NATIONAL HARBOR, Md. -- American Cable Association Summit -- Predicting that someone will create the "set-top equivalent of the iPhone," the lead author of the Federal Communications Commission (FCC) 's proposed National Broadband Plan told cable operators here Tuesday that they should embrace Web-fed video services as way to differentiate themselves from rivals and showcase their high-speed Internet services. (See The National Broadband Plan.)

"Over-the-top video will eventually emerge as a challenge to the current model of large, expensive bundles of programming," Blair Levin, the executive director of the FCC's Omnibus Broadband Initiative, told attendees at the American Cable Association Summit. Although the OTT sector could impact revenue from traditional pay-TV subscriptions, Levin insisted that OTT services create an opportunity for cable operators, and that the industry shouldn't fight the inevitable.

"You don't want to be the industry that says no to the set-top equivalent of the iPhone, particularly when in broadband, such functionality offers such a competitive edge over one of your competitors, the DBS [direct broadcast satellite] industry," Levin told an audience comprised mostly of executives from small and independent cable systems.

Levin, who is leaving the FCC next month to join the Aspen Institute, didn't name any individual OTT services or technologies in his address. (See Omnibus BB Director Leaves FCC.)

However, the OTT sector features companies marketing Internet browsers designed for watching Web video through a computer linked to a TV such as Boxee ; devices that deliver Web video to the TV like Apple TV and Sezmi Corp. ; and broadband-connected Blu-ray players or DVRs from TiVo Inc. (Nasdaq: TIVO) and other vendors.

Cable can differentiate itself from competitors by enabling OTT services, which require fast Internet connections, Levin said. "If that [OTT] functionality increases the demand for bandwidth, your industry has the pole position," he said.

Levin said the rollout of Docsis 3.0, which enables Internet delivery speeds of 100 Mbit/s or more, will help local cable operators grab a bigger share of the high-speed Internet access market. "It is likely, although not inevitable, that cable will increase its lead," Levin said.

But cable operators may face more competition in the broadband sector from mobile broadband, Levin said. "The final inevitability is mobile broadband. We know it's coming. We know it's going to be very, very big. We're not sure what its competitive impact will be on fixed broadband," Levin said.

Some major cable operators are delving into the mobile broadband sector, with the rollout of products such as Time Warner Cable Inc. (NYSE: TWC)'s Road Runner Mobile, and Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s High-Speed 2go, which piggyback on Clearwire LLC (Nasdaq: CLWR)'s mobile WiMax network. (See Cable Plays Clearwire Card and Time Warner Cable Hits WiMax Accelerator.)

"Certainly the ability of mobile providers to produce a service that is much more similar, that produces the kind of speeds that the average consumer today uses on the fixed service will have some kind of impact," Levin added.

— Steve Donohue, Special to Light Reading Cable