Tech Forecasting
Cable operators face at least three significant variables in their planning: continually emerging technologies, fickle subscriber demands and competitive dynamics.
It’s enough to cause heartburn. A vital tool for reducing the stress is to do a careful and complete job of assessing what customers are doing and using that information to map a savvy course into the future.
Floyd Wagoner, the senior manager of global marketing and marketing communications for Motorola Access Networks, recently talked to Communications Technology about subscriber desires, competitors and the way forward for operators. Here is an edited transcript of that interview.
There are a lot of ways in which cable system planners can go. How do they decide?
There is not one technology that will solve the problem. It will be a combination of technologies. We’ve been developing modeling tools, trying to perfect tools around bandwidth.
What has Motorola learned?
What we’re learning is that the services like HDTV, like VOD, like watch-and-record DVRs are more and more commonplace than three, four or five years ago when the first HD-ready TVs, TIVO, or the first on-demand programming were appearing. This was mostly to satisfy a niche. We see the real trends, where there are more high definition televisions in the household. People have high-def on their secondary TVs. We combined this with [what we learning from our] good relationship with studios such as HBO and ESPN. We learned what they do to upload from VOD and the premium channel environment.
What’s the verdict?
We’ve calculated with the announcements … that there will be over 80 HD channels next year, up from 20 to 30 this year. For instance, we’ve seen the announcement that Comcast is offering 20 more channels, Charter has promised more channels. You combine that with what you know about the consumer and see the adoption of HD, the penetration of HD sets, how much HD is being viewed, the growing number of channels on a premium basis and on-demand basis. Where that all starts to collide is in the network. Here is an example. One of the key customers, a top three operator, [told us] they experienced 20 million VOD hits in 2005. In 2006, they expected 200 million. The increase was a factor of 10.
An operator can’t just unilaterally decide to split nodes, upgrade electronics or anything else without have a clear idea of what is going on. How do you start sifting through that to figure out what to do to your network?
What is a practical approach is to measure and analyze data. You have to use metrics measuring the usage and characteristics at given times, given periods of the year, the day, the hour [and so on] to get a handle what is happening in the overall network and pieces of network. It’s understanding what services are being purchased and characteristics of [the areas being served]. Then you start to understand the problem. You understand if you are denying service. Let’s say as an example you want to promote a high-quality VOD service. You may have the most titles in the universe, but the customer will have complaints if he can’t get access. Then that’s not a quality VOD service.
What do you do after you amass the data?
[You] do analysis, use a model to enable creation of a service portfolio. It needs to be competitive based on competition, growth in the HD content. If I am constantly taking the pulse of future service portfolio, I should have an idea of how robust it needs to be.
What are some of the data points you use?
In the video realm, you put in simple things, like how many homes per node, the number of HD channels, what the viewing habits are on VOD. Then you can play around with the forecast. The same is true in the data environment. Some of this can be accumulated via the BSS/OSS environment. In some cases, the switched digital video or CMTS products can measure in real time. Nor does the input have to be streamed in. It can be entered manually.
It seems to be an art and science.
You can factor into this what the competition is doing, for example. So you can do a comparison of different technologies, such as 1 GHz, switched digital video and so forth and what impact it will have on subs. We are very strong about the feeling that no one technology will solve this riddle. It will be multiple technologies. Some of those are Gigahertz upgrades, 3 Gig overlays, switched digital video, fiber-deep technologies, DOCSIS 3.0 and its channel bonding. Our view is it takes a little bit of this, little bit of that. You may be able to reduce node size and use switched digital video to achieve a true competitive level.
The operators also are coming from different perspectives, aren’t they?
The network types are so diverse. Comcast, for instance, is really a blending of [something like] 10 different companies whose networks are so different. For each element in this non-uniform environment, you need to have a different approach, a different combination of approaches.
Is there any competitive intelligence that can be dumped into this, or are operators flying blind in terms of what competitors will do?
Verizon has to apply to for a franchise. Now they are applying and winning at a state level, but there certainly is a heads-up from the regulatory environment of them saying what they want to deploy in a new service area. So there is plenty of information. The cable companies are not blind where they are being threatened.
What trends do you see on the technology side?
We are only shipping 1 GHz network infrastructure, even though Gigahertz CPE gear is not in place yet. Operators already are taking advantage of the economic parity of 870 (MHz) and 1 Gig upgrade technology. There is no cost difference in deploying Gigahertz. The biggest piece of network upgrade is out of the way. – Carl Weinschenk
