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Competitive Market Activity. Robert Gessner President, Massillon Cable TV, Inc. System Information. Massillon Cable TV. Two counties in NE Ohio 68,250 Homes Passed 46,900 Homes Served 43,325 Video 20,675 2-way Digital HH 14,500 HD HH 33,325 HSD 15,075 Phone Lines.

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competitive market activity

Competitive Market Activity

Robert Gessner

President, Massillon Cable TV, Inc.

massillon cable tv
Massillon Cable TV
  • Two counties in NE Ohio
    • 68,250 Homes Passed
    • 46,900 Homes Served
    • 43,325 Video
      • 20,675 2-way Digital HH
      • 14,500 HD HH
    • 33,325 HSD
    • 15,075 Phone Lines
massillon cable tv inc
Massillon Cable TV, Inc.
  • Two service areas
    • Consolidated headend
      • Redundant Fiber Interconnect
  • All-Digital/No-Analog
  • Typical HFC Plant
    • 1,500 plant miles
  • 750 MHz
  • Competitors
      • DBS
      • AT&T U-Verse (60%)
      • Embarq (35%)
      • Frontier/Verizon (5%)

Wayne County

Wooster Vicinity

Stark County

Massillon Vicinity


service area observations
Service Area Observations
  • Wayne County has lower video penetration
    • The result of more rural demographic and consistently greater activity by satellite providers over the years.
  • Stark County has lower voice penetration
    • AT&T is a stronger competitor than Embarq.
      • AT&T record of consistently better service and lower rates.
      • Active marketing programs
        • Aggressive win-back programs
        • Massive direct mail budget
        • Widely varying offers
        • Low-priced, entry-level service.
    • Embarq has history of lower quality service,

higher rates and, until recently, a weak

win-back program.

status of competitors
Status of Competitors
  • Stark County has more competition is all service types
    • AT&T serves most of the Stark County area
      • Actively building and marketing U-Verse.
      • High recognition due to AT&T overbuild of Time Warner North East Ohio (1.5 million customers in Cleveland, Akron, Youngstown, Mansfield areas).
    • Verizon (now Frontier) serves only small portions of Stark County.
      • Provides data and voice only.
      • Virtually no competitive presence.
  • Wayne County has one competitor
    • Embarq
      • Provides data and voice only.
      • Legacy of United Telephone, high rates and moderate service, coupled with the Sprint/Embarq divestiture allowed us a very open market for quite some time.
      • Recent improvements in Embarq’s efforts.
past competitive efforts1
Past Competitive Efforts
  • Carefully examined competitive landscape in 2007. Three product lines had different needs:
    • Video – flat to slightly falling penetration to satellite and the prospect of U-Verse required action to maintain our market share.
    • Data –clear market leader. We needed to continue to innovate but could do so from a position of strength.
    • Voice – Growing steadily. Typical bundle marketing was serving us well.
past competitive efforts video
Past Competitive Efforts - Video
  • Battle for video success framed by HD. Competitors were defining the battleground.
    • Not just DirecTV & Dish. AT&T appearance imminent.
  • We launched our DTV Rollout to minimize the competitive advantage enjoyed by satellite in terms of the “hot item,” HD.
    • Obtained an FCC waiver to use integrated security converters.
    • Developed low-cost DTA (Digital-To-Analog) with no-cost guide.
    • Deployed 100,000 converters in 10 months. Three free per customer.
    • Eliminated all analog video signals.
    • Launched 65+ additional HD signals to reach 95.
past competitive efforts video1
Past Competitive Efforts - Video
  • Did it work? Don’t know.
    • We lost some video customers due to the requirement of a converter on every set.
    • We don’t know how many customers we did not lose because we launched so much more HD.
    • Finished our project just as the economic recession became big news (Q3 2009).
      • Some level of losses to vacant homes, lost jobs, “right sizing” household budgets, etc.
  • More DTV Rollout Information
past competitive efforts video2
Past Competitive Efforts - Video
  • Competitive Difference Trade-Off
    • Gave up our competitive difference as “whole house” provider in this effort to equalize our video product with satellite in terms of HD.
    • With analog, consumers have complex decision when considering video providers.
      • They must ask themselves if they want converters on every set. They can choose different providers depending on the answer. That may be an advantage.
      • When all digital, consumers no longer have that factor in the decision. They simply ask whose converters I prefer.
        • Certainly, we can give people converters, but that

is not the same thing.

    • I will return to this topic later.
recent competitive efforts video
Recent Competitive Efforts - Video
  • HD/DVR Survey
    • Recent survey of HD/DVR subs (1,500 responses).
      • Despite almost 100 HD networks, they want more.
        • 42% about right, 57% not nearly enough, 1% too many
      • However, when challenged to name HD nets we don’t carry, they have difficulty doing so.
      • Perhaps reached point of diminishing returns, but can we stop adding and lose ground in advertising battle?
recent competitive efforts video1
Recent Competitive Efforts - Video
  • Availability of HD is working
    • Door-to-door survey team results show customers are aware of broad HD selection even if they don’t use it.
      • 77% are aware we have 90+ HD networks.
recent competitive efforts video2
Recent Competitive Efforts - Video
  • Same survey showed very high interest in
    • Increased DVR storage space
      • 34% - Always enough storage
      • 37% - Adequate
      • 29% - Never enough storage space
      • Planning launch of 1000GB SATA drives in July. We will sell (rather than rent) for about $100.
    • MRDVR
      • No specific question, but very frequently noted among respondents.
      • Waiting for guide and converter suppliers to offer MRDVR.
recent competitive efforts video3
Recent Competitive Efforts - Video
  • First Door-To-Door effort
    • AT&T Inoculation Team
      • Built upon idea from NPG with very similar results.
      • Small team that works just ahead of AT&T to assure satisfaction of current customers.
      • Goal is not sales, but verification that all services are working properly.
      • About 10% of homes surveyed need a service call.
      • About 15% have some type of issue resolved at the door (remote control programming, batteries, Internet questions, etc.).
recent competitive efforts video4
Recent Competitive Efforts - Video
  • AT&T Inoculation Team (cont)
    • Also using weekly reports to identify area signal issues.
      • Technical SWAT response to resolve very quickly.
    • Collecting information about non-subs
      • Current provider
      • If/why they left us
      • Likelihood of remaining with current provider
recent competitive efforts hsd
Recent Competitive Efforts - HSD
  • DOCSIS 3.0
    • Transition to all-digital/no-analog created bandwidth to offer DOCSIS 3.0 throughout the system.
    • Four downstream channels operating in all areas.
    • Working to recover DOCSIS 1.0 modems before increasing upstream bandwidth to 6.4MHz (underway).
    • Seen benefits from DOCSIS 3.0 without new, higher bandwidth packages.
      • Auto load balancing
      • Multiple return paths
      • Better performance for all customers.
    • Planning new DOCSIS 3.0 packages

in near future.

recent competitive efforts voice
Recent Competitive Efforts - Voice
  • Challenge same as for all
    • Slow sales
    • Cord cutting
  • Began commercial sales in early 2009
    • Reasonably good results to date.
  • Question whether we need a cell phone element to make our phone offering complete.
    • Certainly seems to be the case, but

no winning combination of providers.

recent competitive efforts voice1
Recent Competitive Efforts - Voice
  • Stark County
    • Recognize need for low-cost, entry-level phone service to meet AT&T with competitive offers.
    • Creates problem of margin due to Sprint partnership.
    • Testing price points and response rates now.
competitive efforts other
Competitive Efforts - Other
  • System reliability
    • Allowed to slip during year we worked on DTV Rollout.
    • Currently primary operational focus
      • Deliver higher quality technical signal with greater reliability.
        • Still do as well as others technically and better from customer service, but need to focus on absolute performance.
        • New monitoring tools
        • New workforce distribution
        • New employee dedication
competitive efforts other1
Competitive Efforts - Other
  • Current enhancement products
    • Carbonite
      • Hosted application for off-site backup.
      • Need to make concerted effort to evaluate
    • IT Guys
      • Great service to customers.
      • Keeps them coming back to our HSD.
  • Planned enhancement product
    • Home Security
      • Broadband based
      • Hope for new entrants due to “widgets”

and other flexibility.

my competitive crusade

My Competitive Crusade

Digital TV without a Digital Box

magid study october 2009
Magid Study – October 2009

One-third cite cost and affordability as the primary reasons for not buying HD service.

42% of these sideliners admit that "options are not worth the fees."

34% of HD households do not subscribe to HD programming.

hdtv sets without hd service
HDTV Sets without HD Service
  • Despite economic recession, consumers replacing analog TV sets at a rapid pace.
  • A large percentage are choosing not to add any HD programming.
  • Our experience as an all-digital/no-analog system provides a unique perspective into consumer use of digital TV sets.
  • We really did not know how they were using HDTV sets until we removed all analog signals.
hdtv sets without hd service1
HDTV Sets without HD Service
  • What are they watching?
    • Our experience from our DTV Rollout says ANALOG.
      • Only know this if you have eliminated analog signals.
      • Poor quality compared to digital signals (satellite or telco)
  • Why are they watching poor quality analog?
    • You aren’t making it possible for them to watch digital.
    • They don’t know how to use their digital TV set and you aren’t teaching them.
  • What will they do when they notice?
    • Maybe they will subscribe to your HD service.
    • Maybe they will switch to another provider

because they assume analog quality is the

best you can deliver.

hdtv sets without hd service2
HDTV Sets without HD Service
  • Not just replacing the “BIG” TV anymore.
    • Since Digital TV Transition, all TV sets are digital.
    • Stand at Wal-Mart, Best Buy or HHGregg and watch the number of small digital TV sets streaming out the door. Many homes have replaced all analog TV sets with digital.
    • They may equip the “BIG” TV with a converter, but the others are simply connected to the coax system.
hdtv sets without hd service3
HDTV Sets without HD Service
  • Why don’t they have converters.
    • Magid Study says cost, affordability, options not worth the cost.
    • Perhaps more factors, especially for AOs.
      • Cost
      • Complexity
      • Comfort
      • Aesthetics
      • Convenience
      • Stubbornness
hdtv sets without hd service4
HDTV Sets without HD Service
  • Wouldn’t it be better if we could deliver digital quality signals to digital TV sets without a converter?
    • WE CAN!
    • PSIP – Add small amount of data to SD signals so digital TV sets can easily tune to them.
    • ClearQAM – Maintain a robust lineup of unencrypted SD signals (including PSIP).
consumer continuum of choice1
Consumer Continuum of Choice
  • Why is this important?
    • It is what customers want.
      • Choice
      • Value
      • Friendly
        • Our HDTV registry already tracks more than 5% of our HHs who use at least one digital TV set without a converter.
        • Grows every day.
    • We are the only platform that can deliver it.
      • Competitive difference
      • Delivers digital quality at analog price
      • Affords easy migration path to other services.
consumer continuum of choice2
Consumer Continuum of Choice
  • My proposal
    • Primarily status quo
    • Lifeline & Basic SD signals should be encrypted at the operator’s election.
      • SD no different than analog in terms of signal quality and need to secure from copying and illegal distribution.
    • All HD and premium SD signals should be encrypted at the programmer’s election.
      • Recognizes need to secure HD content from copying and illegal distribution.
      • Allows programmer flexibility (QVC, HSN)
consumer continuum of choice3
Consumer Continuum of Choice
  • Needs both PSIP and ClearQAM
    • PSIP-Program and System Information Protocol
      • ATSC protocol for metadata in an MPEG stream.
      • Available and, within limits, works well.
        • Requires new discipline regarding spectrum utilization
      • TV compatibility issues
        • Being resolved with practice.
    • ClearQAM
      • Required to maintain robust offering directly to digital TV sets.
consumer continuum of choice4
Consumer Continuum of Choice
  • Threats
    • Industry support
      • Comcast has no interest.
        • Want to encrypt everything to reduce truck rolls and theft.
        • Not sure of other MSOs
      • NCTA unwilling to consider in light of Comcast desire.
    • Not all systems in same situation as Comcast.
      • Fully support Comcast’s right to encrypt based on their specific needs.
      • Problem - Comcast (due to their dominant position) precludes my right to choose not to fully encrypt.
consumer continuum of choice5
Consumer Continuum of Choice
  • Threats (continued)
    • Program Networks
      • No clear reason why they want us to encrypt SD.
        • Possible negotiating tactic – trade for something else.
    • Should not put program networks in position to determine our capital expenditures
      • They don’t care what it costs us to secure their signals.
      • Consider that you must eventually replace every DTA and non-HD STB with a new one. The cost is staggering.
        • Probably 3x the number of STBs today.
consumer continuum of choice6
Consumer Continuum of Choice
  • My crusade may be more like Quixote’s than Lancelot’s, but still worth the attempt.
    • Creates a competitive difference.
    • Presents friendly, consumer-oriented options.
    • Appeals to an activist FCC that will offer many opportunities to raise the issue.

Robert Gessner

Massillon Cable TV, Inc.


Voice: 330-833-5509

Fax: 330-833-7522