Comcast Discussing OTT Delivery in Non-Comcast Regions
Michael Greeson, Founding Parter, Research
April 29, 2011
At the SeaChange International Summit in NYC this week, Comcast’s VP of Advanced Business and Technology Development, Mark Hess, said executives are discussing whether to sell its cable programing outside of its cable footprint—yep, deliver it over-the-top of other (cable) operator’s broadband connections to consumers who live in other (cable) operator’s footprint. By implication, this means it would be okay for other cable TV operators to sell into Comcast’s privileged territory, a move certain to recast the entire U.S. PayTV industry. Aw, but it’s just an idea, right?
Is this a box Comcast really wants to be opening? Does this signal an end to cable’s mutually recognized service boundaries, the beginning of new age in which competition (the god to which so many business owners chant, at least when it serves their ends) becomes real and cable operators are let loose to exploit the territory of their former allies?
Perhaps, but doubtful—at least within the next five years or so. After that, all bets are off.
On one hand, Comcast wants VERSUS to be adopted by any and all consumers willing to pay for it, regardless of the platform or country. Very soon, it will think the same way about its NBCU properties. On the other hand, as a cable network operator, the company is charged with increasing ARPU by any and all necessary means within a specifically assigned territory, thus respecting the rights of other cable companies within their exclusive territory. But new technologies and new “conduits” are challenging these conceptions, leading many to question when and where the privileged “cable operator” line starts and ends.
It has long been acknowledged that bringing content creation and content distribution networks under the same business shell means internalizing two naturally competing interest, but regulators were convinced that the two could co-exist in a way that served a company’s best interest.
In the age of quantum media, such assumptions will necessarily be tested. As information and entertainment systems condense—fewer owners with ever-greater reach—dominant players like Comcast and AT&T will have more power over the distribution of information and entertainment.
At the same time, those that create this information and entertainment (specifically Hollywood content companies like Disney) see IP as a means of distributing their content to more viewers without having to spend a fortune for carriage on networks like Comcast and AT&T. Not surprisingly, network operators are wondering how best to maximize their carriage value when multiple (and more open) conduits are available to content creators and end-users alike.
You may recall that TDG first discussed these issues in early 2009, advising incumbents at that time to focus on:
- Putting existing TV programs and services online and incorporating DVD-like bonus features and content;
- Bring Internet-enhanced channels and features created and defined in (1) for broadband delivery back to the television; and
- Provide broadband-only TV media services, both within and outside of cable-only territories.
While (1) and (2) are currently being undertaken by all major cable operators in the U.S., (3) is just now heating up—in particular driven by the fact the nation’s largest cable operator just purchased a Big Four broadcaster (i.e., Comcast/NBCU). While many think the interests of NBCU will take a (far, far) backseat to “Cable Comcast,” the truth may be just the opposite: Comcast will think less like a cable company and more like a national/international broadcaster. Once that starts to happen, cable networks will be revealed for what they are: archaic monopolies that have long since served their purpose, now but roadblocks to progress and greater consumer choice.
Is there some prima facie reason why over-the-top reach should be restricted to existing cable TV territories? That’s for the lawyers and the feds to decide, but the debate is coming and the battle is inevitable.
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