Simple Convergence Is The Challenge

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Las Vegas — Several top-level cable and direct-broadcast satellite executives admitted that while they’re not quite sure how to best offer convergence and connectivity — moving content from platform to platform — they do know it has to be kept simple for consumers.

“The future is about providing services that cut across these platforms, and none of us knows exactly what they are,” Time Warner Cable president Glenn Britt said Monday. “We have different ideas.”

Britt’s remarks on giving the public the ability to shuffle an array of content — ranging from TV programming to Web content to family photos — from a TV set to a PC to a cellular phone came during the “Pipelines Power” session at International CES here Monday.

“Customers are starting to really see the power of the different devices they have, and we want to try to provide the ability for them to use whatever device they want at different places at different times,” Verizon Telecom president Virginia Ruesterholz said. “That’s where we want to move our bundle as we go forward.”

The panel downplayed the threat, at least at this juncture, of content being available on PCs, while acknowledging that consumers want the choice of viewing content on whatever platform they choose.

At the session, EchoStar Communications chairman Charlie Ergen and Cox Communications president Pat Esser voiced their concerns about the ease — or difficulty of — the “new convergence” that’s the big theme at this electronics confab.

“We basically give people a great video experience,” Ergen said, referring to EchoStar’s Dish Network. “Obviously, we have challenges in front of us, to make sure that we also can move in the convergence world, where you’re going to take your video between devices, or take it with you, or move it around the house. We don’t really do that particularly well. Nobody really does.”

Esser said the issue of how best to permit subscribers to move content from platform to platform worried him.

“This is what keeps me up at night, as we talk about these converged services,” he added. “And I agree with Charlie: The customer really wants simple solutions that are dynamic and have high utility. But they don’t want any hassle factor. They want it to work, and it’s a challenge for all our companies in this new world.”

Several of Esser’s fellow panelists agreed.

“The important thing is to focus on what consumers want and keep it simple,” Britt said.

At one point, Ergen said many Dish subscribers don’t want fancy bells and whistles with their TV service.

“These are people who have VCRs last year that are blinking,” he joked. “I grew up in the South … We’re just weren’t the brightest people. You sit in front of the TV and say, ‘Channel up and down.’”

The wide-ranging panel — moderated by CES president/CEO Gary Shapiro — also included DirecTV president Chase Carey and Hearst-Argyle Television president Dave Barrett.

Ruesterholz described Verizon’s investment in its fiber network, which facilitates its FiOS video service, at $18 billion over the next few years.

“It’s really a huge bet for us,” she added, calculating that Verizon’s cost per home is more than $1,500.

But Esser questioned her math. Cox’s calculation is that if Verizon attains 20 percent market share with its video service, its investment will come down to $4,000 per home for video service, according to Esser. In contrast, Cox’s fixed cost is only $1,700 to $1,800 per home, he said.

Shapiro asked what law or regulation each panelist would most like to see scuttled. Esser cited retransmission consent, while Ergen claimed that Washington has been tougher on satellite in terms of mergers, while rival cable and telco deals have been given approval.

“We really weren’t treated the same way as an industry,” Ergen said.

He tried to merge EchoStar and DirecTV several years ago and federal regulators put the kibosh on the deal.

“We saw a lot of economies of scale to compete,” Ergen added.

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