OTT is largely misunderstood as either threat or opportunity

Jim Barthold, FierceIPTVThroughout their long history, pay TV service providers have justifiably incented an aura of distrust with customers who, while agreeing to pay to watch television, often feel abused by the companies delivering those channels to them.

Some of this distrust can be laid at the feet of a consumer electronics industry that has sought to capitalize on TV in general and pay TV in particular with their own revenue-sapping devices--at least as perceived by pay TV operators who, too often, overreacted to the threat.

CE guys selling "cable-ready" gear? Scramble all the channels and make subscribers rent a cable box, even though it negates the features those same subscribers purchased with their VCRs and TVs, including peripheries like picture-in-picture.

CE guys selling universal remotes? That's an easy one. Block the IR eye on the cable box and only open it up when subscribers agree to pay a monthly fee for a cable-provided "clicker."

The list goes on, but those are the two most egregious examples of a pay TV industry that just did not understand its subscriber base and, more importantly in talking and listening to the leaders of that industry, did not understand why subscribers lumped them with used car salesmen and journalists.

Today's challenge for pay TV providers is the so-called smart or connected TV and other devices that tap into the providers' broadband link and (shudder) let broadband subscribers actually look outside the pay TV lineup for video content. Called over-the-top or OTT, for the cognoscenti, this content, based on past experience, can engender the same knee-jerk overreaction of cable-ready TVs and universal remotes.

That overreaction might not happen this time, not because pay TV operators have become more sensitive to their subscribers but because they finally realize they're not the only game in town and, with the addition of telco and satellite competitors, someone will probably break ranks and accommodate the needs of the subscriber base.

Incognito Software, with, of course, its own business to promote, provided a new perspective on the threat versus opportunity that OTT presents for pay TV providers. The broadband provisioning software provider authorized a survey that showed that most pay TV operators at least publicly see OTT as an opportunity and not a threat and, an Incognito press release said, "recognize new business opportunities presented by OTT services."

There is, of course, a catch. These same respondents are, again according to a software company that provides a remedy, worried about managing bandwidth consumption.

"Of the providers who reported growth in bandwidth consumption, 75 percent attribute this increase to streaming video sites," Incognito reported in the press release, calling this data "consistent across operator size and geographic location."

For once, it seems, the pay TV guys actually have a point that should be reckoned into public opinion. Streaming video, especially for IPTV providers still stuck with copper wires and DSL, is a bandwidth hog. It's certainly attractive to subscribers--especially as hyped by CE companies eager to sell new televisions now that 3D has gone bust and UHD is still a pipe dream--but it's not always the easiest thing to accommodate unless you're Google Fiber (Nasdaq: GOOG) or one of the incumbents battling that ultra-high bandwidth service.

So maybe, just once, it would be fair to cut the pay TV guys--at least many IPTV providers--a little slack when it comes to OTT. They seem to have a justified worry about how OTT bandwidth consumption will affect their limited networks.

Of course that slack can only stay loose for so long. The availability of fiber and, certainly, the ITU's G.fast initiative to push respectable broadband speeds over existing copper pairs, will change that perception quickly. Still, OTT is not a cable-ready TV nor a universal remote and, to be fair, it's not for every IPTV operator.--Jim

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