Time Warner Cable to deploy video gateways, IP set-tops

Time Warner Cable (NYSE: TWC) will deploy video gateways later this year that will contain a DVR with six tuners and 1 terabyte of storage, COO Rob Marcus said Thursday on the company's second-quarter earnings call.

The gateways will be able to transcode traditional cable channels delivered in QAM (quadrature amplitude modulation) into IP video, and deliver video to IP-based devices ranging from gaming consoles to connected TVs. Time Warner Cable will deploy new IP-based set-tops in subscriber homes next year that will receive programming from the gateway devices, and it will also roll out a cloud-based interactive program guide, Marcus said.

Time Warner Cable didn't name the set-top vendors that will supply it with gateways and IP set-tops. The gateway device it described is similar to the X1 gateway manufactured by Pace (LSE: PIC) that Comcast (Nasdaq: CMCSA) has deployed in Boston and Atlanta. Arris (Nasdaq: ARRS) is supplying MSOs with video gateway devices, and Cisco (Nasdaq: CSCO) and Motorola Mobility have also developed video gateways for their cable customers.

The gateway architecture will help Time Warner Cable transition to IP-based delivery, and support CEO Glenn Britt's focus on the "four anys"–delivering any content anytime to subscribers anywhere watching video on any device.

Time Warner Cable is expanding the rollout of a new IPG that has the same color scheme used in apps it has developed for Apple's (Nasdaq: AAPL) iPhone and iPad and Google (Nasdaq: GOOG) Android devices. But Britt said the MSO isn't opposed to subscribers relying on user interfaces supplied by other providers. The company is already supporting the delivery of HBO Go through Roku's over-the-top video set-tops, and working on delivering cable programming to connected TVs from Samsung and other CE manufacturers.

"If somebody wants to use the interface that comes with one device or another, that's fine. We're going to continue to have ours. If there's a better one -- as long as they buy video from us--I don't care," Britt said.

Time Warner Cable lost 169,000 video subscribers during the quarter. The company attributed the losses to disconnects that occur each year when many subscribers move homes during the summer, and college students cancel subscriptions at the end of the semester. Britt said that the number of subscribers who are cutting the cord on cable TV to rely on Internet video for home entertainment remains small, and noted that many cable subscribers are struggling with the poor economy.

"There's a group of customers that are really in serious financial shape, and have been out of work for some time, and some of them can't afford the video package even though they want it. That's why we keep having these heated negotiations with programmers. I think that is a much more serious issue than cord cutting. But we keep an eye on it," Britt told an analyst who asked about cord-cutting trends.

Also worth noting from Time Warner Cable's Q2 earnings call:

  • Marcus said Time Warner Cable has sold its IntelligentHome home security and monitoring service to about 7,000 subscribers.
  • Britt told analysts that he was bullish on the prospects of subscribers using their home networks to access remote healthcare services. "At the risk of sounding a little dreamy, there is a lot going on in healthcare. I don't think we've fully come to understand the implications of the Healthcare Act, and how that's going to change behavior," Britt said, noting that subscribers would be able let doctors monitor health conditions. "I have a feeling that [IntelligentHome] is going to be bigger over time than just home security," he added.
  • Marcus said Time Warner Cable is now marketing its products in 189 Verizon Wireless stores and offering joint promotions with Verizon in 11 markets, following the joint marketing and spectrum deal the company struck with Verizon late last year.
  • Echoing comments that Comcast CEO Brian Roberts said Wednesday about Google's Fiber TV and 1 Gbps residential broadband tests in Kansas City, Britt said the Google tests could help the cable industry. "The more people figure out how to use broadband, the better off we're going to be. This is a good thing, not a bad thing, that people are figuring out how to use this technology," Britt said.

For more:
- see the earnings release

Special Report: Cable in the second quarter of 2012

Related articles:
Time Warner Cable bleeds 169K video subs, grows Q2 revenue 9% on high-speed Internet and voice-service gains
Set-tops will become extinct, Time Warner Cable CEO Britt says
Kip Compton: Cisco's NDS deal will boost MSOs' connected TV plans
Time Warner Cable to support HBO on Roku, Xbox and Samsung TVs