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Cable operators dismiss threat of virtual MSOs

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WASHINGTON--Cable operators attending the American Cable Association Summit here Wednesday said they aren't worried about a virtual cable operator such as Intel (Nasdaq: INTC) or Apple (Nasdaq: AAPL) putting them out of business by delivering an over-the-top subscription video product to U.S. homes. They also said they're not concerned about existing pay TV distributors such as Verizon (NYSE: VZ) expanding nationwide with an Internet video offering.

 "As long as over-the-top as it's deployed is not exclusive, we are happy to compete," WideOpenWest CEO Colleen Abdoulah said at a meeting with reporters. "There is no better way to get over-the-top content than by our networks," added Steve Friedman, chief operating officer of Wave Broadband, noting that cable's broadband networks have the speeds, scalability, and reliability needed for Internet video. Friedman added that it might not be so bad to "sell everyone data and phone and let Verizon figure out how to make money in the video business that gets worse every year." "The video business is hard to run," he added.

On Tuesday, The Wall Street Journal reported that Intel was talking to programmers about obtaining rights for a virtual cable operation. Several other technology companies have reportedly looked at ways to challenge cable and satellite TV providers with an Internet-based subscription video package, including, Apple and Microsoft (Nasdaq: MSFT)

Massillon Cable president Bob Gessner also questioned whether bandwidth is sufficient to deliver a full lineup of TV channels over the top. "Is there really the bandwidth to do that in a wireless world?" he asked. "If it were really successful, they couldn't deliver the bandwidth," he said. 

Gessner said that he also doubts virtual MSOs would be able to develop cheap content packages that will be attractive to consumers. Everyone assumes, said Gessner, that companies like Apple, Google (Nasdaq: GOOG), and Verizon will be able "to deliver to consumers small subsets of their favorite channels," that are different from the favorites of other consumers, and that it will be inexpensive and work well. "They haven't talked to the content owners yet," he said, adding that content providers will require them to take all channel families, and deliver them to everyone. "It's tough to make that really cheap basic cable package," Gessner added.

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