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Cable Technology Feature Article

July 31, 2013

At Least Some Cable Operator Execs Think OTT Video Will Help Them

By Gary Kim, Contributing Editor

A new survey, largely of global cable TV suppliers of Internet access (about 14 percent were telco ISPs), suggests cable operators are far less worried about the threat of over-the-top services (including OTT video), compared to telecom ISPs.

Surprisingly, the survey might indicate a rather sharp division of thinking within the cable and telephone industries about the threat of video cord cutting.

Though you might expect cable operators to be more concerned about erosion of video entertainment services by over the top alternatives, they appear less concerned.

Some 86 percent of service providers surveyed (82 percent of the respondents were cable executives) did not report cord cutting as a major threat. Instead, the need for additional bandwidth was cited by about 31 percent of respondents, while just 14 percent said cord cutting was a major threat.

The study by Incognito Software also might suggest why some personnel at cable companies are sanguine. On one hand, OTT apps, principally video apps, are forcing cable ISPs to upgrade capacity.

Nearly 82 percent of respondents have already upgraded their network infrastructure to cope with increased subscriber bandwidth usage.

On the other hand, perhaps where they see a chance to raise prices for new services offering higher bandwidths, for example, greater bandwidth demand, driven by over the top video, actually creates a bigger revenue opportunity, to say nothing of the potential for branded and owned OTT services, or partner revenue generated by services sold to third party providers.

Of the respondents who reported growth in bandwidth consumption, 75 percent point to streaming video sites as the reason.

Latin America was most concerned with bandwidth consumption, as 47 percent indicated this was a top concern.

Service providers in Europe, Middle East and Africa were most concerned about losing content rights to OTT service providers. Some 43 percent of respondents from those regions suggested this was a top concern.

North American respondents were concerned about high bandwidth consumption, but at much lower levels (24 percent) than Latin America.

North American service providers were most optimistic about OTT content as an opportunity. About 56 percent of North American respondents suggested they saw OTT as a chance to create new services and revenue streams.

The study shows that at least some thinking on the part of cable operators that over the top video has more upside than downside, not an unreasonable belief if online video leads to greater demand for higher-priced and faster access services.

Edited by Alisen Downey

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