Cablevision’s Business Model is the Problem

Posted on 07 March 2010

In watching the fight unfold between Cablevision and Disney/ABC, it’s plain to see that the largest problem the cable companies have is their adherence to their business model and not picking the right core competency.

Time Warner Cable is asking its customers to support their fight against content providers:

I’ve recently upgraded my home internet connection to Time Warner Cable’s “Wideband” Internet Service — using DOCSIS 3.0, I get 50Mbps down, 5Mbps up. And I actually get it. Since I’ve posted before about the negative experiences I had with Time Warner’s RoadRunner service at a previous apartment, I’ll update it with some information about how one individual turned around my customer experience and gives me some measure of hope.

In either case, I’ve tried streaming various HD video services, and while I’m fairly impressed as to how far full-screen HD video has come, it’s still not where it needs to be – full-screen on my 24″ LCD the video can resolve to fine detail, but has horribly visible problems with lots of motion. Whether Hulu, TNT, or the Olympics, there were issues, though I found the way the Olympics’ Silverlight video streams seemed to “resolve” to detail very well after motion slowed, and it appeared to in some ways mimic the eye varying focus organically. The Olympics player also didn’t full-screen the video, it full-screened the player, which maintained a photo-like frame with advertising.

In any event, in investigating the bitrates used by all three services, I found that it never exceeded 3.5Mbps, probably due to the tactical problems with distributing significantly higher bitrates over the internet.

Why isn’t Time Warner Cable reading the writing on the wall and recognizing itself for what it is?

The “television” cable company is a content distribution network.

They’ve figured out how to give me a 50/5 last-mile connection. Downloads from content distributed by CDNs is reasonably close to rated speed.

Time Warner should be focusing on making it easy for content providers to get higher bandwidth streaming content hosted (if on-demand) or replicated (if live streams) into their network, from which they could easily pass it along to me at 10 or 15Mbps, resulting in significantly higher quality video.

They could either charge content providers (like ABC/Disney) for their content distribution services which enable an unsurpassed customer experience (possibly even charged at variable rates subject to SLA as monitored by end-user equipment), charge customers to access this premium experience (charge one rate for internet access with “wish you the best” experience, and an additional fee for access to this premium CDN), or a mix of the two.

I’ve got an LG BD570 on the way, which is a Blu-Ray player which supports streaming of Netflix, VUDU, CinemaNow, Youtube, Pandora, and media from my home network over DLNA. It hasn’t been delivered yet, but I’m well on my way to being my own CDN. If they’d provide a highly-accessible CDN, and access to it through a set-top box open to whatever applications whether they use the CDN or not, they could offer a hell of an experience. And they could extend the CDN into my house using one of my set top boxes as a CDN node of sorts.

Did Comcast GetIt(tm) with its rebranding as xfinity? Might that be where they’re heading?

Cablevision’s Optimum Online services have always been a cut above the internet offerings from Comcast and Time Warner. Maybe they can “get it”, give in for now, and then change their business model to be someone whose services are actually in demand, wanted by both the content providers and end users. Rather than being a proxy for licensing battles, they can step out of the way of the content providers’ licensing models, offering infrastructure that seamlessly handles a feature set that supports the licensing models of choice of the content providers, and allow users to handle the battle over licensing.

Get out of being in the middle of the problem, and get into the middle of the solution. There’s something wonderfully empowering in the business model being focused specifically on the level of service provided — it ties business success with customer experience, a wonderful feedback loop.

Wouldn’t it be nice to want to do business with the cable company?

Were they also to establish an open licensing authorization platform, they could provide content providers a platform to authorize access to content based upon the licensor’s business model, and provide sublicensing to content aggregators targeting specific verticals. They’d sell services to content providers (licensors), curators (aggregators based upon value-add with a sublicensing business model), as well as to end users (aggregation of licensing into packages or a la carte bundles for retail sale).

If you make the rights management reasonable, CableCompany, you can open your own iTunes-like content licensing store on this platform. You can get revenue from transaction fees on the sublicensing, and be transparent about it. You’d be a “cloud service”, and could bill based upon usage, and drive usage through an exemplary customer experience.

Or you can wait, and die off when someone else does this. Look out for FiOS and Google. Verizon’s got everything to gain about getting high ARPU internet services rolled out, and don’t have the same legacy mindset about content licensing that you do. And Google’s gigabit-to-the-home is probably actually just an attempt to wake you up to get you to do this for their benefit as well.

Be the open and transparent good guys and innovate to the future, or be the hated bad guys and become irrelevant. Your choice.

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