February 3, 2014 – Amid rising concerns about the viability of small independent cable companies there may be a new story about to unfold with a very different perspective on the competitive balance of power in less populated regions of the U.S. and Canada.
In a nutshell, the prospects for a revival at the small-market end of the business come down to whether Tier 2 and 3 operators can deliver a TV service comparable to the next-gen services that Tier 1 MSOs are launching to meet the intensifying competitive challenges posed by satellite, telco and OTT providers. That’s a tall order, given what these big players are spending to get where they want to go, but stirrings in the hinterland suggest the costs of getting there may be far lower than most people expect.
One place to watch for validation of this proposition is central Illinois, where Cass Cable TV serves a subscriber base of about 16,000 households across 35 communities. Cass Cable, a triple-play provider with a legacy TV service that typifies small market operations, has embarked on a service migration path which, on its face, would seem to be beyond the reach of so small an operator.
“It has been challenging to figure out how to deliver the experience our subscribers want without breaking the bank,” says Cass Cable COO Tom Allen. To do so the company has implemented switched IP video technology supplied by Adara Technologies to deliver a next-gen service consisting initially of approximately 200 SD and 150 HD channels over the same HFC plant it uses to deliver its traditional pay service, along with broadband Internet and digital voice.
The strategy, which requires allocation of as few as a dozen 6 MHz cable channels for the new service, represents a new perspective on how switched digital video can be used to support service expansion in cable. Whereas traditionally SDV has been employed to add niche content and some HD channels on a capacity-strained network, Cass Cable is offering its entire legacy premium channel lineup plus much more in both SD and HD modes without doing anything to squeeze transmission rates to sub-par quality levels.
The channel capacity potential on the switched IP platform is virtually limitless, says Adara CEO Joseph Nucara. “The beauty of our solution is we have real-time monitoring of the bandwidth utilization within each service group,” Nucara explains. “If we start with 12 QAM slots as we’re doing with Cass Cable, we can look at the QAM utilizations of each service group, and when they get above 80 or 90 percent, all we need to do is subdivide the service groups. If you divide them in half, the utilization goes down to 40 or 45 percent.”
The ability to get so much capacity out of so few QAMs didn’t emerge overnight, notes Mark Guerrazzi, vice president of sales and business development at Adara. “There’s a secret sauce element to this that comes from many years of implementing SDV and tweaking the parameters to optimize service group sizes so the percentage of usage never gets above 100 percent,” Guerrazzi says.
“Adara’s solution delivers an order of magnitude more, at a fraction of the cost, compared to the other options we looked at,” says Cass Cable president Gerald S. Gill. “We were reluctant to invest millions of dollars on a DTA (digital terminal adapter) roll-out only to have to invest again a few years later on a real solution like Adara’s anyway. We’re anticipating a real game-changer for our video business.”
Indeed, Cass Cable’s choice of switched digital, first reported over two years ago, not only marks a departure from the use of DTAs to free up analog spectrum for HD and VOD. The strategy as it has evolved over two years of planning and testing provides the framework for an advanced TV service that can support viewer access on IP devices inside and outside the home, whole-home DVR, a next-gen navigation system and ongoing content expansion. And because all content is formatted in IP at the headend, the strategy opens a migration path to all-IP operations in the future.
Like the vast majority of independent operators, Cass Cable TV is a “Motorola shop,” meaning it has long employed Motorola headends and set-tops to deliver an analog TV cable service that has been augmented with a digital tier of MPEG-2 TV channels. In the “cap-and-grow” approach supported by Adara, Cass Cable is able to offer the enhanced service combining MPEG-4 and MPEG-2 utilizing IP switched digital headend technology and hybrid RF/IP set-tops supplied by Cisco Systems without disrupting or replacing the Motorola-based legacy service.
“With Adara, we are using Cisco’s technology to deliver new features and fantastic pictures, while our Motorola set-tops continue to earn us revenue,” Allen says. “Our future investments will be spaced out as we win new customers and upgrade our current ones to a vastly superior video experience.”
In the hosted service architecture developed by Adara, the firm’s remote network control and applications servers are connected over high-speed virtual private networks to customer headends, allowing Adara to manage the locally installed universal session resource managers, edge QAMs and the many advanced service options running on software that Adara downloads to the Cisco set-tops. The feature most critical to transforming the user experience is a universal navigation system that replaces the traditional EPG grid with applications that include personalized discovery, topically organized multi-window mosaics of live programming, caller ID, social networking apps and second-screen DVR control, search and other capabilities.
Another important function of the managed service platform is its ability to integrate content and applications streamed over DOCSIS broadband to the IP side of the hybrid set-top, Nucara notes. “In our solution the switched IP video is delivered to the QAM side of the box, but the enriching apps like news, weather and interactive features can be delivered over the DOCSIS streams,” he says. “This allows the operator to exploit the full benefits of an all-IP service without forcing them to stuff 350 channels of IP video down the DOCSIS side.”
With the introduction of an eight-tuner Cisco gateway on the Adara platform this quarter, these applications can also include support for whole-home DVR and for multiscreen TV Everywhere service, where transcoders in the gateways convert the IP content delivered over the switched QAMs for streaming to PCs, tablets, smartphones and other IP devices at whatever bitrates and in whatever streaming formats are suited to those platforms. In addition, Adara, working with another unnamed partner, has developed a place-shifting streaming application that allows users to access content delivered to the gateway (including DVR recordings) from IP devices outside the home in a manner analogous to the Slingbox technique developed by EchoStar’s Sling Media unit. This avoids the licensing hassles that have prevented delivery of a full-channel lineup to IP devices outside the home.
How all these capabilities are implemented is up to each operator. In the case of Cass Cable TV, “they’ll be adding features incrementally each quarter over the next 12 to 18 months,” Nucara says. For example, “we’re probably looking at the spring/summer timeframe for the new multiscreen features,” he says.
Along with enabling operators to introduce a next-generation service at far lower capital costs than is typically seen at the Tier 1 level, the Adara platform also puts a significant dent in ongoing op ex costs, Nucara notes. “Our utilities portal provides diagnostic and reporting tools that give operators far more visibility into and control over their networks,” he says.
“We reach out to the set-top box and retrieve data across hundreds of parameters into our database so that operator technicians and customer service reps can look into our dashboard when a customer calls to see if the problem is specific to the subscriber, the street they live on, the channel source or something else,” he explains. “It cuts the mean time to repair from several hours down to minutes.”
This is especially important to an operator like Cass Cable which supports a multitude of remotely positioned hubs from a central headend, Nucara adds. “If you save a truck roll in such cases, you might be saving a day’s worth of tech time,” he says.
Also, as Adara CTO Stan Koukarine notes, there’s a churn reduction benefit associated with these capabilities. “Our AdaraMAX utilities drive revenue growth through reduced subscriber churn since issues are identified and resolved more proactively, often before they impact subscribers,” Koukarine says.
The possibilities Adara’s managed switched IP video platform opens for the industry as a whole are gaining a lot of attention in cable circles. For example, Nucara reports, the Society of Cable Telecommunications Engineers will soon schedule a webinar to discuss the implications of switched IP video for operators of all sizes.
At the Tier 2 and 3 levels, Adara has entered into discussions with the National Cable Television Cooperative to explore how the benefits might be promulgated among its members. Here one point of interest has to do with how the switched IP platform can be used to introduce popular content from the Internet that has not gained cable TV exposure, which might not only enhance the appeal of the cable service but also provide a means by which operators can lower their programming costs.
“There are hundreds of premium content networks out there on the Internet that are hungry for the kind of exposure they could get if they were included as part of the cable TV service,” Nucara says. “We met with the NCTC folks and told them we have a way to bring this OTT content to the main screen that’s completely seamless and works with legacy boxes out there. They were significantly excited about the proposition.”
With huge followings, especially among younger consumers, such OTT content, much of it tied to special interests, represents a way to draw more viewers without incurring high licensing costs. In fact, Nucara notes, the introduction of such programming could provide cable operators a way to push back against the costs assessed by traditional cable programmers, which has become a major issue, especially for smaller operators who don’t get the volume price breaks enjoyed by big MSOs.
Adara has begun working with several OTT providers on a test of the concept that shows how their content can be processed through the Adara switched IP system leveraging its cloud-based service management platform to deliver the programming as part of the cable service. “It shows up as a regular channel and the consumer doesn’t know the difference,” Nucara says. “We’ll be demonstrating this exact functionality at the NCTC’s Winter Education Conference in Tampa.”
In working with Adara, some of the OTT providers want to fashion a response to the routine brushoff they get from big MSOs when it comes to persuading them to allocate channel capacity to their offerings. “They’re looking at it from the perspective that if this proof of concept works – and I assure you, it does – they can go back to the Tier 1 guys and say, if the smaller guys can do this, you can too,” Nucara says.