Time Warner Cable's Britt says OTT just fattens the middle

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Jim BartholdThere had been some whispers of late (no doubt instigated by the over-the-top crowd) that there might be a thaw between OTT and cable. If so, things certainly froze back over again last week with the frosty comments Time Warner Cable Chairman-CEO Glenn Britt leveled during his MSO's earnings conference call.

Over-the-top providers, Britt said, were just more middlemen clogging the innards of an already bloated service delivery process. OTT services might be priced lower than cable and might cherrypick certain programming but they "are really attempt(s) to separate the sale of content from the sale of physical infrastructure. You need both; you can't survive without both."

OTT service providers, in short, are belly fat. "If you start at the production level there are already a whole lot of middlemen," Britt said. "The question is whether there's any real value added by creating yet another group of middlemen and maybe all they have is better user interfaces ... which anybody can hire a bunch of Web designers and do."

Britt mentioned no names, but didn't hide behind the usual "no comment" when asked specifically about Netflix, which had been sounding somewhat hopeful of a truce between itself and cable. As a movie rental service, he said, Netflix has "built a wonderful business which they're now trying to extend online. I question what's the ultimate value-add of what they're doing."

"Quite frankly, the fuss that's been made about it in the press is way overblown relative to the dollars involved." - Glenn Britt

Time Warner need not necessarily go to war with OTT players because they "use our infrastructure so it's not a horrible thing for us at the end of the day," he said. For the consumer, "It's all very alluring but when you step back and say 'What's really going on here? Is there any real value being created and therefore is it sustainable?' I think it's pretty questionable. We'll see how it plays out."

Britt also brushed aside the nascent notion that there's money to be made just carrying the extra load of over-the-top content on cable broadband networks.

"The amounts of money that change hands in this whole space are pretty small," he said. "It's something that I would not say is material or a big deal. Quite frankly, the fuss that's been made about it in the press is way overblown relative to the dollars involved."

Of course Britt made all these comments while his company was conceding, again, that subscribers were leaving faster than celebrities who claim to be friends with Ricky Gervais. Unlike Ricky, though, Time Warner is contrite if it's offended its subscribers and is introducing more sophisticated packaging and pricing to "mostly closely fit the individual needs of our customers."

To further enhance the subscribers' feeling of freedom--and in turn cut back on some MSO expense items--TWC is working with rather than against consumer electronics manufacturers with an end goal of eventually replacing set-top boxes. Even Britt, though, admits that set-top-less cable may not happen in the first half of this century.

"The only reason we have set-top boxes is that there are a vast array of TV receivers in place in people's homes and most of them historically can't receive and display all our services because they don't really have any intelligence," Britt said. "Over a very long period (of time) as these (smart TV) devices replace all the TVs that are in people's homes--which is obviously a couple decades at a minimum ... we may be able to not have set-tops at all."

Even with smarter devices that are able to break the bounds of Time Warner's traditional footprint, the MSO won't be in competing for Comcast or Charter or Cox customers anytime soon, Britt said, because Time Warner Cable is a cable operator, not an over-the-top middleman.

"We purchase the rights from the content companies to distribute programming inside our cable footprint so that's what we're talking about doing. Clearly this technology allows you to distribute beyond somebody's footprint over the public Internet but that's quite different from what we're doing; we're using Internet standards but within our cable system and it's not the public Internet," he said.

The point Britt was making--or trying very hard to make--is that Time Warner Cable is no middleman; it's the whole show: the theater, the movie and even the popcorn, if you're hungry and have the money.--Jim