It wasn't very long ago that you could actually offend executives from telco and cable companies by suggesting their business might someday be best structured as dumb pipes, taking a piece of every packet that flowed through them, commoditizing their business.
Just two years ago, Kshitij Kumar, then CEO of TellyTopia, sparked a minor audience uproar when he talked about how over-the-top delivery of video was going to turn service providers into just that. When one attendee challenged his statement, Kumar said simple, "The folks at the C level know."
He was, of course, right, as a couple of recent developments help explain.
One of the first developments was Charter Communications' (Nasdaq: CHTR) announcement last week that it would, early in 2012, organize online content from Netflix (Nasdaq: NFLX), Amazon (Nasdaq: AMZN) Instant Video and Hulu into a single online directory on Charter.net. Pointers to content offered by those OTT services will be integrated with links to content already available on Charter.net through a unified search and discovery experience. Customers will have the ability to search the full library of content available from a variety of distributors, and choose the source of the content with just a few quick clicks.
The cost to consumers? Nada.
CEO Mike Lovett--who has announced that he's stepping down as chief executive in April--during the company's earnings call said the MSO is looking to become more of an ISP. It's worth noting that Charter lost 64,500 pay-TV subscribers in the third quarter, while adding 53,200 high-speed Internet customers.
Charter's not totally moving away from the video business. "It's still a significant part of our business so we are not abandoning it," he said. "We do see ourselves and we are--a bit of a mantra within the company is to think of ourselves as an ISP. But I think that not only drives the strength of our superior broadband product and we are leading with that strength, but it supports the video business and other products and services over time particularly as the infrastructure evolves to all IP."
Charter EVP Don Detampel, during the call, said Charter was simply taking advantage of "a massive" influx of programming online.
"We are coupling our high speed Internet with Charter.net in introducing a service that will integrate and organize content from multiple sources," he said. "...So for us, it's about bringing simplicity to what is something now complex in leveraging our broadband pipe."
On Monday, meanwhile, Tier 2 telco Frontier Communications (NYSE: FTR) rolled out an expanded over-the-top video play of its own, TumTiki.
The company, which has just taken a beating in the media and on message boards over its handling of the FiOS TV customers it acquired when it bought landline services in several states from Verizon (NYSE: VZ) a year ago, launched its TumTiki website nationwide to subscribers and non-subscribers alike.
It offers content from Hulu, Amazon.com and throws in a big mix of local content, too.
The cost to consumers? Again, nothing.
Instead, Melinda White, Frontier's EVP of revenue development told me, the idea is to make sure its line stays in consumers' homes.
"Everybody wants to be the line in the house," White said. "And when you think beyond the network, you have to deliver value to the customer, apps, OTT video, services that everyone should have. We think OTT is an important component of that profile. We think it's an important place to be."
TumTiki, she said, should help the company reduce churn, build customer loyalty, and could potentially lead to other services being delivered by Frontier as well. The company is monetizing the site currently through a revenue-sharing agreement with Amazon, and through ads on its website.
Frontier and Charter are, for the moment, out of step with their service provider brethren. Here's guessing that they won't be alone for long.-Jim