A number of new faces will be on hand at the National Cable Television Association's annual Cable '99 conference, including C. Michael Armstrong, chief executive of AT&T, and Microsoft co-founder Paul Allen, who owns the rapidly growing Charter Communications.
AT&T will be the No. 1 cable operator when its merger with MediaOne Group is complete, while Charter has made 11 acquisitions this year alone, putting Allen in fourth position on the cable totem pole.
AT&T's place at the conference's center stage is telling of a rapidly consolidating industry that is reinventing itself with every new multibillion-dollar deal.
Once a bunch of family-owned operators that primarily delivered television programming, the cable industry has evolved to focus not only on TV but on newer broadband services for the Internet and cable telephony. Players like AT&T, Microsoft, and others traditionally outside the cable fray are now helping fuel that transition.
"This will be the first cable convention where the largest cable company is a well-respected telecommunications carrier. It really has changed the dynamic, especially culturally," said Michael Harris, president of Kinetic Strategies, a cable industry research firm. "It's certainly fitting to have Armstrong give the keynote."
Last year, Bill Gates addressed the convention in his first NCTA keynote since Microsoft's $1 billion investment in Comcast. While the cable industry viewed his presence with a wary eye, this year that "outsider" concern has been largely forgotten.
"The changing face of the industry, which had been run by the venerable cable families, will be noticeable," said Jeannette Noyes, a communications industry research manager for market data firm International Data Corporation. "There's a shift in power. There's new people involved."
The old guard hasn't been forgotten, however. AT&T's newly acquired cable guru Leo Hindery and Time Warner CEO Gerald Levin will be on hand, as well as programming firms such as Liberty Media and traditional cable equipment makers General Instrument and Scientific-Atlanta.
Microsoft, which recently invested $5 billion in AT&T, is expected to tout its WebTV Networks service as well as set-top boxes based on its Windows CE operating system, analysts said. Ericsson and Lucent Technologies also are likely to make a splash with new cable-specific product announcements, according to analysts.
A broadband boom
Regardless of its revolving play list, the industry has plenty to cheer. New revenue streams from digital video, cable modem Internet access, and upcoming telephony services have given the industry a new feel and have also boosted the stock valuations of cable firms.
Broadband services have been the biggest growth prospect for cable TV companies. With hybrid fiber-optic and coaxial cable (HFC) networks--"fat pipes" that can carry huge amounts of digital information--cable may be the best technology to deliver many new services to consumers, many analysts say.
"They've got some clearly defined new service offerings that three years ago they probably were thinking of dabbling in, but now it's their future livelihood," said IDC's Noyes.
Competition and other hurdles in the broadband market have kept cable firms wary. Direct broadcast satellite (DBS) operators such as DirecTV and EchoStar Communications continue to encroach on cable companies' traditional TV turf.
In addition, the specter of new federal regulations, in the wake of a recent court ruling which could force operators to open their networks to competitors, will surely have industry leaders concerned.
Executives also are expected to beat the drum on the issue of cable television pricing restraints. A five-year federal moratorium on cable prices expired earlier this year, but the industry says it is fearful of drawing regulators' attention by raising rates--while analysts say it could spell doom in an era of increasing competition.
Many of cable's standards battles are settling down and operators largely have decided on specific equipment vendors for channel converters, cable modems, and set-top boxes.
General Instrument, the largest supplier of cable set-top converters in the United States, is expected to show for the first time 3D games running on its next-generation DCT-5000 set-top, company executives said. Online gaming could become a big revenue generator for cable operators, given the size of the game console market, industry experts have said.
Jack Miller, director of Scientific-Atlanta's developer program, said his company will show interactive applications from 15 different developers at the show. The company is also slated to prevue its next-generation digital set-top boxes.
The industry also has also settled the debate over the Data Over Cable Service Interface Specification (DOCSIS), aimed at making cable modems work on any cable network, thus increasing their deployment. Many consumer electronics companies now offer certified DOCSIS-compliant cable modems, which soon will be available widely in retail stores.
"A lot of these devices are available at volume now, and it's no longer just speculation," Harris said. "It's not just about [General Instrument] and Scientific-Atlanta anymore."
But Excite@Home has seen its stock price plummet from a high of nearly 200 in early April to below 90 today, partly due to the pull-back by the entire Internet sector and the recent court ruling which could affect its exclusive Net access arrangements with cable companies.
While cable players tout their broadband plans, a lot of groundwork has yet to be done before these promises become reality.
Much of these new high-speed services are dependent on costly network technology upgrades, which are being completed--albeit inconsistently--across the industry.
Cable operators cannot afford to move too slowly with their upgrades as local phone companies are simultaneously rolling out digital subscriber lines (DSL), a competing high-speed Net access technology.
AT&T will talk about how it will combat these issues next week when it presents a research paper that will detail how it expects to "future-proof" its network in a cost-effective manner, said Cynthia Brumfield, principal of Broadband Intelligence.