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New Why Basic Doesn't Matter - 23-May-2008, 11:20

Why Basic Doesn't Matter

As Comcast's Brian Roberts put it, "It's not about basic video anymore."

The wired industry isn't putting less emphasis on its analog TV business. Given that several MSOs racked up better-than-expected first quarter basic customer net adds (55,000 at Time Warner Cable and a 2,000 gain for both Mediacom and Cablevision, among others), there is still a good business for the traditional set of analog channels, even if competitors point out the hefty basic subscriber losses seen in the past.

Still, cable also has a speedy high-speed internet access platform and a very competitive phone offering that's part of its triple-play arsenal.

And the business has a growing digital video effort that is poised to take over analog in the very near future.

Comcast plans to convert about 20 percent of its systems to all-digital video capabilities in the second half of 2008. Time Warner Cable is taking its New York City operations to an all-digital format this year.

The move toward digital comes as operators continue to add customers to the video platform by the hundreds of thousands each quarter. Comcast netted 494,000 digital subscribers in the first quarter, for a total of 16 million. Time Warner Cable said its digital video customer count grew by 261,000 in the period to 8.2 million.

Also, don't forget the digital TV transition. Cable is hoping to cash in on the Feb. 17, 2009, switch. Comcast's Stephen Burke said there are 8 million consumers in the MSO's footprint who do not subscribe to a pay-TV service, relying solely on over-the-air TV. "This (transition) could create a real opportunity for us to gain new customers," he said.

Why should competitors worry? Digital cable has proven its might with a large selection of video-on-demand titles, interactivity and a high-def programming slate that my be limited in size today but expected to grow in the coming months. And while cable may continue to experience capacity crunches in the future, the move to digital will free up some capacity for expanded services

Eventually, it won't be about basic. And the change may come sooner than cable's competitors think.
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