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Smaller Cablecos Fleeing Legacy Pay-TV

Alan Breznick
2/26/2019

ATLANTA -- National Cable Television Cooperative's Winter Education Conference -- Unlike major US MSOs such as Comcast, Charter Communications, Cox Communications and Altice USA, small and midsized cable operators are accelerating their drive to shed their costly legacy pay-TV assets and replace them with more profitable, data-based offerings.

Speaking at the National Cable Television Cooperative's Winter Education Conference here this week, executives from a number of smaller and independent cablecos indicated that they are increasingly de-emphasizing or shedding their traditional pay-TV bundles as they focus even more on high-growth areas like broadband connectivity and business services. Led by Cable One, probably the industry's most outspoken advocate of shifting away from video, operators are moving to app-based video services, incorporating OTT-delivered streaming services, dumping their proprietary set-tops and, in the most extreme cases, exiting the video business altogether.

Ken Johnson, senior VP of technology services for Cable One, noted that only about 15% of the homes passed by the company's HFC network now take its traditional pay-TV bundle while many more pay for broadband service. While the MSO is still supporting its rapidly dwindling base of video subscribers, Cable One is putting much more effort into developing and deploying other, cheaper platforms to deliver video content to customers.

"Consumers have decided how they want to get video," Johnson said, describing the shift as a done deal that Cable One has embraced. "We just happen to be further along in that continuum than most people. It's moving towards an app-based world, it's moving toward an over-the-top streaming solution."

Speaking on the same panel, Scott Watts, executive VP and chief marketing officer of North State Communications, said his company has drastically changed its pay-TV postures over the past decade. While it viewed video as a growth engine when it launched pay-TV service ten years ago, it now sees video as mainly a retention tool for broadband service.

"We're at a place where consumer behaviors are changing," Watts said. "They're consuming content from multiple sources, they want to do it on their own terms."

As a result, like many other small and midsized cablecos, both Cable One and North State are looking at jettisoning their proprietary set-tops and adopting app-based approaches and more streaming services to their still-growing pools of broadband customers. Specifically, they are exploring possible deals with MobiTV, Sling TV and other OTT players, as well as developing their own in-house IP video services.


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"We're looking at alternative options, things like app-based services that don't require a set-top box," Watts said. He noted that North State has experimented with offering HBO Now in the past but hasn't settled on a solution yet.

Both executives, however, shied away from the idea of acting as total video aggregators for their customers, including offering billing services for OTT providers. They'd rather let those third-party providers do that heavy lifting themselves.

"We're not looking to be in the middle of that," Johnson said. "We look at [video service aggregation] as something we're moving away from, not towards. We don't want to have the burden of billing for that."

Watts agreed, noting the growing number of OTT providers makes the video aggregation role pretty challenging. "There's just so many different offerings, it's tough to get in the middle of that," he said. "It's so complex, the different offerings, the different levels of service, trying to bill for a lot of different partners and be that aggregator. I don't know the value we could bring to that."

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— Alan Breznick, Cable/Video Practice Leader, Light Reading

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jbtombes
jbtombes
2/27/2019 | 11:41:35 AM
CABO as Outlier
CableOne was also an outlier, compared to the larger MSOs, on VOD. Probably saved them a lot of money. Their broadband-centric approach looks mainstream among NCTC peers.
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