrical and Electronics Engineers Inc. (IEEE) standard that might be useful for another high-margin offering: business services. And they're already starting to wonder about how much capacity they'll need to nail up for UltraHD 4K services. There's always something on the horizon that will fill the pipe ... and then some. (See Docsis 3.1 Set for a Spring Fling , EPON-Over-Coax Starts Its Standards Journey and Photos: Comcast/NBCU Ultra-HD Demo .)

Cable spectrum is always tight. Cable likes to point out that they have lots of tools in the proverbial toolbox to free up space: switched digital video, analog reclamation and more efficient compression schemes.

It's not exactly the kind of bandwidth-saving instrument a cable engineer would be proud to wield, but ditching high-cost, low-performing networks might be another tool cable operators will look to in order to free up space for higher-margin services. Britt and Rutledge didn't exactly put it that way, but notice seemingly has been served.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
1/10/2013 | 4:00:18 AM
re: The New Bandwidth Management Tool


Still, to clear a 6MHz channel, TW Cable or Charter would  need more than a handful of networks to be in the doghouse... anyone got a sense on what the muxes are these days for SD and HD channels? On HD, i thought we were in the neighborhood of 4, and maybe 12 or more on SD. JB

Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
1/10/2013 | 4:00:14 AM
re: The New Bandwidth Management Tool


Thanks for the insight. Good point that many of these carriage deals do bundle together multiple channels in the programmer's stable, so MSOs can indeed get stuck with a range of popular and not-so-popular networks, a model that 's worked pretty well for the programmers.


So until that breaks down some, I agree that these threats are somewhat empty at least among poor performers that are baked into much bigger deals. Britt and Rutledge did not mention any networks by name. 


Both of those MSOs use switched digital video, so part of the negotiatons might involve determining if more channels can be offered in a switched tier so the operator doesn't have to keep bandwidth nailed up when no one is watching. That helps to conserve bandwidth, but the MSO is still paying the fee, of course... just maybe less?  I'm not sure how the cost models change for networks offered on SDV versus a perpetual digital broadcast, but thought i'd mention since i did not really factor in how SDV could impact future negotiations involving the least popular networks.   JB

Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
1/10/2013 | 4:00:08 AM
re: The New Bandwidth Management Tool


It's begun, at least at TWC. Ovation says the MSO is going to drop it when the cable channel's current contract expires on Dec. 31.  Ovation's got a petition drive going on its Web site. I can't recall the last time that sort of thing got a cable MSO to change its mind... chopping the carriage fee? Maybe.   JB


 


 

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