The National Cable Television Cooperative (NCTC) is urging its members to participate in a plan to bail out MobiTV, as the video streaming tech company trudges through a Chapter 11 process that could ultimately lead to a sale of assets.

That plan includes financial help for potential buyers of MobiTV and the consideration of major changes to current MobiTV service agreements, including a healthy price hike and minimum penetration commitments.

"We believe the best outcome is the continuation of MobiTV," the NCTC explained in a letter to members obtained by Light Reading.

"NCTC has retained outside help to navigate the Chapter 11 process and financial modeling of the MobiTV business to assess investment options and member agreement changes."

Pull for investors

NCTC noted that it has formed a small task force of members to help advise and evaluate options for MobiTV. One option under consideration is an "investment consortium of members" willing to put up a minimum of $1 million to partner with a potential MobiTV buyer or other investors.

According to the NCTC, there are roughly 25 entities now reviewing investments in or purchasing MobiTV.

As Light Reading reported earlier this week, the latest deadline for potential bidders is May 7, with potential "stalking horse" bids expected in by April 26. May 12 is the date set for an auction if multiple qualified bids are received.

"We do not know what the outcome of the MobiTV Chapter 11 filing will be, however we will do our best to help make sure MobiTV is here to stay," NCTC explained.

Alternatives 'fraught with risks'

Several vendors and suppliers, including Minerva Networks, Adara Technologies and a startup called Shift 2 Stream are actively pitching alternatives to cable operators amid the uncertainty surrounding MobiTV.

But the NCTC is encouraging members to stick with MobiTV, claiming that its review of other suppliers and vendors, which were not identified by name in the letter, won't enable a large number of NCTC members to quickly pivot over to a new platform.

"Moving to another solution quickly is fraught with risks and various costs," NCTC asserted.

"The alternative providers we have reviewed have limited experience in providing a service like MobiTV on this scale ... A preliminary review indicates there is no other comparable provider well suited to create a robust managed service and that can transition a large number of members very quickly."

NCTC said it has also evaluated OTT options (such as partnerships with virtual multichannel video programming distributors). While such options "could be launched much quicker" they would also "significantly change the consumer/member relationship and may be viewed negatively by consumers," NCTC argued.

It's notable that NCTC stands to benefit financially if MobiTV survives, as it's also a business partner of MobiTV. NCTC and MobiTV inked their original deal in December 2017 but did not disclose the terms and how NCTC gains from member deployments.

Proposed changes to MobiTV service agreement

NCTC is also proposing to alter the current MobiTV service agreement that, industry sources say, is a primary reason that led to MobiTV's financial woes.

Those changes include an increase in the monthly base fee, along with an annual increase each year. NCTC told members that early estimates, based on its modeling, show it will need to enact a minimum increase of $2 per account.

According to an industry source familiar with MobiTV's model, the general current cost is in the range of $5 to $7 per month, and possibly lower for some of NCTC's larger members.

NCTC is also pitching the introduction of monthly minimums, including service penetration requirements for the monthly base service, and the launch of a three-to-five-year commitment/agreement. The lack of a minimum penetration requirement was another big hole in MobiTV's business model.

"We believe these changes are needed to increase the viability of MobiTV," NCTC wrote, adding that it expects some or all of those changes to start by July 1, 2021.

"We recognize that this is very difficult and for some will be very disruptive. Our assessment is that concessions are essential to help ensure a healthy MobiTV and their long-term survival."

Scaling up MobiTV's business

The letter also shines a light on potential scale that MobiTV stands to generate from its agreement with the co-op. NCTC estimates there are about 90 members using MobiTV today, with another 16 pending launch. NCTC members on the platform today serve about 130,000 pay-TV customers that also have a collective legacy video subscriber base of roughly 1 million subs.

Exposing another hole in MobiTV's business, NCTC points out that MobiTV's financial structure was designed to be profitable once higher volumes of subscribers were added to the platform, but it acknowledges that the inertia of quickly converting customers to the new app- and IP-based MobiTV platform has been difficult to overcome.

Achieving the necessary volume on MobiTV "has been delayed over the last few years most recently due to operator's slowdown in converting from their legacy video platforms as a result of COVID (restrictions on staff in home, need to focus on broadband demand)," NCTC said.

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— Jeff Baumgartner, Senior Editor, Light Reading