As I mentioned in my previous post, the cable industry has deployed switched digital video (SDV) as a means of conserving bandwidth, allowing us to provide better and more services to our customers.  As the FCC examines the future of set-top boxes and the current CableCARD regime, TiVo has raised a question about whether the Tuning Adapter (which it helped develop) is a satisfactory approach to enable consumers with TiVo one-way devices to access cable programming delivered via SDV.

We’ve already responded via filings of our own  – making the points that Tuning Adapters are generally working and the TiVo proposed “fix” doesn’t withstand scrutiny  – but I wanted to take some time to explain where we think TiVo gets it wrong. (Coverage of this battle of filings can be found at Multichannel News and Light Reading.)

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Several major cable operators are making new deployments of switched digital video – see here and here – which provides a timely opportunity to explain how SDV works and how consumers will benefit.

Standard cable service, both analog and digital, works on a “broadcast” model, in which every available channel is sent to every subscriber all of the time, regardless of what is actually being watched. Sending more channels than you’re actually watching just takes up more of the capacity on the cable pipe – capacity that could be used for other important purposes.

As this article succinctly puts it:

One of the primary benefits of SDV is that it frees up bandwidth because it only delivers the channel a customer is viewing.

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Yesterday, former FCC Chairman Michael Powell led Marc Andreessen, Time Warner’s Jeffrey Bewkes, CBS’ Leslie Moonves, Comcast’s Brian Roberts, and Fox Filmed Entertainment’s Tom Rothman through a wide ranging, free flowing, and spirited discussion of the future of content at The Cable Show’s second general session.

To start the conversation, Powell asked Brian Roberts if cable should be worried about online video.  Roberts responded that every new medium presents a new opportunity, but said they all present avenues to deliver lawful content; the more opportunities for that, the better.

Andreessen (who shared details of his 36 port HDMI switch with 36 different inputs and a $4,000 per month commercial Internet connection) said that was the right way to look at the future – since every device is now expected to be Internet-enabled, and to allow content consumption.

Rothman chimed in to agree, but said that creates a requirement that content be compelling.  Without compelling content, you just have a bunch of devices to check baseball scores.  Rothman says the key to content online is two-fold.  First, the most important piece of content is good storytelling.  Second, that storytelling must be accompanied by a way to protect and monetize content.

The various models of monetization became a hot topic and Powell noted that customers may have different thoughts about the monetization process – so cable operators may end up fighting with consumers.

Moonves answered by noting that, for his company, there used to be one source of revenue – advertising – but now there are many more, such as syndication, retransmission fees, DVDs,  iTunes, Hulu, etc.  That presents more options to address the monetization question.

The introduction of the topic of advertising led Powell to ask what impact services like Facebook will have, since they present a new, and possibly competing, set of audience segmentation data.  Powell noted the industry no longer has the exclusive on audience data.

Bewkes suggested all the different entities must become partners in the sharing of audience data, and Moonves said one of the essentials is accurate eyeball measurement – and we don’t have that yet.

Andreessen suggest Facebook can be an enabler of content by providing data, and also by sharing content with friends.

Roberts said people may go to other providers  – not because the content is different, but because the experience is different or cooler.  As a result, it is incumbent upon cable to stay fresh and cool, and spend more time on the interface.

Asked what makes them nervous, the panelists suggested that the uncertainty of regulatory change was a great challenge.

Moonves joked, “Whenever they say it’s not about the money, it’s all about the money.”

In a discussion involving the people responsible for wireless strategies at America’s largest cable companies, one thing was clear – there is no single path they are taking to deliver wireless.  Cathy Avgiris of Comcast, John Bickham of Cablevision, Stephen Bye from Cox Communications, Frank Miller of Bend Broadband, and Mike Roudi from Time Warner Cable spoke today at The Cable Show in Los Angeles, on the panel “Spectrum of Possibility: Technology & Strategy for the Business of Wireless Communications.”

While most noted the agreement between industry players Sprint and Clearwire to provide mobile outside their service areas, there were differing business plans on display.  Stephen Bye noted Cox Communications plans to build its own wireless network using current 3G technology, but also noted the ease of upgrading to LTE in the longer term.  That approach puts Cox at odds with most of the other operators.

Comcast’s Avgiris, for instance, noted the different approach cable operators had taken to telephony years ago.  Rather than try to develop a circuit-switched network, many cable operators began pursuing a VoIP solution that would allow them to be competitive without high upfront costs.

Similarly, Avgiris said companies like Comcast and Time Warner are looking at Wi-Fi networks and dual mode smartphones to deliver their wireless offerings.

Cablevision’s Bickham discussed the deployment of their Optimum WiFi service in the New York area (see this earlier post), and the agreement between Time Warner, Comcast, and Cablevision to allow Wi-Fi roaming across each others’ networks (see this Multichannel News article).

All agreed that wireless would be a key part of the bundle of services offered by cable operators, but most spoke to the consumer benefits of that.  It’s no longer about bundling services just to save money, it’s about the experience.  When customers can use their mobile device as a gateway and player for their home based services, that becomes a powerful driver for consumer interaction.

EDITOR’S NOTE: Earlier this week, we were invited to submit something to Ars Technica on the hot topic of the SOC waiver, addressed previously here. The following day, they followed up with a counter to our thoughts. We’re grateful for any opportunity to continue a meaningful dialogue, so we’re posting our response back.

First, I appreciate Ars giving me the opportunity to provide a guest post on the issue of Selectable Output Control.  And, like someone lost in the desert, I suppose I should just be grateful for a cup of water and take Ars’ agreement that this issue really isn’t about “hobbling” consumers’ equipment – despite what SOC opponents have been arguing for months.

But Matthew Lasar’s response now shifts the debate from hobbling existing TVs to the inevitable slippery slope: If the FCC grants a waiver for early release movies, Ars argues that next will come use of SOC for the “Big Game” (which won’t likely involve my Washington Redskins), a key episode of Mad Men (perhaps where Don divorces Betty and moves in with Peggy because she has a TV that works with SOC), and, Lord knows, it will then be used to provide exclusive showings of a film of the JFK assassination  that will prove that the Zapruder film was part of the “cover-up.”

But the truth is that there is no studio-cable-DBS cabal to deny consumers viewing opportunities; rather, we’d like to give our customers content they would not otherwise receive without our ability to use SOC.  Forgotten now is that the cable industry supported the adoption of the FCC ban on SOC as part of a compromise with the consumer electronics industry in which both industries recommended one-way Plug & Play rules to the FCC. We did so while recognizing – as did the consumer electronics industry and the FCC – that waivers would be granted upon a showing that the public interest would be served by waiving the rule, for example where the waiver proponent demonstrates that the content is a “new business model” advantageous to consumers. Therefore, the FCC must decide in each particular case whether SOC should be permitted. To me, it is crazy that the government is in this business of deciding outputs/inputs at all.  But the FCC’s role ensures there isn’t a slippery slope; the proponent of a waiver must prove each time that the proposed service is something beneficial to consumers.

Putting aside the debate over the use (or abuse) of SOC, I have a particular concern with the claim that our television services are part of some “public network” akin to the public switched telephone network and therefore subject to some special regulation which restricts our business in ways not allowed with regard to other businesses. To be sure, our video services are subject to government regulation – at the federal, state and local levels – but we aren’t like telephone companies (which built their systems with captive ratepayers and a government-guaranteed rate of return) or even radio and television broadcasters (who were given public airwaves for free, but in return had to adhere to certain “public interest” requirements).  Our industry had no government-guaranteed return or government-granted public airwaves – to the extent we used any public resources, we paid for our rights-of-way with local franchise fees. Indeed, the cable industry built analog networks, our new digital networks, our cable modem and digital phone services with private risk capital with no assured return.

If the goal is innovation to meet rapidly-changing consumer demands, the old-style public utility model is exactly the wrong way to go.

Again, I appreciate the opportunity to engage in a discussion with Ars and its readers and look forward to more in the future.