& cplSiteName &

Video Profits on Pause?

Light Reading
Supercomm News Analysis
Light Reading
6/22/2004
50%
50%

CHICAGO – Light Reading Live – Service providers gathered in Chicago yesterday to get the lowdown on the Triple Play scene, only to be faced with a stark message: You can't afford not to do it, but once you have, don't expect to make much money from your new video service capabilities.

For the more than 160 attendees who had just been hearing about the potential offered by video in the voice/data/video combo, that message from Harmonic Inc. (Nasdaq: HLIT) broadband access networks division VP David Piehler, who has worked with telcos and cable operators, put into context the size of the challenge faced by operators sizing up the triple-play opportunities.

"You've no idea how much the MSOs have to pay content owners such as ESPN for their feeds," warned Piehler, who said that while the cable operators might drive a lot of revenue from their video and broadcast capabilities, most of that goes back out the door to the major content suppliers in license fees. "The MSOs look at VOIP as a better profit opportunity," he added.

Event moderator and chief analyst at Heavy Reading, Scott Clavenna, was stunned by Piehler's insight into the economics of the video services. Yet his message remains that carriers cannot afford not to make the leap into the video services sector, a sentiment backed by event speakers Mark Marinkovich from Allied Telesyn Inc., Geoff Burke from Calix Networks Inc., and Ralph Biesemeyer from Intel Corp. (Nasdaq: INTC).

"There is no upside to doing nothing about video," said Clavenna. "Sitting back and not moving will lead to a drop in average revenues per customer and a loss of market share. The cable companies will just come and take your customers away."

"As a service provider, you have to be offering the full range of services to the consumer market to be competitive," agreed Allied Telesyn's Marinkovich.

That message has clearly hit home with even the biggest players. As the Light Reading Live event was taking place, BellSouth Corp. (NYSE: BLS) was telling Reuters that it will begin video service trials over its DSL lines within the next year. And at the same time, a major MSO, Cablevision Systems Corp. (NYSE: CVC), was piling the pressure on Verizon Communications Inc. (NYSE: VZ) by cutting the price of its triple-play package to $90, the same price that Verizon charges for a voice/Internet access combo.

But while there's major pressure on carriers to develop a triple-play strategy, there are a number of hurdles to overcome in putting that package on the table, noted Clavenna. Jumping into the video services sector comes replete with business, technology, deployment, and support risks. Clavenna noted that, for some operators, the potential downsides of trying to compete in the triple-play arena were making them think about exiting the fixed-line market altogether.

"I talked to one operator that said video was too scary. They were considering dropping their fixed-line business altogether and concentrating on wireless."

Such operators need help from vendors and integrators to get their strategy right. "There are a lot of hardware and software elements that need to be certified and integrated," noted Marinkovich, "and the carriers must get help from third parties as they get into video."

But it's not all doom and gloom for the video hopefuls. Marinkovich observed that the cost barriers for entry have fallen dramatically in the past few years, and that "there are a lot of entertainment dollars on the table" for the operators that can nail down a solid business plan.

And the potential to capture those revenues and win (and retain) customers has the world's operators excited about triple play, according to the results of research carried out by Heavy Reading. Clavenna noted that of more than 400 service providers surveyed about the importance of certain new services in 2004, only VOIP, cited by more than 30 percent of respondents, came out ahead of triple play, which was chosen by just fewer than 30 percent of the carriers.

Those figures varied in different regions, noted the analyst. Asian operators, which have a more mature broadband sector, cited triple play as the most important, while European operators are still mostly focused on driving further revenues from vanilla broadband access services. VOIP was considered the most important new service by nearly 40 percent of North American carriers.

— Ray Le Maistre, International Editor, Boardwatch

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Abby
50%
50%
Abby,
User Rank: Light Beer
12/5/2012 | 1:31:33 AM
re: Video Profits on Pause?
I liked to see a joint venture between a service provider and content owner take a run at this. Maybe then weGÇÖll see a business model that makes sense, since both will have a vested interest in the alliance succeed.
lr_fanny
50%
50%
lr_fanny,
User Rank: Light Beer
12/5/2012 | 1:31:17 AM
re: Video Profits on Pause?
No not really. Time Warner already had the content. They own HBO and numerous other channels. ESPN is owned by Disney and is by far the worst. They charge an exorbitant amount to cable operators as well as forcing the operators to air losers like ESPN classic, ESPN2, etc.

This is why Comcast wanted to buy Disney.

AOL is a portal like Yahoo and a dial-up service like Earthlink. Not a supplier of video content.
eieio
50%
50%
eieio,
User Rank: Light Beer
12/5/2012 | 1:31:17 AM
re: Video Profits on Pause?
I liked to see a joint venture between a service provider and content owner take a run at this. Maybe then weGÇÖll see a business model that makes sense, since both will have a vested interest in the alliance succeed.

++++++++++++++++++++++++++++

Isn't that what AOL-TimeWarner is all about?
eieio
50%
50%
eieio,
User Rank: Light Beer
12/5/2012 | 1:31:16 AM
re: Video Profits on Pause?
No not really. Time Warner already had the content. They own HBO and numerous other channels. ESPN is owned by Disney and is by far the worst. They charge an exorbitant amount to cable operators as well as forcing the operators to air losers like ESPN classic, ESPN2, etc.

This is why Comcast wanted to buy Disney.

AOL is a portal like Yahoo and a dial-up service like Earthlink. Not a supplier of video content.

++++++++++++++++++++++++++++++++++

Understood, the point I was trying to make is that I thought one of the reasons for the merger was because AOL thought it could supply video content to it's customers via it's marriage with Time Warner - no?
lr_fanny
50%
50%
lr_fanny,
User Rank: Light Beer
12/5/2012 | 1:31:15 AM
re: Video Profits on Pause?
No. What AOL wanted was a stable company and they won in the long run because AOL would be dead if they had not merged with TW. AOL's pipes you must remember were 50k. Quality video that the cable pipe delivers is 4M. TWC already has the video content and the pipe.

AOL, I think, sold TW a bill of goods. The premise was more about AOL Internet access customers migrating to cable modems etc.
Abby
50%
50%
Abby,
User Rank: Light Beer
12/5/2012 | 1:31:11 AM
re: Video Profits on Pause?
>>Isn't that what AOL-TimeWarner is all about?

AOL-TimeWarner was an acquisition, not a joint venture. In a joint venture, two or more companies form a separate company to achieve business goals. The firms typically must invest significant resources, but receive equity in return. The parent firm determines the ownership, personnel, and organizational structure of the new company.

Black's Law Dictionary defines joint venture as "a business undertaking by two or more persons engaged in a single defined project. The necessary elements are: (1) an express or implied agreement; (2) a common purpose that the group intends to carry out; (3) shared profits and losses; and (4) each member's equal voice in controlling the project."

jayja
50%
50%
jayja,
User Rank: Light Sabre
12/5/2012 | 1:30:51 AM
re: Video Profits on Pause?
The telcos are only beginning to understand the highly competitive nature of video delivery.

As well as the high rights fees charged by ESPN and the forced bundling of unwanted products like ESPN Classic and ESPN News channel, is not DirectTV unable to obtain rights to show Philadelphia's professinal sports teams' games because they are owned by Comcast?

On the other hand, forced bundling of unwanted products and services, holding desired product back from the market, monopoly pricing tactics and forcing vendors to carry unprofitable product lines in order to sell other products should be familiar territory to the telcos.
From The Founder
Either we perform a complete 'factory reset' on the way the telecom industry creates and deploys virtualization, or we face the consequences.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Infinera Introduces Instant Network

4|20|17   |     |   (1) comment


Mike Capuano, vice president of marketing at Infinera, discusses the advancement from Instant Bandwidth to new Instant Network capabilities, which include Bandwidth License Pools, Moveable Licenses and Automated Capacity Engineering (ACE).
Women in Comms Introduction Videos
Vodafone's Eubank on Sponsors, Mentors & Moving On Up

4|19|17   |   4:25   |   (0) comments


Vodafone America's Head of Operations Kimberly Eubank breaks down the difference between a sponsor and a mentor and shares why both made a big difference in her career.
LRTV Custom TV
NYC Auto Show: Are We Smart Yet?

4|18|17   |     |   (0) comments


The auto industry is facing some big transformations as electric vehicles, autonomous technology and connected cars are seen as the future of the industry. During the much-anticipated NY international auto show, there was an emergence of new technology and mobility service on the show floor. Aside from performance, brands like Lincoln, Hyundai, Honda, Mercedes and ...
LRTV Huawei Video Resource Center
The Impact of Video

4|18|17   |     |   (0) comments


David Mercer from Strategy Analytics discusses the impact of video on current strategies.
LRTV Custom TV
Pardeep Kohli Discusses Network Transformation & the Market Opportunity for the 'New' Mavenir Systems

4|13|17   |     |   (0) comments


In a brief discussion at MWC 2017, Heavy Reading analyst Adi Kishore talks to Pardeep Kohli, CEO, Mavenir Systems about the creation of the 'new Mavenir' and some of the key challenges facing operators in today's market. A key theme of the discussion centers around operator need for software-only, virtualized solutions and how they will need to adapt to ...
Women in Comms Introduction Videos
Tech Maverick Shares Her Tips for Gender Inclusivity

4|12|17   |   7:28   |   (0) comments


Wendy Hall Bohling, a corporate escapee, author and gender exclusivity consultant, tells her story of sexism, bias and progress along the road to gender equality in the workforce.
LRTV Huawei Video Resource Center
Huawei at MWC 2017

4|11|17   |     |   (0) comments


At Mobile World Congress 2017, the biggest mobile industry gathering of the year, Huawei showcased its new innovations and solutions with the theme "Open Road," which focuses on cloud, 5G, operation transformation, videos and consumer-oriented products. Its campaign has been recognized by three awards given by GSMA.
LRTV Custom TV
China Telecom NFV Infrastructure on RSD

4|6|17   |     |   (0) comments


Lynn Comp, senior director of market development of Intel, is joined by Chong Zhang, storage engineer at Inspur and Ou Li Yan, architect for technology strategies of China Telecom on what NFV brings.
LRTV Custom TV
Nokia's IMPACT Software Demo

4|6|17   |     |   (0) comments


Khamis Abulgubein of IoT market development at Nokia demonstrates IMPACT (intelligent management platform for all connected things), a software solution with a horizontal approach to managing any device on any application.
LRTV Custom TV
Nokia Introduces Virtual Service Router for More Rapid Service

4|6|17   |     |   (0) comments


James Cumming, product line manager for virtualized service routers at Nokia, demonstrates how the virtual router based off the Nokia ecosystem changes the network function experience.
LRTV Custom TV
The Keys to SD-WAN Success

4|6|17   |     |   (0) comments


Versa Networks CEO Kelly Ahuja talks about the key requirements for service provider-managed SD-WANs.
LRTV Custom TV
Intel & Cisco on Joint 5G Solutions

4|5|17   |     |   (0) comments


Dave Ward, SVP and CTO of Cisco, is joined by Sandra Rivera, corporate VP and general manager of network platforms group of Intel, on the revolutionary 5G technology that changes networking and computing fundamentally.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Brazos Hall - Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Time for a Telecom Reboot
Steve Saunders, CEO and founder, Light Reading, 4/19/2017
Comcast Ready for Clash With Hulu
Mari Silbey, Senior Editor, Cable/Video, 4/18/2017
Unlicensed: It's What's Next for US Mobile Operators
Dan Jones, Mobile Editor, 4/19/2017
Verizon's Fiber Spend Won't End With Corning
Mari Silbey, Senior Editor, Cable/Video, 4/19/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Animals with Phones
Now That's an Ad Campaign Click Here
Meerkats to the rescue!
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.