Abdoulah: 'The content model will be broken'

WASHINGTON, D.C.-- The conventional model where consumers receive premium cable television programming through a provider "will be broken...consumer behavior is doing it...and that's not a bad thing," Colleen Abdoulah, chairwoman of WideOpenWest and the American Cable Association said yesterday during a lunch here at the ACA Summit.

Colleen Abdoulah, ACA

Abdoulah

While stopping short of advocating that cable operators become broadband-voice-only companies, Abdoulah said she hopes her company reaches a point where we are "content agnostic," when consumers can get content from anywhere and don't rely on her company.  

Bob Gessner, the president of Massillon, Ohio cable operator MCTV, agreed with Abdoulah's thrust toward disaggregation, adding, "The consumer revolution is coming...everyone should have Netflix (Nasdaq: NFLX)." 

In the competitive markets where Abdoulah's company WOW operates, video competition is fierce and margins continue to decline, she said. Should consumers eventually drop her video service in favor of OTT delivery, "we'd hope they'd stay" with WOW's data and voice products, she said. An early proponent of data and voice, WOW's margins on those products are far greater than video. For ACA members whose business relies more on video and less on voice and data, consumers moving to OTT products would be a much greater problem, Abdoulah admitted.

Debunking the 'content is king' axiom, Gessner said in the digital world "consumers are the kings...they've dethroned newspapers and music," so why not television? Neither Abdoulah nor Gessner would predict when the current content model will be completely gone. Gessner also looked on the positive side. If his company doesn't have to carry "as much stuff" on the cable video side, MCTV's network can have more capacity to carry other things, he said.

On other issues:

  • Abdoulah said ACA expects the Comcast-Time Warner Cable merger to be approved. She noted that it's "ridiculous" to fight it, but ACA will insist that "thoughtful conditions" be applied to the merger. The "scariest part" will be on the programming side, where the combined company's "size has the potential" to make [programming deals] worse for operators, she added.
  • Abdoulah confirmed WOW is talking with Aereo.  Gessner said MCTV is speaking with "lots of device makers" to enhance its set top.
  • Gessner said by 2020, if things don't change, "our cost for content will more than double...the average consumer can't afford" to pay double their current cable bill, which is yet another reason why the current content model eventually will break down, he added.
  • Gessner said scale isn't always necessary to succeed in cable. "I provide better service, have better penetration [than MSOs]"...there always will be room for the local cable operator, he said.
  • Both Abdoulah and Gessner decried the possibility of an Internet tax, particularly should cable operators migrate away from providing video. They also wondered aloud who would provide customer service, billing and explanation of rate increases if cable operators eventually stepped away from the video business.

Related articles:
Aereo CEO wants to sell cable operators a cloud-based DVR for $10 per sub
TabletTV, Syncbak, Dyle fuel broadcast battle with Aereo
Cable operators embrace over-the-top video, but studios thwart Netflix, Hulu options
Cable operators dismiss threat of virtual MSOs
WOW CEO: Cable operators forced to 'buck up' and pay increased retransmission fees

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