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How the Cable Industry is Adapting to Cord Cutters

Are you like me, fed up with paying for more than 500 channels of TV but only watching a couple of them? And that’s only if I can actually find a couple of hours to sit down in front of a TV during a busy work week.

Well, maybe there’s help on the way.

For people attending The Internet and Television Exchange (INTX), the redubbed Cable Show for 2015, enabling technologies are as important as always, but the transformation of business models in the video delivery industry has certainly cast a huge grip on an industry caught in the middle of a seismic change—driven by ever-increasing broadband speeds, mobile access to content, and yes, disruptive Over-The-Top (OTT) offerings.

TV delivery, or video content delivery to be more accurate, is changing dramatically. It’s a business model shift, and it’s changing in reaction to an altered audience landscape where viewers demand the content they want to watch anytime, anywhere, and on any device—and their choice is precipitated by OTT offerings like NetFlix, Hulu, and Sling TV.

This year’s show drew up its curtain under this backdrop. And it’s only fitting that the name of the show has changed from The Cable Show to The Internet and Television Exchange.

Broadband Internet and smartphones have transformed the way video content is being consumed: it’s moving online. It’s also moving to mobile, especially for younger generations who have grown up with broadband, social media, and smart devices. This phenomenon has forced video content distribution businesses to adapt. We now hear about “skinny bundles” from multichannel video program distributors (MVPDs)—a trimmed down TV channel program bundle that only includes local over-the-air channels and a dozen more of your choice—like the “skinny bundles” offered by Comcast or Verizon FiOS. Consumers may even be able to swap channels after a certain period of time, and it’s all for a fraction of the monthly bill offered today for 500-channel packages.

A week before the show, Cablevision announced its “Cord Cutter” package, a video package based on HDTV antennas that transmits basic TV with local over-the-air channels and OTT content for $39 a month, which can also be bundled with high-speed data for $45 a month. Did you get that? A cord-cutting package from a cable company! It’s built for people who would probably never sign up for a fat cable TV package that can cost upwards of $100 a month. Cablevision executives I chatted with at the show admitted that this move is all about adapting their business model to meet customer expectations. I think that’s a smart move.

Recent announcements from some fast-moving cable operators offering OTT content from Hulu and Netflix from their set-top box services or subscription services to OTT is another testament to these business model changes. The skinny bundle, the cord-cutter bundle, or whatever you want to call them, reflects the trend that service providers are adopting to meet consumer demand. Some time ago, some people claimed that à la carte TV programming would never happen. Well, it’s happening.

What does all this mean for service providers? A flexible service activation platform that can activate and support flexible bundles—including promotions and consumer self-selected services—becomes critical. The new business model challenges the traditional service fulfillment process, from back-office service order orchestration to field workforce management. It calls for a fast, reliable, and flexible platform to enable service delivery. Easy installations, even self-installations, are essential to get high-quality services up and running quickly.

And this is not just a North American phenomenon. This trend is indeed global, as I saw at the show and from experience firsthand working with service providers worldwide. INTX still draws a sizable and growing international audience who continues to talk about speed and bandwidth, but even that conversation is changing. It’s now more about networks converging, convergent services across all network types—HFC, DSL, Mobile, WiFi, FTTH—and the bandwidth and speed required to ensure that consumers receive their services. The connectivity part of facilities-based services is always going to be there, but the services riding through connectivity “pipes” are even more important. The search for innovative business models is universal. It’s all about how to better serve consumers who are at home in front of the television, with their iPad on the go, with their smartphones in the mall, and so on. Consistent, unified user experience backed by excellent support service is what makes a brand stand out.

I won’t be surprised in a few years’ time when today’s cable operators become more like the nemeses they love to hate—the OTT players. IP delivery of video content will one day become the dominant form of content delivery. Indeed, OTT wouldn’t be so OTT any more—it will be mainstream.

By the last day of the show, I wondered whether even the name “Internet and Television Exchange (INTX)” would continue to capture the essence of the industry. It’s about Internet, for sure. And television? Not anymore. It’s about video content—entertainment and communications content delivered to a screen. The big screen that we are so used to calling “television” is quickly being complemented or replaced by smaller screens: tablets, smartphones, and laptops. So here’s a prediction: INTX is going to be INCX—with the C standing for “Content.”

By William L. Yan, Chief Operating Officer at Incognito Software Systems

Incognito Software Systems is a global provider of broadband device provisioning, IP address management, bandwidth monitoring, and service activation solutions.

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