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Windstream Gets Hip to Over-the-Top Video

LAS VEGAS -- Telco TV 2012 -- Windstream Communications Inc. (Nasdaq: WIN) likes the progress of its Merge video service so far and might even end up developing a new device for it.

Merge brings Internet content into the home via a Roku Inc. box. A more Windstream-specific box could be the next step, Windstream CEO Jeff Gardner said during a Thursday morning keynote here.

"We are absolutely looking at partnering with companies on products like that that will bring in some additional content to augment that over-the-top experience, but not in a me-too way, not in a traditional cable-offering way," he said.

It's an example of the thinking independent telcos have to do to keep up with new services and technology -- a topic that's already emerging as a theme at the conference.

Analysts participating on a Wednesday afternoon panel noted that independent telcos should be looking at different angles on video -- guaranteed quality, more personalization or local events such as high school sports.

"Part of this becomes a marketing question -- can you extract more revenue for a better video experience?" said Bernie Arneson, managing partner of Pivot Group . "Windstream, if you look at their Merge product -- that's exactly what they're doing."

In fact, video quality is a top reason why people change pay-TV providers, according to a Heavy Reading survey conducted in September.

Analyst Adi Kishore has been running that survey for five years now, and the results have consistently said that pay-TV consumers care about price more than anything else. But delays due to buffering are a real pet peeve. One in eight survey respondents also said they'd change TV providers solely on the basis of video quality.

"Just poor quality for Internet video is enough to get them to consider switching ISPs," Kishore said during a Wednesday presentation. "That definitely is something to be concerned about if you're a broadband service provider."

Tracking the cool kids
Merge, launched in March, was Windstream's way of getting with the times. Another emerging theme of TelcoTV is the obvious shift in consumer habits. Independent telcos built networks for home shoppers and emailers, but the Internet has suddenly become a video junkie's world, with content increasingly getting viewed on wireless devices.

Teaming up with Roku was a way to align with the younger generation's video-viewing habits, Gardner said. (See Windstream Prepares to Merge With OTT Video .)

Merge guides the user to Internet-based content by posing a set of questions, making the service personalized. Future revisions could build on that idea, Gardner said.

"They're being flooded with 500 channels, and they want à la carte offerings, so we're developing more along those lines," he said.

That, too was a topic that came up in Wednesday's analyst panel. Up against more monolithic video packages from cable providers, telcos can use customer hand-holding as a selling point.

"There are all these services out there that the subscriber may have subscriptions to," said Jonathan Hurd, a director of Altman Vilandrie & Company . That might open the possibility for a service provider "to direct the consumer to find that video across all those services, and that might be a service that comes along with the broadband."

— Craig Matsumoto, Managing Editor, Light Reading

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