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03-Jun-2010
by John Moulding
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Do Pay TV operators need mobile networks?
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Convergence TV
One of the emerging issues for European cable is whether operators need to provide mobile broadband services, or at least mobile services, in order to remain competitive with quad-play telecoms providers. We recently asked the market intelligence company ABI Research whether Pay TV operators in general need a mobile offering or a mobile network, and whether cable providers in particular need mobile networks looking ahead. Here are the answers:
Question: Does the cable industry need to have mobile or mobile broadband networks of their own in order to deliver the mobile video services expected in future?
Answer from Fritz Jordan, Principal Analyst, Consumer Mobility, ABI Research:
“Need” is not the right word. Wholesale mobile broadband network operators are establishing MVNO relationships with retailers, content providers and mobile service providers to mitigate CAPEX investments and a lack of internal mobile service competence. For example, Comcast, Brighthouse Networks and Time Warner are resellers of Clearwire's mobile WiMAX service in the US. Similarly, AT&T and Verizon partnered with MediaFLO (now FLO TV) to provide managed/wholesale mobile TV services.
However, some MSOs may "want" to weigh their "build, buy, or partner" strategic service options and partner (like above) or acquire/merge with mobile service providers, since most MSOs are good at what they do and will suffer costly growing pains getting down the mobile services learning curve to compete (and monetize their investment). This is similar to cellular network operators (that have "communications" not "entertainment" competence) currently struggling with multimedia services and being successfully attacked by broadcasters and OTT [over-the-top] multimedia service providers.
The gamble/investment will pay off for the innovative/aggressive/well-managed MSOs (that are proven at acquisition execution/integration, particularly new culture integration). However, most will fall for the "lemming effect" and fail due to the lack of competitive advantages. This is just the natural order of emerging technology markets, with eventual "incumbent envy".
Question: Can Pay TV operators expect to maintain market position without a good mobile offering looking ahead, whether they are making their branded content packages available within mobile TV or mobile video offers?
Answer from Michael Inouye, Industry Analyst, Digital Home, ABI Research:
From a Pay TV operator’s perspective, mobile is more about offering a “quadruple” bundle than it is about mobile video – at least right now. But even as mobile video grows it is hard to see how that would impact a consumer’s decision to keep or drop their current premium Pay TV services. They are quite disparate markets. Will there be some overlap and flow between platforms? Very likely, but that shouldn’t impact their market position within the Pay TV market (e.g. cable/DBS/IPTV/DTT).
Many of the larger MSOs are starting to embrace things like TV Everywhere and that includes offerings for mobile devices; whether or not they control/own the mobile service that customers use to access content isn’t really important, because in the end, in order to access the mobile video the individual will have to have an active Pay TV subscription, be it cable, satellite, IPTV, or pay DTT. This is the model that was brought up by TWC [Time Warner Cable] and Comcast.
There might, however be more competition from things like OTT content on CE devices (e.g. DTV, Blu-ray players, game consoles, etc.) as connectivity continues to spread. However, I don’t see this as a strong threat to the Pay TV operators yet either, as they still control a significant portion of the content and especially when you consider things like Comcast’s bid to acquire NBC.
Question: As a Pay TV service provider, can you gain by having your own mobile network or own outdoor Wi-Fi? Can you offer better services – presumably the telcos have an advantage here?
Answer from Michael Inouye, Industry Analyst, Digital Home, ABI Research:
Depending on the speed of the mobile network or outdoor Wi-Fi solution the answer would likely vary. If, for instance, you’re talking about most of the current speeds on the mobile network then probably not, but if you start to reach/approximate speeds more inline with robust broadband platforms then possibly.
The cable operators are not blind to the growing importance of IP. In fact, some believe a significant shift from QAM to IP is on the horizon. In addition, as cable operators roll out things like MoCA [Multimedia over Coax Alliance] you essentially create an in-home IP network so you can more readily bring OTT content to other screens in the house via thin clients (again MoCA enabled).
When you look at the telcos in the US, the main operators Verizon and AT&T are using MoCA and HomePNA respectively. Verizon is a hybrid service (QAM based) so some consider them a cable operator. So by enabling a home network through a wired technology you in effect create new opportunities to add IP to the mix. So if, by adding a mobile network or outdoor Wi-Fi, you enhance your ability to offer IP content throughout the home then that might help, but things are already moving towards IP anyway.
If we are talking about portability of content (e.g. watching it on a mobile device) then certainly the telcos would have an advantage there, but that is a different market and likely would not have a substantial impact on the more conventional Pay TV service(s). If mobile TV/video becomes essential then there is little reason why the MSO could not port its mobile solution for “TV Everywhere” to other mobile devices/services outside their own service portfolio.
For terrestrial, the answer definitely depends on the region. In the US there is no pay-DTT unless you count Sezmi. In Europe there are a growing number of pay terrestrial services but I’m not sure adding mobile broadband would impact their growth prospects.
In general the Pay TV operators still have a strong hold on the TV market with most of the competition still coming from other more conventional Pay TV services – and free-to-air DTT.
ABI Research
www.abiresearch.com
Recent relevant work includes:
4G Mobile Consumer Services report, published 1Q-10
Digital Media Research Service
About the author
John Moulding joined Videonet as editor at the start of 2010, having spent over 10 years writing about digital TV and the various technologies that have simultaneously disrupted and enriched the television business. With Videonet he is focused on the unstoppable march towards multiplatform, connected and personalized television. John was editor of Cable & Satellite International (now CSI) for six years before helping launch New Video Technology, and helped develop the IPTV World Series conference programmes from 2006-07. At home, he takes a Sky triple-play bundle, watches around one-third of content time-shifted, enjoys BBC iPlayer on television through the Wii, and eagerly awaits the arrival of YouTube on his own TV (the killer TV application for late on a Friday night). He is still loyal to channels - but can also remember when TV shut down after lunch.
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