George D. Miller
Our second single-market supplement--this one on video--paints a business climate as fast-paced and complex as the telecommunications market described in our January supplement [packaged with the January 1995 edition]. Like the telecommunications industry, the cable-TV industry faces complex and rapidly evolving business issues, both within its core business and from the businesses it may be viewed as converging with--data communications and telecommunications. Yet an underlying theme of both supplements is that, as important as convergence is, you cannot let it distract you from your core business. The short-term war is about existing market share and customer loyalty. If you lose this war, you won`t be around to fight the high-stakes multimedia war.
Video fiber deployment--drivers and directions--is the theme of this supplement. By speaking with the principals in the industry--multiple system operators, video equipment and system suppliers, and the officials driving regulatory policy--we attempt to assess the current drivers and impediments to fiber deployment. Market projections and the tradeoffs inherent in network architectures containing various levels of fiber penetration are also examined.
Fiber optics will remain a vital tool in the cable-TV industry. It will ultimately help to distinguish the offerings of multiple system operators. Fiber optics helps the cable-TV industry on two important fronts--network reliability and service offerings. In terms of network reliability, architects will soon be seeking standard network availability of 99.99% from hybrid fiber/coaxial-cable technology, writes analyst Gary Kim. Such availability will be required for the cable-TV companies to remain competitive with their telephone company counterparts. In terms of service offerings, cable TV`s broadband distribution networks will evolve to eventually deliver multigigabits of voice, data and video information and access to a vast customer base.
Growing a business in this environment requires a more sophisticated combination of business and technical savvy than ever before. On the technical front, the permutations of the basic hybrid fiber/coaxial-cable architecture continue at a dizzying pace. Variations based on calculations of subscriber density factored against the kinds of services that will be offered abound. But who`s to say if or when the services offered will be used? Even if you`re confident about demand, you still have to face questions of willingness and ability to pay for the services.
On the regulatory front, writer Stephen Barlas likens cable-TV systems to Gulliver. They are tied down by the Federal Communications Commission with such competitors as telephone companies and direct broadcast satellite companies crawling like Lilliputians all over them. The cable-TV industry hopes that Congress, via a telecommunications deregulation bill, will cut its regulatory restraints.
From this picture, we derive the following industry call to action, which is presented in the supplement:
Keep an eye out for merger and acquisition possibilities.
Prepare for new thinking regarding the application of any technology to this industry`s changing needs. Remain aggressive in fiber deployment and make sure Sonet and wavelength-division multiplexing are part of your vocabulary.
Remember, the short-term war is about existing market share and customer loyalty. The multimedia war hasn`t started yet. You`ll wind up fighting both.
Develop programs for training your crews to manage and maintain your more sophisticated networks.
Take network reliability and customer satisfaction very seriously.
Work closely with your suppliers and allow them to help you characterize your network requirements.
Support your suppliers in their attempts to partner with other suppliers.
On the regulatory front, use your lobbying power.