Cable to the Cloud Brings Content to Consumers as Operators Seek Tech-Friendly Mantle

operator-supplied hardware in subscribers’ homes to systems’ own networks so equipment updates can be more easily delivered and content is available on a wide array of CE devices, according to interviews with industry executives who responded to Communications Daily’s informal survey this summer and fall. Part I of our report on that survey showed operators are updating user interfaces to better integrate linear and other video as well as third-party apps (CD Oct 31 p6). Bringing more content to cable subscribers also is being accomplished through moving functions such as searching TV listings, video storage and DVR menus to the cloud, as the industry uses more open-platform picture rendering standards such as HTML5 to bring IP video to many types of devices, said survey respondents.

The upshot for consumers is they are able to get newer features sooner, and without getting new set-top boxes or having other hardware updated, as more is done on the network and less in household-based operator-leased or supplied devices, said operator and cable research-and-development executives. Some operators say they are trying to be more customer-friendly, while analysts forecast the industry will continue losing video subscribers amid a historical reputation of anti-consumer friendly pricing and packaging. To get conventional cable content outside the home -- which some executives said will increasingly be possible as carriage deals permit it for TV Everywhere-type services -- subscribers can also use the Wi-Fi hotspots of cable companies, some interconnected to allow for roaming among systems owned by different companies, said Time Warner Cable Senior Vice President Gregg Fujimoto and others.

Decreasing reliance on the set-top box is one theme among some in the cable industry as systems increasingly move functionality to the cloud, though some say TV set-tops will continue to be used in many households, and makers of the boxes say they are increasingly giving operators more service options beyond just the devices. The cloud is also a way to store data about subscribers’ content preferences as operators try to personalize the programming to viewers, said some survey respondents. Such efforts can involve storing the data of many subscribers, depersonalizing it by stripping it of individually identifying data and using it to better understand viewing habits, some said. “The metadata lends itself to being put in the cloud, or in a private data center, because that’s where you can enhance it,” said Cisco Director-Sales Operations Steve Tranter. There can be links between such customer data and subscribers’ Facebook and Twitter accounts, if the users opt in, he and others said.

Cable headends are expanding “to support a richer experience” in consumer households, sending video in IP to various devices, said Tranter. Operators are trying to figure out how to ensure quality of service for such offerings, as they don’t solely rely on the cable plant to deliver the video as does encrypted cable content, he said. It may take “a while” for operators to solve the issue, he said. Multichannel video programming distributors’ “common goal” is to move “to a scalable solution that works with many devices across networks, and really get it to the cloud,” said Tranter. In the headend, there’s “migrating, or is a transition, to the cloud,” he said.

Second-screen content availability means cable consumers can get the device functionality they want and not be limited to set-tops and TV screens, said Tranter and other survey respondents. They said that may engender customer loyalty. “That’s only going to stem the flow of anybody looking elsewhere” among MVPDs, said Tranter. MVPDs are “moving in the right direction” when it comes to consumers’ device experience, he said. The cable industry’s research and development consortium said it and operators are working to increase broadband speeds to provide more new services, such as allowing Ultra HD content to be delivered by broadband, amid a growth of entertainment options. Cable subscribers that are more satisfied with their services will help improve the reputation of operators among all consumers, said Chief Technology Officer-Cloud Solutions David Grubb of Arris, which bought from Google what was once Motorola Mobility’s set-top box business and provides hardware, software and services to operators.

The cable industry’s transition to the cloud has brought with it more cooperation with high-technology companies and their standards bodies, with operators sometimes using tech innovations originated elsewhere, said survey respondents. “There is a movement away from sort of cable industry specific technologies and delivery mechanisms to leverage standards and protocols used in the much broader Web communities” like HTML5, said CableLabs Director-Application Technologies Jon Courtney. “We're letting the rest of the computing industry carry a lot of water for us in fleshing out these technologies.” Previously, “a lot of the cable software was proprietary to the cable industry,” said incoming Time Warner Cable CEO Rob Marcus on C-SPAN’s The Communicators from the Cable Show’s floor in June. “By using standard language,” Time Warner Cable can use others’ developments to improve subscribers’ viewing experiences, he said (CD June 17 p11) (http://cs.pn/1gac4Z2).

'More Choice’ Than Ever

The trend toward consumers having “more choice than they ever have” will continue, said CableLabs Senior Vice President-Application Technologies Ed Miller. “It is clear that things are evolving very rapidly within the cable industry.” Comcast CEO Brian Roberts demonstrated at NCTA’s June show the broadband transmission of an Ultra HD clip at 3.2 Gbps (CD June 12 p14). Increasing broadband transmission speeds, as allowed by CableLabs’ DOCSIS 3.1 specification that was finalized this fall (http://bit.ly/18DecGD), will allow “an uptick” in “the traditional level of services and also allow for the delivery of next-generation Ultra HD services,” said a CableLabs spokesman in an interview for this survey.

Using standards not linked to any particular operator, working with standards bodies across the cable, CE and Internet industry and moving functionality from consumers’ homes to the cloud are among ways cable ISPs and CableLabs are using Web technology to improve customer experiences, said executives from that R&D body. Having HTML5-based navigation guides means operators can “make the changes in the cloud” in terms of enhancements and updates, “so the operators will be in a very good position to innovate their guide position much more rapidly,” said Miller. That functions are “hosted in the cloud” means operators can make updates “overnight, with the stroke of a couple of keys on a keyboard,” said Marcus on C-SPAN from NCTA’s show. “In the past, we had to make a major software push to literally 15 million set-top boxes” in Time Warner Cable systems, he added. “Not very flexible."

IP video has a “great ability to reach lots of devices” and works with HTML5 to render images, said Miller. Doing more in the cloud means “all the same functions are happening” as used to occur on more traditional video equipment in households, “they're just happening in different devices,” said Miller. Operators including Time Warner Cable have been telling customers that cable’s “more than a distribution system” because “what you love is the content in many instances,” said Fujimoto. “People are falling in love with how they receive the content, too, now” as video is seen on devices such as tablets, smartphones and laptops, he said. “It’s not just the traditional viewing on the couch,” he said. What things “people are really passionate about are starting to expand."

"It’s making a lot of sense to move functionality to the cloud, and this is going right along with the transition to more IP-based technology” among operators, said Miller. The multi-gigabit download speeds allowed by the new DOCSIS 3.1 broadband spec is “building the technical capabilities upon which we can deliver an immense amount of service to the consumer,” he said. Cable ISP customers’ increasing use of IP-connected devices likely will bring an accompanying demand for faster speeds, said executives including Fujimoto. “As the consumers start understanding the role that bandwidth has on the performance of their devices,” they may want faster speeds, he said. “When you have a proliferation of devices all tapping into the system” of a household’s wireline broadband connection, “you will need more speed,” and the question is how much faster, said Fujimoto. “Do they have the bandwidth to support all the devices at the speed they've become accustomed to?"

Cable operators next year for the first time will have more broadband subscribers than video customers, with SNL Kagan forecasting in 2014 there will be 55 million Internet subscribers and just 54 million for basic video. “Our projections call for further losses” of video customers among cable operators after the “crossover of video subscribers and broadband subscribers” happens next year, said SNL Kagan analyst Tony Lenoir. The industry research firm forecast the number of broadband subscribers will grow 1.7 percent yearly to 62.4 million by 2023 while the number of video customers will decline 1.3 percent yearly to 48 million. Video is a “relatively mature business,” said Marcus on C-SPAN. “That’s been somewhat challenging” as there has been little new U.S. household growth, he continued. “We're very focused on returning the business to growth."

Wi-Fi Bolstering Reputations

Many cable customers think of the companies as broadband providers, which may be an improved reputation for that industry “because they're not just the evil cable company” anymore, said Jeff Blyskal, a cable and telecom analyst for Consumers Union’s Consumer Reports. “They bring the Internet to us, and at a higher speed than the phone company used to,” and so “they've submerged that reputation in the Internet stuff,” he said. Cable operators have “got a pretty good name” among consumers, though their satisfaction rankings among Consumer Reports readers aren’t “spectacular,” said Blyskal.

Wi-Fi in cable customer homes and hotspots run by operators for subscribers are leading to further IP video penetration into a host of consumer devices, many of which are portable and not set-top based, said cable equipment company and other executives. Some said it’s also helping bolster cable operators’ reputation among consumers generally. Time Warner Cable is among several operators in a consortium (see separate report below in this issue) with others such as Comcast that allows Wi-Fi hotspot roaming when any one company’s subscribers are in another’s territory, noted Fujimoto. There’s a “benefit to the cable category overall” from that initiative, he said.

Having Wi-Fi in homes allows IP video to permeate throughout a household and not just encrypted content that’s delivered by cable lines, said Grubb. “If you repackage the video and deliver it over IP technology, then you can use whole-home IP networking technology” such as the Multimedia over Coax Alliance or ethernet standards, he said. Introducing new features more quickly “ties to consumer satisfaction” for operators, said Grubb. “Happy consumers generally are going to turn into better brand perception in the market."

Operators have said they are trying to be known as more customer- and tech-friendly, and for innovating and having products that are easier to use. “The cloud is a game changer,” said Comcast’s Roberts at the Cable Show, later mentioning its interactivity and simpler user interfaces. “We would describe ourselves more as a technology and innovation company.” A goal is to “make it easy,” amid some criticism cable products could be “clunky” and “hard to get around,” he said in June (http://bit.ly/1c7vOtA). A goal at Time Warner Cable is making the company “easier to do business with and simply more customer friendly,” said Marcus that month on C-SPAN. “We're doing a better and better job."

Cable operators aren’t highly rated by Consumer Reports’ readers, mostly with satisfaction scores in the 60s and 70s out of a possible 100, said Blyskal. “You can change the window dressing” through tech innovation, but “is putting things up in the cloud rather than on your set-top box” a significant change? he asked. Operators “need to be more consumer-friendly” if they want increased satisfaction, he said. Comcast’s and Time Warner Cable’s bundled products were rated 61, with scores for major operators ranging from Mediacom at 52 to 60 at Charter Communications to 79 at WOW, said Blyskal.

The cloud isn’t an attraction to consumers per se, but rather what it brings helps retain subscribers, said cable executives. It’s no longer the case that “innovation is dependent on what that cable box can do,” said Roberts in June of the “'aha’ moment to move most of the brains of the box, like everything else in our society, to the cloud.” There, “as a consumer, you don’t care how we do it, you just want it to be faster to the content you like, learn your preferences” and be “fun, easy and elegant,” he added. “With where the consumer is and the industry is, [it] is more a means to an end,” said Fujimoto of the cloud. “It’s not necessarily a consumer-facing message” and he said he “can’t see the consumers really caring a lot about it. They just want the features and the functionality that comes with it.” He added: “Don’t cloud up how you do it.” (jmake@warren-news.com)