It’s the eternal dilemma: Operators want consumers to use their broadband pipes, but not so much that they cause problems on the network. The solution? Target additional broadband capacity where operators can offer new high-bandwidth services and make more money.
I was thinking about this proposition this morning in between writing a paper on integrated CMTS and reading over at OneTrak about HBO’s ongoing strategy to make its content available online only through allied cable operators. (HBO introduced this approach back in January.) The beauty of targeting bandwidth for MSOs is that they can spend money where they’re most likely to get a financial return. For example, imagine that HBO and Comcast worked out a deal to offer online HBO content to subscribers not already getting it in a TV package for a small extra monthly fee. (an online approach to a la carte) Comcast would know that the only subscribers chewing up bandwidth with HBO shows would be ones contributing to their revenue stream. For that extra revenue, Comcast would probably be willing to spend money for more downstream capacity.
So then the question becomes, how does a cable operator target bandwidth? There are lots of broad-spectrum approaches, like analog reclamation and switched digital video, but targeting and then scaling bandwidth as needed is a slightly different proposition. One way to do this is by decoupling downstream data channels in a CMTS and adding physical cards with more downstream channels to a CMTS chassis as needed. In the scenario above, if more people wanted to pay for HBO content online, an operator could spend the money to make extra bandwidth available in small increments. Money goes out and money comes in.
On a separate note, HBO’s approach is fascinating from the content side of the business as well. Here everyone is trying to make money off free video on the Web, and HBO has decided it’s changing the rules for online video by working only through existing content delivery channels. Monetization is back in the hands of the service providers.
Important Clarification: I re-read this post and realized folks might think I’m advocating that operators prioritize online content by making more bandwidth available only for content they’re getting money from. I’m not. What I’m suggesting is that operators have a compelling financial reason to increase bandwidth where they know they can make money. However, that doesn’t mean that that same bandwidth couldn’t be used for other applications by other subscribers as well. That’s part of the business that operators are in. Ultimately if there’s not enough bandwidth to keep all subscribers reasonably happy, people will stop subscribing to both the baseline connection service and premium content services.