Keep up with the partners




Gustin Partners | February 22, 2014 |

Cable: A Critical Industry Most of Us Know Nothing About

By Thornton May
Futurist, Senior Advisor with GP, Executive Director & Dean - IT Leadership Academy

Many years ago [1982], I was THE technology lender at America’s strongest bank. The project at hand was financing the massive build-out of the cable TV infrastructure. That was my last professional interaction with this amazing, huge, totally misunderstood and critically important component of modern existence. Since 1982, I, like most of us have been a paying customer of the cable industry – not really giving much thought to the people delivering bits to my home.

In retrospect I find the lack of attention given to the cable industry surprising. I was shocked when I found out that the energy associated with set-top boxes cost Americans $3 billion in electricity charges a year. A program associated with improving the energy-efficiency of set-top boxes could save consumers over $1 billion per year, essentially eliminating the need for three power plants.  The scope and scale of the cable industry is breath-taking. It is easy to forget that the cable industry touches each and every one of our lives and yet most of us know nothing about the companies, the personalities, the body of law, or the economics associated with the industry that makes most things digital possible. The industry is understudied.

While the NSA ‘touches’ 1.6 per cent of global internet traffic [~35 million books’ worth of data a minute] cable companies have hands, eyes and analytics on  the six billion emails sent every hour and the 1.2 petabytes of data that travel across the internet every minute. This is the equivalent of two thousand years’ worth of music playing continuously, or the contents of 2.2 billion books.1 Sarah Benet-Weiser, Cynthia Chris and Anthony Freitas open their illuminating introduction to the cable industry, Cable Visions: Television Beyond Broadcasting with the quote, “Few technologies have been the subject of as many hopes and expectations as cable television.”

Cable is a great story. Depending on your point of view it can be a panegyric to American entrepreneurship or a tragedy featuring the hubris of billionaires and the excesses of monopoly power.

When most of us think about “cable” our minds turn to the supply side – the content that the cable industry delivers to our homes. This is understandable. Content creation is labor intensive and “reeks of human juices”. The New Jersey production team of HBO’s The Sopranos included more than 200 people – carpenters, electricians, painters, seamstresses, drivers, accountants, cameramen, location scouts, caterers, writers, make-up artists, audio engineers, prop masters, set dressers, scene designers and production assistants – all kinds of production assistants and then there are the stars. Many do not know that nine companies produce ~95% of the professionally TV content consumed in the U.S. today.

What matters most about the cable industry is not the specifics of the content delivered [as life enriching as it might be] but the impact that the industry has on our increasingly digital existence.

Cable [Community Antenna Television –CATV] began humbly as a means of retransmitting broadcast signals to under-served areas. It evolved into the central core of the digital nervous system of our nation and the enabler of information access. Because the industry is perceived by the FCC as delivering “information services” rather than “telecommunication services” it is not regulated as a common carrier which allowed cable producers and programmers to take greater creative risks to attract audiences. This was in inflection point in broadcast program theory [instead of one channel having to cater to many needs, with cable you could have many channels serving niche markets]. There are currently over 500 channels.

The recent ~$45 billion merger proposal from Comcast Corp. [$64.7 billion in 2013 revenue/21.6 million subscribers] to Time Warner Cable Inc. [$22.1 billion/11.4 million subscribers] has put the cable industry back in the spot light. I suggest we watch carefully and hug our cable guy.

1Daniel Soar, “How to Get Ahead at the NSA,” London Review of Books [24 October 2013].
http://www.lrb.co.uk/v35/n20/daniel-soar/how-to-get-ahead-at-the-nsa


Boston

One International Place
Suite 1400
Boston, MA 02110

Phone: (617) 535-7725
Fax:     (617) 332-0882

info@gustinpartners.com

London

42 Berkeley Square
London W1J 5AW, UK

Phone: 44(0)20.7318.0860
Fax:     44(0)20.7318.0862
info@gustinpartners.com