with Kevin Hart, EVP and CTO, Cox Communications
Hart (Image source: Cox)
During last week's SCTE Cable-Tec Expo, Steve Donohue, editor of FierceCable, sat down with Kevin Hart, EVP and CTO of Cox Communications, to talk about Cox's FlareWatch virtual cable trial as well as plans to launch next-generation services such as 1-Gig Internet and cloud-based DVRs.
FierceCable: Does Cox plan to launch a cloud DVR service?
Hart: We have cloud DVR on our roadmap. We just launched our six-tuner, 2-terabyte DVR, partnering with Cisco (Nasdaq: CSCO), so that's the immediate approach for the DVR. We've done some trials with our own internal cloud DVR. I definitely see that trend emerging faster.
FierceCable: We've run some stories about operators looking at using network-based DVRs to offer subscribers with physical DVRs extra storage capacity. Is that the model Cox is looking at?
Hart: I think you're definitely right. Having additional optionality and capacity, perhaps a hybrid solution with a cloud DVR and a set-top, could be a good solution over time. A lot of it comes down to content rights and accessibility. There's also cost benefits with both models, so I think there might be a sweet spot between hybrid over time. There will naturally be a hybrid as we transition.
FierceCable: Wouldn't it be less expensive to stop buying physical DVRs and switch to a cloud-based service?
Hart: We've done the economic analysis. Based on the current cost of the equipment and where we are going, including some of the truck rolls, it's about break-even at this time. From a content rights perspective, that is probably the swing vote. If it's break-even and we can get through the content rights, then I think we would start to jump to cloud DVR sooner rather than later. We've done a couple of trials with an internal cloud DVR. It wasn't ready for scale. It's definitely on the roadmap.
FierceCable: Have you seen issues with latency in cloud DVRs compared to the speed of physical DVRs?
Hart: Not with the trials. They've been very small and contained. For the most part, the performance and latency has been pretty good.
FierceCable: How far do you look out when getting Cox ready to launch next-generation services?
Hart: We have a five-year roadmap in terms of our video architecture--what we're doing from an analog-to-digital conversion to free up spectrum on the network for broadband growth. And then from a UI [user interface] perspective, [there are] a lot of the great developments down on the [SCTE Cable-Tec] Expo floor--the gateways, the RDK [Comcast (Nasdaq: CMCSA) reference design kit software stack], the HTML user interface. That's all part of our roadmap, and pretty much every month there is a new development in the technology space.
FierceCable: Why did Cox shut down the FlareWatch trial so soon?
Hart: We have a new business group within Cox, and we're trialing probably 20 or so different products in 2013. This was a contained trial, to really test the customer feedback about the user interface and our ability to partner with a third party like a Fanhattan. It was IP content, and we had the rights for the trial for that time period within that footprint [the trial ran on Cox's Orange County, Calif., cable system]. And that's another driver of why we contained the trial.
The feedback was very positive. The technology worked. Most of the customers took it as an additional service on top of their existing package because of some of the things that are coming around gaming, music and storage. It's more of a full entertainment suite as opposed to just the over-the-top video. We were happy with the trial. We're reevaluating what that might look like moving forward.
FierceCable: What did you learn from the trial?
Hart: The majority of the folks that purchased the service were existing Cox customers. And in many cases it was the additional member of the household; in some cases the younger generation were drawn to the service, and had it as a bolt-on service to an existing package. It's really more of the flexibility, the navigation and the other components, including gaming and things of that nature, that we're going to be rolling into that service over time.
FierceCable: How much interest was there from the programmers involved with the trial--were they studying what you were doing?
Hart: Yeah, there [have] been good conversations. We're in that trial post-mortem evaluation phase now in terms of what does this mean, what does this look like going forward.
FierceCable: Do you expect that Cox will face pay TV competition in the next few years from Comcast and other cable operators pursuing this virtual cable model?
Hart: Based on the current rights situation, and partnerships that we have, it's possible, but I wouldn't expect it in the near term.
FierceCable: If the programmers embrace that concept, do you want to be one of those virtual cable operators that could sell video not only to Cox households, but also outside your cable footprint?
Hart: That's not our current plan or strategy. But this is a fast moving industry. There are competitive threats and new opportunities on a daily basis, and we definitely have to evaluate them.
FierceCable: Is Cox deploying CCAP (converged cable access platform) gear?
Hart: We are. We have some successful CCAP trials that we've evaluated, and that's definitely on our multi-year network transformation roadmap. That's a key component, enabling the additional bandwidth growth and hitting the right cost benefits.
FierceCable: Cox Enterprises started a venture capital fund earlier this year. Do you work with any of the startups that Cox Enterprises is funding?
Hart: We do. Tripp Rackley is our board member, and he runs the Cox Enterprises innovation fund. It's about a $250 million investment. We do have active dialogues with Tripp, but they are separate entities. If there is a good cross-pollination of our network or capability, then we definitely have discussions around that. He's doing great work, and has a couple of things underway.
We're looking for new opportunities, new revenue generation growth. We [Cox Enterprises] also have AutoTrader, Manheim and other businesses, so there's a lot of potential synergies from a digital perspective.
FierceCable: Does Cox offer any download-to-go options today for TV Everywhere, or is that something you're looking at doing soon?
Hart: It's definitely on the roadmap.
FierceCable: Would there be potential to monetize it by delivering targeted ads that could be stored on mobile devices?
Hart: Potentially, yeah. The whole dynamic ad-insertion [sector] and opportunities for joint benefit [for distributors and programmers] is definitely something we're working on as well. That's also becoming a key requirement for some of the programming content rights.
FierceCable: Do you have gigabit Internet speeds on your roadmap?
Hart: We definitely do. We're freeing up spectrum, building out node-splits and then aligning with the [DOCSIS] 3.1 roadmap for 1-gigabit speeds.
FierceCable: Will you match the 1-gig speeds that CenturyLink (NYSE: CTL) is offering in Las Vegas and other markets where you compete?
Hart: We've rolled out 150 megabits to all of our footprints. It's a very small percent of customers that are accessing that currently, and/or have the end computing devices to take advantage of that. But we do have that capability in service, and we can offer it to customers when we can.