TWC CEO: Reliance on Set-Tops Fading

Time Warner Cable Inc. (NYSE: TWC) is on the cusp of rolling out new products that will allow subscribers to use PCs and mobile devices to navigate cable content on any TV in the home, CEO Glenn Britt said Wednesday.

Pointing to the capabilities of mobile devices such as Apple Inc. (Nasdaq: AAPL)'s iPad, Britt said that subscribers will be able to use the devices to watch content in any room, eventually without the use of a cable set-top. "Multi-room DVRs are going to become an old set of words. It's going to be amazing what you're going to be able to do, and ultimately you're going to be able to do all of this without set-top boxes," Britt said at the Goldman Sachs & Co. Communicopia conference today in New York.

Time Warner Cable, Comcast Corp. (Nasdaq: CMCSA, CMCSK), Cablevision Systems Corp. (NYSE: CVC), and other cable MSOs have been developing apps that let cable subs use the iPad and the iPhone to navigate TV content in their homes and to view content on those devices. (See Everyone's Mad About the iPad .)

While Britt said subscribers would be able to view content within their homes, he suggested that rights issues could limit the content that is available on devices outside of the home. "Outside of the house is still more complicated," he said.

Responding to a question from an analyst who asked how Time Warner Cable could improve its interactive program guides, Britt said the MSO would rely on PCs, the Web, and mobile devices to improve navigation. "We’re going to use a combination of all of these devices and technology, and Internet technology to make it better. You're going to start seeing some of these things later this year."

What OTT threat?
Britt spent much of the discussion responding to questions about threats posed by over-the-top (OTT) video. He downplayed the threat, but emphasized that Time Warner Cable has studied the sector closely since the time it launched high-speed Internet service in 1996.

Since OTT users need broadband Internet connections to view content, Time Warner Cable is in a position to profit from subscribers who rely on the Web for their home entertainment, Britt said. "You can’t do broadband over the top unless you’re online with broadband. This rides on our infrastructure, so I feel pretty good about us."

He said entertainment companies face a bigger risk from OTT video if they give their content away for free, and content owners that run linear cable networks can’t afford to do that.

"The profits of those companies come from the cable networks. It’s not from the broadcast networks. It’s not from the studios. If they mess that up, their business is going to collapse. Perhaps I’m overstating it," he allowed.

Time Warner Cable has yet to launch a broadly available TV Everywhere site, along the lines of Comcast’s Fancast Xfinity TV, but Britt said the company is working on ways to deliver any content to any screen, noting that TWC could offer its own OTT video products.

"I don’t think it [OTT video] is going to be free forever, and I think we can offer the same functionality for one subscription price. And whatever technology we use, it doesn't matter. At the end of the day it’s about satisfying consumer needs, and I think we have a way to do that."

Rather than OTT video draining subscribers, Britt said the economy and a slowdown in new housing has taken a toll. He said the company is seeing more families share a single household, and a single cable subscription.

"People are increasingly living in multifamily arrangements. There are just as many people as there were before -- probably more. But we sell to households, and if a house is vacant… there’s nothing we can sell to a vacant house." [Ed. note: Or, if you take the glass-is-half-full view, perhaps this opens a new challenge for the cable industry's new product development teams.]

— Steve Donohue, Special to Light Reading Cable

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