CAN TECHNOLOGY SAVE SMALL OPS?
Being an independent cable operator these days is an awful lot like being Tokyo during a fight between Godzilla and Mothra. While the gigantic, nuclear-power-agitated lizard of programming costs smashes away at your underpinnings with its great tail, the terrifying airborn mutant that is satellite sprays the rooftops with lasers. The next thing you know, your entire infrastructure is in smoking ruins, and everybody’s either dead or screaming. Yep, it’s not much fun living in a place that’s infested with angry monsters; nor is it much fun trying to stay alive as a small cable operator. Faced with the prospect of becoming a quick meal, smaller ops are under considerable pressure to offer their subscribers the same sort of advanced services that the big guys can and do. Problem is, they can’t afford them. High carriage costs only compound the misery. Lucky for them, there are some people looking out for the little guy. During last week’s Kagan Broadband Summit, panelists discussed programming costs and revenue opportunities, often focusing on the plight of the indie op. Gary Traver, SVP and COO of Comcast Media Center, kicked off the proceedings with a a clear-eyed examination of why the small op’s salvation lies in digital. “Smaller operators have a greater urgency to convert to all-digital,” Traver said. With digitization comes the ability to multiplex, a critical factor when you consider that a single HD-channel eats up four or five analog channels. The reality of the situation, however, is that all-digital networks are still a few years away from fruition. The nation’s smaller ops may be running out of time. Approximately 12 members of the National Cable Television Cooperative shutter their businesses each month, said NCTC SVP of hardware sales Mark Bishop. “The small guys are really hurting from DBS,” he said. “If you can’t reclaim bandwidth, you can’t compete in this market.” The NCTC is exploring various avenues to help the smaller ops beat back DBS. Much of what has been bandied about thus far revolves around the idea that there’s strength in numbers. “We’ve seen a number of big groups that have linked all the local fiber networks together in a ring,” Bishop said. “So it doesn’t take much imagination to see that a similar approach might work in cable.” Sean Bratches, ESPN’s EVP of affiliate sales and marketing, spent much of the afternoon defending his network’s hefty programming price tag (an estimated $2 per customer). When asked how a cooperative head-end might help smaller ops survive, Bratches pointed out a flaw in the hypothetical arrangement. “There’s no provision for blackout service in that kind of scenario,” he said. “If we had to black out coverage in one area for rights reasons, that would affect every customer served by that head-end.” There may not be a perfect solution, but exploratory discussions will continue, Bishop said. In the meantime, Tokyo burns.