Broadband Cable Association of Pennsylvania

NewsClips

May 11, 2012

With the large, publicly traded MVPDs having wrapped up quarterly earnings reports, smaller operators on Wed got a turn to present their 1Q views at the Broadband Cable Assn of PA's annual Cable Academy. And like their larger brethren, they are seeing plenty of opportunities in the commercial business space. "We're taking 2K unsolicited calls from business every month looking for alternatives to ILECs for DSL and even phone," said Dave Dane, Atlantic Broadband's svp, ops. Making commercial even more attractive is that the existing residential infrastructure has been able to serve business customers thus far, he noted.

The spike in commercial services business was reported by others. Service Electric Cablevision svp Mark Walter said that even when his company isn't the primary provider for a business, it's getting business as a back-up provider to provide redundancy given the importance of data. "And that's a foot in the door," he said. While HSD and voice are the primary products for commercial services, video is also seeing traction. Residential video has seen losses, but Atlantic Broadband's commercial video business has been growing nicely at nearly 5%/year, Dane said.

All of the companies on Wed's panel obviously operate in PA, which has fared better than many other states in the economic downturn. The Bureau of Labor and Statistics shows the state ranked 28th in Mar for unemployment. Atlantic Broadband is seeing some new HH formation in some areas of the state that Dane believes is coming from the fracking and mining industry. For the much smaller Nittany Media, there haven't been a lot of housing starts, said vp, gm & CTO Michael Hain.

But there is growth, and Nittany is getting a few more of the nonvideo subs. "I'm not sure if that's related to over-the-top or competition with satellite," he remarked. Non-video sales are making up about 35% of Atlantic Broadband's connect activity, according to Dane. "I don't think it's cord cutting. I think it's the faster speeds chipping away at the DSL market," he said. Armstrong vp, cable marketing David Wittmann noted that bandwidth usage is accelerating exponentially at his company, in some cases it's gone up by 40% YOY.

Nittany saw similar spikes in Dec '10, but it has since leveled off. Hain attributes some of that to people becoming less infatuated with Netflix. "I think people have watched all the shows of 'Lost' they need to see. It was sort of a fad," he said, reminding the audience of how much Napster helped the cable modem business in its heyday. In other trends, the operators are generally seeing declines in call volume thanks to improving reliability of plant, more info available online and less billing questions due to bundles. "Those calls that do get through are more detailed questions about products or how to help with what they're trying to accomplish," said Wittman.

Similarly, Dane reported a trend toward longer calls with Atlantic Broadband seeing the avg length of time for a call increase to about 6 min. Programming costs didn't come up as much as one might expect, but Hain did raise the alarm about "unbridled" growth. He said Nittany recently had to implement its largest rate increase ever, 10%, to cover retrans costs. HSD, which the panel agreed is the future of the industry, is another matter. "Our Internet product is going to continue to grow. [And we've] never increased its price in 15 years," Wittmann said. Walter said Service Electric Cablevision's 50Mbps Wideband offering is "probably our hottest product right now." And customers are buying it in bundles-meaning it's not the cord-cutters wanting it.

BCAP Notebook: Miller Tabak's David Joyce told the PA state association that he doesn't think there is much fear at all over OTT. "Investors are finally saying 'OK, it's going to be a particular kind of user, but not the whole business model,' " he said, noting that people spend on avg less than an hour week with online viewing vs 30+ hours/week with traditional TV.

Noting Nick and MTV's rating declines, he raised questions about whether it's the programming or the measurement. "We are a proponent of the industry working more with Rentrak to get data," he said, adding that Nielsen's sample includes 25K homes while Rentrak has set-top data for some 8mln homes. Asked whether he thought any public companies might soon go private, he said it's possible something might happen in the next 3-5 years with Cablevision and Charter. But it would be hard for anything to happen sooner than that given Charter's debt and Cablevision's hit to EBITDA this year by not raising prices.

Frank Eliason is now the svp, social media for Citibank, but he'll forever be remembered in the industry as the original Twitter voice of ComcastCares. He told the crowd that their customers have an extreme passion for their companies because "cable connects them to the world." That also is why they get so upset when they have service problems. "The opposite of love is not hate. It's apathy. Your customers don't have apathy at all," he said. He stressed that customers don't want their problems solved via social media, but instead it's where they turn when an issue isn't fixed right the 1st time. "Social service is a necessary evil because brands are being talked about [in social media]," he said. Ideally, companies should address issues in a more private setting such as email-with all complaints treated like an exec complaint and resolved in 24 hours.

CableFAX columnist Steve Effros spoke at the gathering on NimbleTV, Aereo and all things cable. He gave NCTA a tip of the hat for new marketing, being rolled out in DC now, that features the tagline "It's More Than TV. It's the Way We Connect." He said: "That is the job we do.. and we do it with an infrastructure that happens to be cable." He also commended NCTA on the line, noting it doesn't say what cable connects. It could be Hulu, Wikipedia or CNN. CableFAX Daily


Commercial-free prime-time shows-the Holy Grail of TV watchers-has come to Dish Network Corp. And it's likely to wreak holy havoc.

On Thursday, the satellite-TV operator began offering its customers a DVR feature that allows viewers to completely avoid commercials-rather than just fast-forward through ads, as the old model digital-video recorders do. The new "Auto Hop" feature comes on a DVR dubbed the "Hopper," a device that has been available to subscribers since March. With Auto Hop, viewers see a black screen momentarily where the ads were broadcast, or a glimpse of the first frame of the first commercial. Then the show resumes. Consumers merely have to click an on-screen Auto Hop button before a show to enable the feature. "You can put down your remote control" and not see an ad again for the entire show, said Vivek Khemka, vice president of Dish product management.

The "Hopper" DVR costs Dish subscribers $10 a month in addition to a $99 upfront fee. Dish also offers a less-expensive traditional DVR with no upfront charge and a $6 monthly fee. The "Hopper" is made by Echostar Corp., which like Dish is controlled by satellite-TV pioneer Charlie Ergen. The notion that viewers won't see even a whirr of fast-forwarded ads threatens billions of dollars in broadcast television advertising-and risks the ire of the networks. "There has been a problem with ad skipping and this is just making it worse," said Tracey Scheppach, innovations director at Starcom MediaVest, a media-buying firm owned by Publicis Groupe SA.

The feature is available on recordings of nationally broadcast prime-time programs aired on Walt Disney Co's ABC, CBS Corp's CBS, News Corp.'s Fox and Comcast Corp's NBC but watched after 1 a.m. the day after they air. Dish is the third biggest pay-TV distributor, with more than 14 million subscribers, trailing Comcast and DirecTV. None of the broadcast networks affected had any immediate comment. News Corp. owns The Wall Street Journal.

Dish's move is likely to heighten tensions between TV network owners and pay-TV distributors-cable and satellite operators and phone companies. Relations are already strained because of rising programming costs. Broadcasters have been pushing to get a larger share of "retransmission fees," paid by the service providers that pipe or beam programming into homes. Traditionally, retransmission fees were paid almost entirely to cable channels, not broadcast networks. Dish Chief Executive Joe Clayton in an interview acknowledged the tension over retransmission fees. "But that's a separate issue," he said. "The Auto Hop feature is all about the consumer."

Mr. Clayton trumpeted the new feature. "This has been the Holy Grail of television viewers for 40 years," he said. Dish didn't provide definitive numbers on how many customers have opted to get the Hopper, but Mr. Clayton said it's a "big number." "What's wrong with giving the consumer what he wants?That's my response to anybody who takes issue with this," Mr. Clayton said. Introduction of DVRs several years ago raised widespread concerns about the impact on TV advertising. The impact so far has been mixed. The devices have been widely adopted and are now in about 43% of U.S. households, according to Nielsen. Media buyers say about 50% of ads get skipped by DVR users. Yet TV advertising has increased from $51.6 billion in 2003, when DVRs became widely available, to $58 billion in 2011, according to Publicis Groupe SA's Zenith Optimedia.

Marketers say TV is still a crucial medium for advertising, given its broad reach. Nielsen has developed ratings measures that track how many people watch ads that appear during programs up to three days after it airs, which is reflected in ad deals. Still, DVRs have changed marketing tactics. Advertisers have worked overtime to embed their products and pitches within the shows. Product placement over the past few years has soared and become a major part of most media companies' offering to advertisers.

Dish makes clear that it isn't deleting the advertising from the recorded material; if customers want to watch all the ads, they can. "We spend hundreds of millions on advertising per year," Dish's Mr. Khemka said. "I don't think it makes a very big difference from our perspective to the advertising market." Unlike cable channels, broadcasters earn relatively little in subscription fees. Advertising accounts for the vast majority of broadcast networks' revenue. CBS, for instance, collected $209 million in subscription fee revenue in 2011, compared with $4.9 billion in ad revenue, according to market researcher SNL Kagan. Now, broadcasters are pushing for higher retransmission fees to bolster revenue. But pay-TV executives are balking at the costs-and are following a legal battle that could give them more leverage in their negotiations.

Pay-TV distributors, including Dish and DirecTV, have said they are closely watching litigation between broadcasters and Aereo Inc., an online video-streaming service that offers broadcast network signals for New York residents. Aereo, which is backed by media veteran Barry Diller among others, has been sued by broadcasters claiming copyright infringement. "If it is found to be legal, not paying retransmission consent, it's a very interesting thing," Time Warner Cable Chief Executive Glenn Britt said on a recent conference call. Derek Chang, who oversees programming negotiations for DirecTV, said in an interview the case "could impact some of the dialogue going forward." Wall Street Journal

Links