Digital transport adapters (DTAs) may offer a cheap option for cable operators that are looking to go all-digital, but the simple channel-zappers won't play a starring role in Charter Communications Inc.'s transition, company CEO Tom Rutledge said on Friday's fourth-quarter earnings call.
Charter, he said, will instead power its all-digital move with fully functional, interactive set-top boxes, holding that they provide a better user interface (Charter's developing a cloud-based version) and access to popular services such as video-on-demand.
DTAs, which have been central to Comcast Corp.'s all-digital strategy, cost about $30 for standard-definition models, while new HD versions are expected to sell for sub-$50. Comcast has deployed millions of DTAs to recapture analog spectrum and create more capacity for HD programming and Docsis 3.0.
On the downside, DTAs saturate the market with more QAM devices, which can prolong an operator's IP video transition. Their one-way limitations also make them incapable of supporting VoD on their own, though it's technically possible to deliver on-demand programming to the devices using apps on smartphones and tablets. (See Comcast: DTAs Can Be 'Force-Tuned' and Comcast HD-DTAs Reach the FCC.)
But that's not in the Charter game plan. It's pursuing a waiver at the Federal Communications Commission (FCC) to help it deploy a new type of box outfitted with a downloadable security system. Charter has not got the waiver, but Rutledge said the MSO is in position to begin its all-digital move without it. The plan is to move ahead in select markets that have already achieved relatively high digital video penetration rates. Until the FCC says otherwise, that means Charter will have to use pricier boxes with CableCARD security. (See Charter Bemoans CableCARD Costs , Charter Video Plan Good for Cisco, Samsung and CEA Tries to Kill Charter's Video Plan.)
Charter will not be giving boxes away during the transition, so Rutledge said the operator will have to do a good job marketing its new digital video products as it prepared to roll out its box strategy en masse. "The plan is to charge for the outlets," Rutledge said.
Rutledge said Charter stopped selling analog video packages in mid-2012, and anticipates completing the all-digital migration by the end of 2014.
That transition and Charter's new cloud-based interfaces and video search capabilities represent two areas Charter will focus on as it looks to improve its overall operations and stem video subscriber losses.
Rutledge also identified business services as a core focus, estimating that it's a $9.5 billion market opportunity for the operator. Charter generated $658 million in commercial services revenue in 2012, up 20.7 percent from 2011.
Beyond tech and services, some cable operators, including Comcast and Rutledge's former company, Cablevision Systems Corp., have implemented "tracker brands" (Xfinity and Optimum) to inject some freshness into their consumer marketing. Rutledge acknowledged that some believe Charter, which emerged from bankruptcy in 2009, should do something similar. But "we have nothing to announce on that today," he said.
— Jeff Baumgartner, Site Editor, Light Reading Cable