As it prepares to exit stage right, Time Warner Cable is hoping to leave behind one last technical achievement -- the development of an IP-only TV service.
In his swansong earnings call with financial analysts on Thursday, Time Warner Cable Inc. (NYSE: TWC) Chairman & CEO Rob Marcus reported that the MSO has seen promising results so far from its beta trial of an IP-only TV service in New York City. "The early feedback is encouraging," he said, touting the "simple frictionless experience" that it offers to subscribers. "We think this is great for our customers while at the same time it could significantly reduce our capital and operating costs."
As part of that beta trial, which started last fall, Time Warner Cable is delivering every channel in its standard cable line-up as a unicast video stream to each video customer over its own managed network. TWC executives would like to see the New York trial become the first step in the transition to a set-top-free, all-IP future, enabling them to substitute a full video offering for their traditional set-top box-based video product. (See TWC Steps Toward All-IP TV.)
"The way I would characterize the NYC trial is really the next step in the evolution of TWC TV," Marcus said in October, referring to Time Warner Cable's IPTV app. "The goal there was to create an offering that was complementary to our traditional video product; to add additional screens on additional IP-enabled devices for customers to consume video."
On Thursday's call, Marcus argued that the IP video trial is proof that cable operators like TWC are now more willing than ever to offer customers innovative new types of video delivery. "That's where the industry is going," he said. "In the past, we were much less responsive to what customers wanted."
Turning to another IP-related subject, Marcus downplayed the impact that the federal government's regulatory conditions might have on Time Warner Cable's all-but-certain new parent, Charter Communications Inc. As part of the expected approval of Charter's pending purchases of TWC and Bright House Networks , New Charter will not be allowed to impose usage-based pricing or data caps on broadband service, charge interconnection fees or make agreements with video programmers that disadvantage online video competitors for the next seven years. (See Wheeler Recommends Charter Deals.)
While Time Warner Cable has dabbled with usage-based pricing and struck an interconnection deal with Netflix Inc. (Nasdaq: NFLX) last year that brings in some revenue, Marcus insisted that TWC will not be much affected by the expected Charter regulatory conditions.
"Interconnection as a revenue source has always been overrated," he said. "The numbers are exceedingly small in terms of our overall business."
— Alan Breznick, Cable/Video Practice Leader, Light Reading