Broadband Cable Association of Pennsylvania

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April 26, 2013

Powell in PA: Programming Costs, Net Neutrality & Cable's Need to Get Flashy

As Michael Powell settles in to his 2nd year on the job as pres/CEO of NCTA (Thurs is his anniversary), the war over rising programming costs shows no signs of slowing with Cablevision's antitrust suit against Viacom the latest high-profile volley.

But calling it a programmer vs operator conflict is simplistic, Powell told the crowd gather in Harrisburg Wed for the Broadband Cable Assoc of PA's 25th annual Cable Academy. "There are a lot of varying beliefs-not that it's not a problem, but in how helpful the govt can be in solving it," he said, warning against the law of unintended consequences. He lumped retrans into a general programming costs category, saying that even if retrans held flat starting tomorrow, the rising costs of sports would still be a challenge. And programming costs is one of the toughest issues he's ever seen (and remember, he's a former FCC chmn). "Ultimately, I don't know how it will be resolved. Maybe it will have to break more," Powell said. "The value of my table is that I do have them [programmers and operators] all together. It's a very good forum to force the board members of NCTA to talk about this problem."

While he called programming costs a big problem, on the flip side, he thinks it's one of the industry's "biggest advantages" because the expense is a major barrier to streaming alternatives. (By the way, Powell stated that no public policy discussion about video excludes Netflix, Hulu, Google, Amazon, Intel, etc). Another concern facing the industry continues to be net neutrality, with Powell calling the FCC's rules "clunky, but mostly manageable."

His worry is that a Verizon win in its legal challenge of the rules would spur an explosive reaction, with Congress instantly codifying the rule or worse-the FCC does it all again, but this time under Title II. "That would mean instantly thousands of regulations would apply to you," he told the room full of PA cable operators. "It would be as if you were AT&T of the 1980s. We have consciously avoided that regulatory treatment for 15 years now."

Right up there next to the net neutrality challenge in intrigue is the ongoing Aereo litigation, which if it became recognized as legal nationwide, could create packages of Netflix and Aereo or Roku and Aereo, etc, Powell said. "They suddenly have a pretty sweet bundle offering at what looks like a lower cost... That's a much more serious alternative," he said. His parting advice was to change cable's perception ("We are culturally fun to hate") and to stop being so cautious about the future. "Google announces Google Fiber 2 years before it does it and then brags about it for 2 years. We never do that, and we should," he said, then promising cable will be "screaming from the mountaintops" at the Cable Show June 10-12 in DC. "Our society has less and less attention span. Less patience. The media world is noisier and more fragmented. You have to be loud, flashy and persistent."

Futuregazing: When it comes to competitive threats, Time Warner Cable's Jeff Lindsay is watching 3 areas closely: new entrants, LTE rollouts by wireless ops and OTT.

In the case of Google Fiber, it's not so much that the company is coming in as an overbuilder but that in doing so it could interrupt the industry's economics for many years, Lindsay, TWC's group vp and gm of digital phone, told attendees at the Broadband Cable Assn of PA's annual meeting.

"We have players like Google and Apple getting into the market. They may do something even unintentionally that's very disruptive to us all," he said. "There is a risk of irrational behavior." Like his bosses, Lindsay was dismissive of Google Fiber's 1GB offering. "It's a little bit like having a Ferrari in NYC. It can go 200mph, but good luck trying to find a place to try it," he said, predicting it'll be a few years before 1GB applications are developed.

As for LTE, the risk there is that this spectrum carries signals well and has tons of bandwidth. Or a new housing development could say, 'we'll do it all with WiFi if it's more effective and cheaper.' But the good news for cable is it would provide the backhaul. "It just means our business would change. Either way we win," Lindsay said. OTT is a similar situation since cable would provide the high-speed data.

As for new opportunities for cable, like home security, Comcast svp, strategic planning Mark Coblitz said the cable platform has lots of possibilities such as venturing into home healthcare, which could also be a sensor-based tech. It's too early to know where tele-health is going, but the possibility remains, he said. "The learnings we're getting from this are totally transferable [to smaller operators]," Coblitz said. "That's a really valuable thing we don't often find."

Some of Comcast's early groundwork has included ensuring that various state legislation, including in PA, doesn't preclude cable from getting into the field. Meanwhile, not everything has to be brand-spanking new, he said, pointing to Comcast's pilot with UnitedHealthcare that targeted decreasing the risk of diabetes. The MSO turned to the "old" tech of VOD to create a reality series with coaching to help subs in Philly and Knoxville reduce their risks. "We often look to new technology to do great things. We forget what a huge valuable system we have today that can really be used for some great stuff," Coblitz said. CableFAX Daily

When 21-year-old Stuart Goldberg went into a job interview last fall with a partner at the consulting firm McKinsey & Co., the University of Pennsylvania senior expected to discuss his 3.8 grade-point average, his internships in private equity or the data-crunching he'd done for the Philadelphia Eagles. Instead, the interviewer went straight for a different bullet point on Mr. Goldberg's resume: his interest in the cable-television series "Breaking Bad."

They spent 10 of the interview's 45 minutes discussing the dark drama about a high-school teacher who becomes a methamphetamine kingpin, Mr. Goldberg recalls. "I was shocked that he wanted to allocate so much time to that." The candidate was also pleased that his strategic decision to represent himself with a "popular yet relatively highbrow" TV show had worked. He starts as a business analyst at McKinsey this summer, the consulting firm confirms. Everywhere you go it seems as if all anyone wants to talk about is TV. Watching the boob tube used to be the couch potato's hobby, hardly a subject to trot out over cocktails. Now, that stigma has vanished, and a few knowing remarks about "House of Cards" can confer gravitas. Ever since fictional mob boss Tony Soprano had an existential crisis over the ducks in his swimming pool in 1999, viewers have been feasting on a growing bounty of high-quality dramas.

The result is that TV has infiltrated almost every setting, from dinner parties to the torrent of tweets on Sunday nights. That's when a glut of good shows air, causing twice the amount of TV-related activity on social media than on Mondays, the next busiest night. Major publications (including this one, which has a law professor and Supreme Court advocate leading a "Mad Men" discussion online) recap every plot development, even of ratings-challenged shows. - Article continues in Wall Street Journal

Q: Who writes the program descriptions for the digital channel guides? When we had Comcast, they seemed to be very professional and accurate. On FIOS, there are lots of words misspelled, grammar errors, run-on sentences and just flat out incorrect information (for example, a recent "Young and the Restless" description referred to Laura when the character's name is Lauren). - Sandy, 50, Castle Shannon

Rob: There are pretty much two major providers of TV listings nationwide: TMS, which is what the Post-Gazette uses, and FYI Television, which is what Verizon uses. - Rob Owen's "TV Q&A" column in Pittsburgh Post-Gazette

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