It wasn’t a surprise to hear COO Landel Hobbs tell analysts last month that Time Warner Cable plans to launch switched digital video to half its footprint by year-end. The need to conserve bandwidth with technology so cable can ramp up HD offerings is a theme we heard repeatedly during interviews with cable’s content gatekeepers.

Although at one time it seemed that switched digital video would become the best friend of those hoping to launch or gain carriage for linear networks, particularly ethnic channels, this isn’t a likely scenario, with a few exceptions. The execs we spoke with said they will not (and cannot) open the floodgates to content. The top priority, most of them said, will be boosting HD VOD content.

Call it switched digital video, SDV, switched broadcast or switched video — the technology will be crucial in the competition on the video front against the telcos and DBS, particularly DirecTV, which, under Dr. John Malone, threatens cable with potentially 100 HD feeds this year and 150 HD channels in 2008. Dr. Malone’s fast-moving threat has induced Time Warner Cable, Charter Communications and Suddenlink Communications to get smart now and address their bandwidth issues immediately. — Shirley Brady

• Click here for part 1 in this series

Time Warner Cable: The Vanguard of Switched Digital Video

If Peter Stern were still a kid, he’d be the one at school with all the new toys. As Time Warner Cable’s EVP of product management, he oversees the MSO’s sexiest new gadgets and services, including the latest in broadband content delivery, high-definition TV, interactive TV, phone and video on demand. So when CableWorld contributing editor Janet Stilson wanted to learn how the company is managing bandwidth to add all of the new products and gain a competitive edge, a conversation with Stern was clearly in order. Mike LaJoie, the company’s EVP and chief technology officer, also provided insight on the technical issues involved in rolling out switched digital video.

THE SWITCHED ROLLOUT

In our "7 in ’07: The Year Ahead" feature story at the beginning of this year, we said Time Warner Cable had emerged as an industry leader in the rollout of bandwidth-saving technologies, in particular, switched digital video. So far the company has announced two divisions that are using the technology: South Carolina and Austin, Texas. "Both of those divisions are actively using switched digital video technology associated with both standard definition and high-definition programming," says Stern. "We have over 100 channels on the switch, in each of those locations. And we are adding high-definition programming to those divisions as a consequence of the additional capacity that switched digital video frees up."

Stay tuned for further announcements. Some additional divisions are at the same point as South Carolina and Austin in the switched digital process, but they haven’t been announced, Stern says. "And we have a large number of divisions that are in the process of deploying the technology. It’s not a simple deployment, so it takes a few months, from start to finish, to be able to turn it on," he adds.

THE BEFORE-AND-AFTER SDV PICTURE

Switched digital video theoretically allows operators to offer an infinite variety of channels. But in the markets where SDV has launched, Time Warner Cable has so far only added "a handful of channels, mostly high-definition channels. You could count them on the fingers of one hand," says Stern. Because it’s such new technology, the company has just begun to acquire new programming rights to begin to take advantage of it.

Selecting which channel gets put on the switch involves some mathematics. "There are costs and some complexity associated with switched digital video," Stern explains. "So there’s a trade-off that you have to engage in. And that is: Is it worth spending money on switching on this channel to gain the savings in capacity? For very frequently viewed channels — let me take an extreme example, one of the top four or five broadcast networks — it doesn’t make sense, because someone’s always watching it. So they use [SDV] for infrequently viewed channels. And the less frequently viewed the channel, the more capacity you free up by switching it. You align the economics of the networks with the economic value of the programming."

Stern declined to offer an estimate of the number of channels that will be added in the future.

LINEAR GAINS FROM SDV

While Stern notes that there are limited opportunities at Time Warner Cable for linear channel additions in the new switched digital world order, he’s direct about the kinds of programming that would most likely be added. "There are two particularly exciting opportunities with regard to switched digital video: one is high-definition TV programming, the second is ethnic and multicultural programming, which by its nature appeals to niche audiences. [In the past,] we would never have carried say, a Hispanic golf channel, because we had limited capacity in the system, even though we might have wanted to appeal to Hispanic golfers. [Now] the only question is, is a programmer willing to invest in that content, and are they willing to make the content available to us on the terms that make sense?"

Stern would not say if there were any programming genres of no interest whatsoever. "There are always creative ideas emerging from the programming community. Remarkably, even when it seems like we’ve hit every possible niche, someone comes along with a great idea. And switched digital video gives us the flexibility to carry those channels. But we’re not in the hunt right now for those types of standard-definition channels."

SDV’S COMPETITIVE EDGE

Stern notes that satellite platforms are investing in more birds and replacing equipment in customers’ homes in order to offer a wider selection of HD programming. But he notes that even with those improvements, it’s not enough to one-up operators that have deployed SDV, which allows for an infinite variety of content. And there’s no need for operators to change any equipment in the home when they add switched digital.

The competitive edge is narrower when it comes to the telcos. "AT&T is offering IPTV [Internet protocol TV], which is switched. In fact, our network is using IP in the switches as well. So they’re doing the same thing that we’re doing," Stern says. "Verizon has been using the broadcast approach, but they’ve engineered their network in such a way that they can switch later as well."

SHARING THE LESSONS OF SDV

Mike LaJoie notes that Time Warner Cable has been a pioneer in switched digital video, and began its tests three and a half years ago. So as a natural consequence, the company has shared what it’s learned with other MSOs. "We have shared with them the method that we’ve implemented, and in some cases taken feedback and incorporated it into a specification. And we’re happy to contribute that work to CableLabs," he says.

LaJoie reports that MSO technologists are also working together in hope of devising a common platform for SDV. "I can’t say for sure what the other MSOs are going to do. But the notion is, that’s what we’re driving for. It makes sense from a technology perspective; that way vendors don’t have to implement the same task in multiple discreet ways. And it also ends up more of a launching pad for other things like targeted advertising and interactive advertising."

The tricky part of switched digital video, from the standpoint of technology, is in the way it’s rolled out, LaJoie explains. He’s learned that gradually introducing it over a few weeks, in a very deliberate manner, works best. A big overnight splash can result in a wave of problems and swamped phone lines. "For switched digital to work, the signaling on the plant has to be really good. Because you have to make sure that you can transmit the message back up the network if [a customer wants] to join a channel that’s already being viewed or another channel in your service group."

That whole process needs to happen very quickly, so that the entire channel-switching activity operates in a completely seamless manner from the consumer’s perspective, LaJoie says.

On the plus side, SDV is being added "on the heels of high-speed data and video on demand and most recently phone, so the networks are much tighter than they were, say 10 years ago," he adds. Occasionally customers have difficulty getting a clear signal for channels on the switch. "Because of their drop or some other anomaly, they don’t receive those channels real well. So you have to go and fix those few homes. But once the thing’s installed, it just runs."


OTHER NEW TECH INNOVATIONS

Beyond switched digital, video on demand is developing into a key means for Time Warner Cable to differentiate itself from rivals as a cutting-edge programming distributor. One VOD offshoot at Time Warner Cable is Start Over, which allows consumers to reverse to the start of a program in progress. That’s expected to be available in about half of TWC divisions by year’s end, up from about six divisions at the start of 2007.

The company also started to deploy a service called Quick Clips. "It allows programmers to send us content from their websites. We are able to place that content on their network for viewing at a touch of the button, within 15 minutes of it being posted to the Web," Stern says.

As an example, when watching The Weather Channel, viewers can use Quick Clips by pressing a button that instantly accesses a local forecast. Today, Quick Clips is available in South Carolina and Hawaii; two other divisions will introduce the service by the end of the second quarter.

Voting and polling has also proven effective. Stern says that when local channel NY1 elicits votes in the greater New York market every night at 9 p.m., it consistently has a 20% to 25% response rate.

THE TWO-WAY ADVANTAGE

Stern notes that satellite services’ broadcast technology limits their ability to offer two-way services. "It’s very difficult for them to do voting and polling, unless they have their set top box hooked up to a broadband connection," he notes. While satellite platforms can offer VOD by taking over space on digital video recorders, they’re limited by storage capacity. "Something like Start Over, which involves individual streams to individual homes, satellites just can’t do."

On the other hand, telephone company infrastructure mimics cable’s, so theoretically, they could offer the same interactive features. "But they’re catching up on the video business, so they’re not very widely deployed and don’t have some of the technology — for example, the technology that would enable Start Over," Stern says. — Janet Stilson

Suddenlink Pushes HD, and Quality not Quantity

In part 1 of this series, Patty McCaskill, SVP of programming for Suddenlink Communications, said her job is "to be very cautious [that] we’re looking at quality, not just tonnage," regardless of whether she’s assessing analog, linear, VOD or HD lineups.

How does she strike that balance? We revisited McCaskill after last month’s Cable Show, where bandwidth management was at the top of her mind.

"We’ve been thinking about, talking about and looking at all of the different technical options on bandwidth for the last three years," McCaskill says. "We knew that while it seemed like there was a lot of bandwidth, in fact it was limited. Somewhere along the line we were going to have to understand how to manage it and make those programming decisions."

The bottom line? "Like every other large MSO out there, we are looking at switched digital and the opportunities that it brings," she notes. "We’re also looking at the possibility in some markets of doing a digital simulcast and moving to an all-digital solution. And we’re just keeping our eyes open to see what’s happening out there on the technological front."

That’s why McCaskill, who’s quick to point out that she’s not a techie, carved out three hours between meetings with programmers during her busy schedule at the NCTA convention in Las Vegas. She poked around CableNET and chatted with cable tech vendors on the show floor. She was particularly impressed with the DOCSIS 3.0 demonstration of channel bonding to create ultrafast broadband speeds.

"Things have changed dramatically in the last 24 months, and there seem to be more and more things being explored and tested," she observes. "I’m sure, like everyone else, we’re going to find there may be different solutions for different markets, and maybe a solution that we haven’t even thought of yet."

MIXING SWITCHED DIGITAL AND SIMULCAST

Suddenlink is investigating a mix of switched digital and [digital] simulcast, "depending on the market," as an interim step to an all-digital environment. Its engineers are assembling "a road map, but it’s not gelled enough to share anything yet. Like all top 10 MSOs, we’re looking at this very, very seriously and will begin testing [both] sometime soon, within the near future."

Suddenlink also frees bandwidth by bumping analog nets to digital or dropping them, creating new channel slots — a tricky, but common, contractual tool in the content gatekeeper’s kit. "We always look at, when contracts come up for renewal, networks that are analog that we feel might work better if they migrate to digital, or networks that we have been carrying that, for whatever reason, simply aren’t performing and it’s time not to renew them," she notes. "It’s part of our ongoing analysis of programming. So bandwidth can become available to us in many different ways."

HD IS THE PRIORITY

Her priority once programming contracts and Suddenlink’s engineers can open up additional shelf space? Unlike Cablevision’s use of switched digital to add a plethora of ethnic and multicultural programmers, her focus is HD content, both linear and VOD. "We are certainly looking and believe that we’re going to need to add more high-definition programming," she confirms. "That is definitely a priority for us as we free up bandwidth.

Except for Hispanics in Suddenlink’s Texas systems, where McCaskill offers Spanish-language tiers, new ethnic programming typically occurs on video on demand. "While we have diverse demographics in our market, we don’t have as diverse or as broad a mix of ethnic demographics as Cablevision does, so I think what they’re doing is somewhat unique to them," McCaskill says of Cablevision’s industry-leading switched digital rollout.

Suddenlink’s HD lineup varies between markets, but offers, on average, 18 high-definition programming services "between [local] broadcasters, premiums and broad entertainment networks…We have got more networks right now in high definition than some of the other MSOs that have deployed high definition, because we see that as a real need today."

In January the company added HD channels from National Geographic Channel, A&E, Food Network, HGTV, Starz and TNT — at no extra cost to subscribers. Last fall, it added Discovery HD Theater, ESPN HD, Universal HD, HDNet, HDNet Movies, HBO HD and Showtime HD.

"As we move to the end of ’07 and beginning of ’08, I am very confident we will be adding more HD networks," McCaskill notes. "We saw it at The Cable Show — more and more networks are announcing plans for high-definition channels and that they will simulcast in high definition because they want to make sure they have that programming available in a format that people prefer, and that means high definition for a large number of households today. Before long all the major, widely distributed networks are going to have an HD feed, and we’re going to need to pick and choose between them for the ones that we think are going to provide the most compelling experience for our customers."

McCASKILL SLAMS 100 HD CHANNEL CLAIM

Part of the flurry of HD network announcements at The Cable Show was spurred by DirecTV’s declaration at CES in January that it will launch 100 HD channels by year-end (and 150 HD networks next year), a claim that makes McCaskill shake her head.

"There are not even 100 HD channels out there yet," she points out, adding that what DirecTV is calling an HD network is not a 24/7 entity, but any HD feed. "When you read between the lines in their announcements and some of the stuff that [DirecTV CEO] Chase Carey mentioned, when they carry the NFL package and it has 13 or 14 games, they count that as high-definition channels. If they’ve got six screens of NASCAR they count that as six high-definition channels; if they’re running 12 simultaneous games of Major League Baseball, they count that as 12 high-definition channels. So it’s a little bit specious to say they’re going to have 100 HD channels."

QUALITY OVER TONNAGE

 

Suddenlink is also increasing HD VOD content to differentiate its local lineups. McCaskill says bandwidth issues on linear "can somewhat be mitigated by the fact that there can be really compelling content and diverse content on the video-on-demand and the free-on-demand front, so what we’re looking at in the HD world is putting a lot of HD content onto our on-demand platform. Again, for us it’s not about tonnage, it’s about quality and the number of quality hours that are available in the HD format. It doesn’t have to be a linear channel."

A LINEAR DEARTH

As she noticed at The Cable Show, there simply aren’t as many linear networks seeking launch. "New entrants have come to the realization that launches of new linear networks are going to be few and far between," McCaskill says.

Increasingly, Suddenlink will bypass the cable plant entirely — in perhaps the greatest bandwidth-saver of all — by licensing content for mobile devices. A recurring theme in McCaskill’s conversations with programmers and technologists in Las Vegas was "the mobility of the content and how we can make sure that we have a compelling product on whatever screen the consumer wants to watch it on. Also, how we’re going to facilitate and help them to navigate that content as it starts moving from screen to screen."

As Suddenlink’s capacity opens up and the marketplace for content evolves, McCaskill’s customers are going to lead her. "The consumer marketplace is going to tell us where content is going to go, and it’s our responsibility to make sure that we’re going to provide the service that they want." — Shirley Brady

Charter Gets Ready to Switch on HD Content

The rich mosaic of content that Charter Communications wants to offer will require a lot more bandwidth than the MSO has at its disposal. That’s why Gregory Rigdon, the MSO’s SVP of business development, and Cathy Fogler, VP and general manager of video services, are relying on technology and EVP/chief technology officer Marwan Fawaz to make their dream lineup come true. [Part I of this series can be found at cable360.net.]

Charter expects to roll out switched digital video (SDV) in a few markets by year’s end. That’s just the start. "Our plan is to scale to switched video in the next couple of years — to the majority of our markets by 2009," Fawaz says. "We haven’t officially announced the markets where we’re going to test it."

He notes Charter is among MSOs that will deploy switched digital for both standard-definition and high-definition programming. "The way we look at is, it’s really a strategy to do both, not either/or."

But Rigdon and Fogler make clear their primary focus is adding hi-def content, in on-demand and linear formats. "Over the next several years, a lot of programmers are going to bring high-definition content to market. A lot of that HD content is going to be just a simulcast of existing linear networks, and it will be important for us to carry a good deal of that," Rigdon says. "It’s not clear how much of it is going to be brand-new HD linear networks. To the extent that there are existing program partners of ours that want us to carry their HD content, switched digital only helps that case."

Rigdon says new HD additions will not diminish the scale of the digital networks Charter carries, "at least for the next several years." The scale of the expanded basic package is also unlikely to change imminently.

Switched digital, Fogler says, won’t play into the hands of standard-definition linear channels looking to hop aboard Charter’s channel lineup. Such services "are not our strategic focus," she says.

"We will need to be very strategic and highly selective in the HD content that we offer, even in a switched digital environment," Fogler adds. "It still must fit the true needs of our customers to be competitive. Our customers want more HD, and that’s why we’re looking to gain more bandwidth in a variety of ways. It is a strategic priority, but again, we will be strategic and highly selective in the HD content that we offer."

Beyond switched digital, Fogler and Rigdon are assessing the value of the services in the current lineup, with the idea of winnowing out the least-compelling networks.

NO HARD NUMBERS ON HOW MANY CHANNELS

Rigdon and Fogler are circumspect when asked how many channels Charter will offer in three years time as a result of switched digital. "I think the only safe answer is ‘more,’ and we’re going to do what we need to, to satisfy consumer demand and stay competitive in the marketplace," says Rigdon.

"[The lineup] is going to be less analog, more digital, more HD, more on demand. I think that this is an evolution of our lineup," Fogler says.

The high-definition on-demand component of that big picture will debut in the third quarter of this year, leading into the first SDV rollouts. "We’re very excited about the value that will provide to our customers — to be able to watch on-demand content whenever they want in a high-definition format," Fogler says.

Exactly how much HD on-demand programming will be available at the get-go is "still in the works," Fawaz says. "From engineering and programming and marketing [points of view], we’re still working out the details. It’s safe to say that before the end of the year, we’ll have significant high-definition on-demand on our platform."

MORE TECH ADVANCES

Beyond SDV, on-demand technology will allow Charter to add significant new features.

Fawaz notes that on the advertising side, Charter has completed several pilot deployments. "One is telescoping ads on the on-demand platform, and that’s been very successful in L.A. We’re able to customize ads with local content. We’ve greatly improved the time to market from the inception of the ad to the time when it gets to our system, specifically, the on-demand system."

WOOING THE CUSTOMERS

The MSO wants to wow consumers with the sheer quantity of on-demand hours, as well as quality content. "Charter is focusing on creating the most robust on-demand experience for our customers," Fogler says.

Once again, HD on demand is viewed as a key difference maker. "We’ll work with our program partners to make sure [our HD on demand] launch provides the most value to our customers," Fogler says, adding that Charter is part of a highly collaborative effort with its programming partners to identify the most appropriate content for HD on demand.

HD VOD COUNTERS THE COMPETITION

Rigdon notes that Charter’s HD on-demand option — particularly once switched digital is rolled out — will differentiate the MSO’s HD offerings from satellite’s. The situation is more complicated when it comes to countering the telcos, Fawaz explains. "If you’re talking about Verizon’s FiOS, they’re essentially built as an inside-the-home HFC network, similar to what we have, plus they’re pushing fiber to the home. If you’re talking about AT&T and their U-verse TV product, we believe we have a significant advantage over them. Today, they’re [only capable of] streaming two channels of HD at one time. I think eventually they have to reconsider DSL as a technology in offering video to the home." [See "Cable’s Content Gatekeepers," April 16 issue, for a look at the competitive landscape in Charter’s top DMAs.]

INTEGRATION IS KEY

As Charter prepares for switched digital, it’s working "very closely" with MSOs that have already deployed it, Fawaz says. "They’ve been forthcoming with many of the lessons they’ve learned. A lot of it is around integration with existing applications, specifically, the SDV client that gets downloaded to the set-tops. And we’re working with CableLabs to standardize SDV architectures and APIs [application programming interfaces]. Part of our platform is Scientific-Atlanta, and part’s Motorola. And they have different architectures when it comes to switched digital video. We have to support both, so we stay close to other MSOs in how they’re being deployed."

The most difficult aspect of launching SDV, for Fawaz, is determining which channels should be placed on the switch. (Switching technology enables an operator to regulate streaming channels that have limited appeal, "switching" them on and off, depending on demand, thus freeing bandwidth.) "[It comes down to] understanding the traffic patterns of what channels you want to switch and how quickly we can make changes based on different viewing habits. That’s the piece that we’re doing a lot of homework [on], getting ready before the system is in place." — Janet Stilson

 

Cablevision & Comcast: Switching Allegiance

Cable operators now venturing into switched digital video are drawing on Cablevision’s experience as the first MSO to test the technology. Two years ago Cablevision launched SDV in its Paterson, N.J., system using BigBand’s technology. The resulting freed bandwidth enabled the operator to offer 60 channels of foreign-language programming in 2005 in that market.

Cablevision’s president of cable and communications John Bickham explained the company’s switched digital strategy to CableWorld late last year: “We’re going after the roughly half-million ethnic, foreign-language speaking households that are in our footprint, many of which are served by satellite companies today. We have a great offering of services—about 60 channels, everything from Chinese, Japanese, Arabic, Russian, Italian, Filipino to, of course, Spanish-language and others—and we market that along with our triple play and our World Call voice product, because many of these homes are in some cases first-generation or second-generation. We’ve already started this marketing activity and we’ve found it to be pretty successful attracting new customers. But the technology itself made it possible to do that with a limited amount of bandwidth.”

The test was so successful that in January of this year Cablevision expanded its switched digital rollout across its New York metropolitan footprint. It soon began offering nine packages of foreign language programming under the umbrella of iO International in a bold move that represents the largest use of switched digital video technology in a single cable system.

Cablevision now offers nine premium packages using switched digital, including iO en Español (30 channels), a Russian-language programming package, a South Asian package, a Korean language package, a Chinese channel, Italy’s RAI International, TV Japan, TV Polonia and SPT offering channels from Portugal and Brazil.

Now that it’s shored up its multicultural content offerings, Cablevision is looking at using switched digital to expand its high-definition programming. As COO Tom Rutledge noted on the company’s fourth quarter earnings call: “We have aggressive capabilities to expand our HD lineup, and we have [built] our plant with switched video and our digital strategy in such a way to have virtually unlimited capacity for HD.”

Bickham told CableWorld why the technology is an operator’s bandwidth-conserving dream: “The switched broadcast capability allows you to reuse spectrum in an efficient way, particularly for products that are not highly viewed. If you get foreign language programming, while it is highly valuable to consumers, it has limited appeal to a mass audience. As a result, you can add a tremendous amount of value to very specific consumers using switched video architecture, which allows you to essentially reuse the same spectrum over and over and get an efficiency or a compression ratio that essentially allows you to have an unlimited channel capacity on your cable system.”

The bottom line, Bickham continued: “We have the ability to offer every service on earth simultaneously to all of our customers using switched video, and the reason you use switched video for lower-viewed products is because of the way the algorithm works and how you get your maximum compression rate.”

COMCAST INVESTS IN SDV

Comcast also confirmed in its first-quarter earnings call (on Apr. 26) that it’s been testing switched digital in its Cherry Hill, N.J., system, as well as in Denver.

"We’re doing very early stage trials in a couple of markets, Denver and New Jersey, and when I say very early, I’m talking in the lab and with employees," Comcast president Steve Burke said on the earnings call. "We’re committed to switched digital playing a role in our capacity enhancements, but I think it’s too early to declare victory or say that the trials are doing well or poorly."

On Comcast’s fourth-quarter earnings call (held Feb. 1), CFO John Alchin explained the lure of the technology: “By using switched digital broadcast and load splits, we plan to offer more speed, more high-definition television and more video on demand, and to lay the groundwork for more revenue opportunities, such as interactive advertising, in 2007.” Alchin pegged the price tag to deploy switched digital to 30% of Comcast’s footprint at $150 million.

Comcast chairman and CEO Brian Roberts said on the same call: “We think the capacity augmentation offered by switched broadcast, for going all-digital in some markets, is going to be beneficial as the world migrates to all hi-def…for switched broadcast, we’re on sort of an 18-month program to make sure that all of our systems have vastly more hi-def capacity than they have today. We have plenty of capacity right now, and we will have plenty of capacity, in our opinion, for the next six to 12 months, given the available products. I would also not discount hi-def VOD. The fact of the matter is [people] want to consume movies and sports and programming in hi-def that they want to watch. It really doesn’t matter how many channels you have. The fact that we can have 300, 500, 1,000 great movies at your fingertips in hi-def, particularly at a time when not everybody has a hi-def recorder, playback device, is going to be a real advantage.

“We would rather allocate bandwidth to what the customer wants, when they want it, and give them more,” he said, estimating 4 million orders in November and December of 2006 for HD VOD titles. “If you have 200 hours of hi-def and, let’s just say that’s 100 movies, you could easily say that’s 100 channels at that moment that the consumer has a choice, plus the 20 or 30 that we already have.”

Roberts’ conclusion: “We are pretty comfortable that we have a migration plan with switched video, with taking analog and converting it to digital. We have plenty of bandwidth. We are not going to radically change our game plan here, and I think we have a superior hi-def experience to the consumer, and consumers will know that.” — Shirley Brady • Don’t miss the rest of CableWorld‘s 3-part series on cable’s content gatekeepers — click here »

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