Some things always change, others never do. Twenty years ago, the NCTA convention was in Las Vegas, as it will be this year (May 7–9). But now dubbed The Cable Show, it will be about a totally different business. In 1987, it was all about big MSOs buying smaller ones (at record prices of $2,000/subscriber) and (drum roll, please) programming! Operators had just invested $575 million to keep Ted Turner afloat, wondered whether home shopping channels were a fad and battled movie lobbyist Jack Valenti’s attempt to make cable a common carrier. Six months later the stock market crashed, but not for long. And it took another decade before satellite competition pushed cable to unveil modems and digital boxes.
Now, content is still king, but technology is its consort. Video-on-demand, Internet and mobile video will be the buzz in booths and hallways. Interactivity is about to blossom, thanks to OCAP, the civil rights act for set-top boxes and TV sets. The industry finally is focusing on Internet access and voice for small businesses, and video gaming is appearing on its radar screen. In Las Vegas, cable will show its highest profile yet in digital voice, while taking market share from the telcos that some thought were the next logical buyers of cable 20 years ago. (Well, they tried.)
Most prominent this year is that techno-content hybrid, high definition, pushed out front by satellite’s expansion into local station HD. But the HD headlines may mask the cable industry’s most impressive, new technological achievement: switched digital video (SDV), the transmission scheme that unlocks the full capacity of the broadband pipe. The poster child for SDV — BigBand Networks — went public March 15 at $13/share (above the $10 – 11 original estimate). It raised a net $90 million from the sale of 7.5 million shares and soared as high as $18.80 on March 27, valuing the company that day at $1.07 billion.
Time Warner Cable’s breakthrough SDV tests in Austin, Texas, and Columbia, S.C. — Nov. ’05-March ’06 — have advanced to full local deployment in those markets and now into a nationwide rollout of the new technology. Other MSOs are making it a trend. The magic in the process, says Time Warner Cable senior network architect Paul Brooks, is that "every set-top gets its own stream"; 160 channels morph into 320, but it’s the use of those channels that makes the difference. The MSO learned that by the way subscribers watch prime-time TV, the software can always shift enough streaming capacity to the most-watched channels. As a system converts to SDV, limited channel capacity is no longer an issue.
Some things never change. The flap over the Major League Baseball premium package reminds me of cable circa 1987. But back in Las Vegas this year, check the silver and black boxes to see how much the industry really has changed.
Analyst/investor Paul Kagan is chairman/CEO of PK Worldmedia, Inc., in Carmel, Calif. He owns shares in BigBand Networks and Time Warner Cable. Information in his column is not intended to be a solicitation to buy or sell securities.