From cord-cutting to over-the-top (OTT) video, today’s video services marketplace is radically changing the way consumers engage with content, as well as with multiple-system operators (MSOs) and multichannel video programming distributors (MVPDs).
Different service providers are pursuing different initiatives in response to these new competitive dynamics . One of them is Charter Communications, which has generated a lot of interest with its WorldBox initiative.
Technicolor is partnering with Charter to optimize the WorldBox opportunity. The collaboration has resulted in the development of an innovative — and open — set-top box. WorldBox is a hybrid internet protocol/quadrature amplitude modulation (IP/QAM) video device. Key features of this next-generation service platform include downloadable security, as well as a cloud-based interface.
We caught up with Eric Rutter, senior vice president of Technicolor’s Connected Home division, to discuss the changes in the customer-premises equipment (CPE) space.
Rutter: WorldBox is a huge initiative for Charter — it’s only one part of the evolution Charter is undergoing. The launch of its Spectrum Guide, which runs on WorldBox, is another huge initiative for the company.
The WorldBox decouples conditional access from the set-top box — the customer-premises equipment (CPE) itself. Doing that opens the set-top box market from a traditionally closed environment – based on the conditional access paradigm that has been traditionally in place -- to an open environment in which a number of players can compete to add value.
This should lower prices to the consumer and increase competition among vendors — not only on price but on quality of service. Initially, this might not sound like good news for Technicolor — we’re used to competing in a closed environment. But the reality is that we were participating in only a portion of Charter’s footprint.
In theory, when WorldBox is available, we’ll be able to sell across the entire footprint, which consists of nearly 17 million video subscribers. That’s access to essentially a new market for us.
Rutter: In addition to the fact that decoupling the conditional access should lead to lower prices and increased competition, it also introduces a lot of flexibility in terms of how STBs can be deployed. Now you can deploy these set-tops across the entire footprint; the devices are not tied to a specific head-end, and they’re not tied to a specific warehouse.
This means that from a purchasing and a supply chain management standpoint – including warehousing and deployment functions -- the operations on Charter should become easier. By deploying WorldBox into the market, Charter should increase efficiency and effectiveness in all of those areas.
And that’s only the operational impact. There are also significant benefits to be had from a customer-support and troubleshooting point of view. By having a more consistent ecosystem across your entire footprint, there are fewer types of products Charter has in the field. This allows customer service representatives to have a much higher familiarity with what is happening in the home, making it easier to troubleshoot issues over the phone. That should lead to better customer satisfaction.
Rutter: This is very new to both Charter and Technicolor — that’s why we wanted to be involved right from the beginning. We’re engaged in building a new conditional access system based on PowerKEY that will work with the existing versions of PowerKEY.
PowerKEY has been a conditional access industry standard that Technicolor and previously Cisco and Scientific Atlanta have deployed successfully in the marketplace for more than 15 years. We’re creating a new, downloadable version of PowerKEY that will allow different WorldBox set-top boxes from different vendors to operate in traditionally controlled headends that had supported only that PowerKEY software. This is part of this new paradigm: being able to take boxes across the footprint. In theory, boxes from any vendor will work anywhere in the Charter footprint.
This was a requirement to make WorldBox work in the marketplace. It has been a success so far. We’ve got a lot to do, but it’s forcing both parties to engage differently. It’s creating new opportunities for communication and collaboration. By supporting WorldBox this way — through this new level of engagement and collaboration — we’re opening new opportunities with Charter.
Rutter: I believe the skills have always been there in Technicolor, but the way we’re interacting with Charter is entirely new because of these WorldBox requirements and the evolving nature of this business.
I mentioned that this new version of PowerKEY is downloadable. That’s one example where we’re headed into a much more software-based, collaborative environment than Charter and Technicolor had traditionally enjoyed. Right now, as we evolve and become more ingrained in software development for downloadable PowerKEY and the WorldBox program overall, we’re learning how to reuse some of our own technology in new ways, given the evolution of the CPE environment.
CPE, as everyone talks about, is headed toward virtualization. The way we’ve approached this downloadable PowerKEY allows us to think about how hardware becomes virtualized in the future and how we can be part of that as we move forward.
We’re open to conversations with Charter about that. That’s in the future, down the road, but nonetheless we need to start thinking about how we drive innovation and help our partners be successful in the marketplace.
Rutter: I believe that one of the reasons Charter pursued WorldBox was to lower costs and open the environment to competition. That benefits the consumer — we all agree on that.
I also believe it allows them to control their own destiny. They believe their commitment to WorldBox and the Spectrum program will allow them ultimately to be more successful in the marketplace. I don’t believe it is purely cost driven — although that’s one of the components. I believe it is their desire to increase customer satisfaction with their offerings and their products. I believe they think by utilizing WorldBox and Spectrum they will get to a much more desirable customer experience.
Rutter: Really, it’s been around the downloadable PowerKEY. Most of the other components involve how to engage with this new Charter entity. Previously we had been an end-to-end original equipment manufacturer (OEM) and we’d build products and sell them to specifically targeted customers.
Now we’re building much more custom-designed equipment based on our customers’ specifications. We’re part of a value equation now that requires a much more consultative process.
Rutter: I think it’s about getting it deployed successfully in the field. Getting Charter to scale WorldBox is critical. All of the other evolutionary components of WorldBox — what comes next — we’re discussing. We’re excited about those opportunities and those next-gen discussions, but getting to scale is, I believe, the most important milestone for both Charter and Technicolor. We look forward to helping Charter be successful in the marketplace.