Cable operators are in comfort zone

The evolutionary process of the media has shown that not just another medium. In the end, the OTT will coexist with cable operators, particularly in the video on demand.

Richard St.

OTT platforms and video on demand have meant a concern for subscription TV operators, which are threatened the continuity of their business in the coming years. But what are the options they have for the future? What are you doing to ensure business continuity?

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TVyVideo + Radio spoke with Gabriel Levy, an industry expert with extensive experience in the countries of Central and South America, who made an X-ray of what is happening and what, in his view, the solution could be implemented to ensure their survival. The road is not easy.

He said that "the cable operator has been an important ally for the creator of the contents, which distributes and markets. At the same time it has been a headache for those allies. A large chains like HBO, Fox, among others, the cable operator who is allowed to bring the content from the satellite to the end user, who collects a monthly fee and pays the channel. But in some cases, in the process the cable operator generates underreporting, the transition is not efficient, do not reach agreements and cut the signal, this has generated a traumatic relationship. "

He added that with the emergence of new internet-based technologies, content creators are experiencing arrive directly to the user as an added value to cable services like HBO Go, Go Fox Play or TNT. But the reality is they are experiencing in the future to get the user direct way and jump to the cable operator. That becomes the biggest threat.

The big question is what is making the cable operator? Gabriel Levy, they are trying to understand that change slowly migrating their networks to the Internet and the equation is very bad for them because the only move left to them to save the business is devoted to providing internet services. And devote to offer internet services has three major components: Having a good network infrastructure, make it profitable and scalable.

The first is achieved by a very large investment, the second goes against the current model of the flat fee, charging the same for any demand for the service, which is killing the cable operator. And that affects the third variable is quality, because the cable operator has to make large investments, their collection is limited and how distributes content affects business

"What are they doing? Very little. Beyond the first variable, they are doing nothing. I do not see how telling the assembled cable operators will end the flat rate, talking to MinTic to allow them to create a new tariff model. Not even know in detail the use of its network, only know how much you spend but do not know how they spend it, do not identify which users are those who consume the most and least, that's deadly to your business. There are very poorly prepared, "he said.

Swimming against the tide
In Colombia the phenomenon of OTT is still second screen, it has not replaced the first screen is the traditional television. So far, all have affected the OTT cable companies is congestion in their data networks. No more cancellations by an OTT service that for bad service themselves.

In countries like the United States, where the involvement of the OTT has itself been significant, the process is reversing due due to two reasons: the first that television is an entertainment service and people do not want to decide what to see and second because milenials cut the cable when they went to live alone and stayed with OTT, but when they begin to form family back to the cable, because it offers certain solutions such as children's channels.

Gabriel Levy noted that cable operators must understand that they will not block Netflix and will not block Uber, or blocked because it affected Gmail or Skype Adpostal because it affected Telecom. The output is not suit you to tell the government block. The most to what the government is going to get is to put one or two taxes Netflix and require you to open an office in Colombia to serve users and suddenly demand an audience share for the 20% or 30% of the contents are Colombians. That's the roof of what the government might do with OTT.

"Cable operators are generally industries I see that more are anchored to a comfort zone. It is, it is a very profitable model in which squeeze the cow and continue to survive to a model that has not changed almost nothing since the early 80 "he said.

The real threat
For cable operators, the real threat is that the paid channels jump directly to the user and offer Internet services that have no difference with what offers a pay TV operator in a village. That is the next step which is live. This is exactly the same situation in all countries of Latin America.

"The real threat is when the pay television as we know it begins to get online, because television will remain the same, what will change is the transmission medium. Channels not going to want to continue selling the cablero to avoid underreporting them but they'll want to sell from United States directly to the user, removing the cable operator intermediation and bringing even more channels with signal 4K "he said.

The role of the regulators
The impression left in the different forums where this issue is discussed, is that cable operators only cast the blame on the governments of the situation. But the reality is that there is general agreement to respect the neutrality of the network, for which they have signed many agreements in this regard, countersigned even with free trade agreements.

Governments and regulators are looking at what to do about respecting agreements net neutrality. Gabriel Levy cited the case of Brazil, which found cracks in the system in the form of tax the OTT and digital services through the collection with credit card issued in Brazil. Being cards issued locally, the state has the right because they are using banks and local currency. It also requires that any service that has collection with cards issued in Brazil, you must have a local office that meets the quality of service to users.

He explained that "in the case of the European Union, the position is that the important thing is the service and not the medium, but are aiming for that in the years to break the rules of net neutrality and are thinking of declaring that it does not go to be an area in which the state can not intervene. The Australian government is being bold in how to interpret the norm while Latin American countries are lost trying to understand what is happening. And the US government is still almost a referee in the fight between big corporations sector. In general there are large asymmetries, there is a global trend in regulation. "

Finally, Gabriel Levy said that this situation of uncertainty for the industry is going to give until three things: 1. They join as an industry, 2. Will end the flat rate, and 3. Have the ability to put traffic conditions on the CDN. The state also must regulate, because cable companies now have large cost overruns infrastructure, a margin of very low utility service operation and a threat to the one who is giving profitability is cable television. These are the three variables that will cause a turning point.

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