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Cox positions itself on technology’s bleeding edge

Jun 11, 2001  •  Post A Comment

John Hildebrand has three things on his mind: video on demand, next-generation set-top boxes and home networking. The vice president of multimedia technology for Cox Communications will have his eye on those three areas as he scours the floor at the National Cable & Telecommunications Association show this week in Chicago.
“On the set-top box side, I am looking at anything new-next-generation boxes that include high-definition TV technology, personal video recorder technology, maybe video conferencing, home networking, wired or wireless, either on the set-top box side or the cable modem side,” he said.
Motorola and Scientific-Atlanta are Cox’s primary vendors for set-top boxes, but Mr. Hildebrand will be considering the full spectrum of competitors. In fact, Cox issued a request for proposal for set-top boxes six months ago looking for those that incorporated support for S-A’s conditional access powering system. In the field, Cox has installed both S-A and Motorola boxes, but it would like to roll out hardware from a third vendor later this year. “We like healthy competition,” Mr. Hildebrand said. In its laboratories, Cox is currently evaluating boxes from Pace, Pioneer and others.
Today’s boxes support digital video, pay-per-view, video on demand and interactive TV capability, while PVR and HDTV functionality is probably at least a year away, he said. “If I go to a show and see boxes that are good solid prototypes, I would expect to have those in the hands of consumers within 12 months-that’s a rough expectation.”
Mr. Hildebrand is particularly interested in the home networking possibilities afforded by future boxes. Since Cox already has a strong presence in the home with its set-tops and cable modems, a home networking component makes sense, he said. “I have four PCs at home and had to bring in a contractor to connect those all together and connect to cable modems. Our sense is we can go in and make that easy for people. That’s why we are looking at boxes and modems that enable home networking functionality.”
The killer application on all these boxes is not technology, he said. It’s the ability to bundle services, thereby reducing churn and driving penetration. In markets where Cox bundles video, voice and data at a reduced cost, churn has dropped to nearly zero, he said. “It’s not about a new technology. It’s about new revenues and customer retention.”
Generating new revenue and new revenue-generating units (digital cable, telephony and high-speed access) is something at which Cox has excelled, said Michael Harris, an analyst with Kinetic Strategies in Phoenix. “I think the thing that’s always impressive about Cox is the progress it can make in new products even as they offer a lot of products.”
One of those new services is VOD, which Cox launched in San Diego as a commercial trial last fall to about 2000 customers. The cable operator plans to expand the service later this summer, while also introducing it in a new market-Hampton Roads, Va.
“The trial that we’ve done (in San Diego) has served to increase our confidence,” said Mr. Hildebrand. “We think VOD gives us a competitive advantage because we do real-time VOD-and DBS doesn’t. From our market research we know VOD is something consumers want, and the business case works,” he said, adding that the cost of a set-top box has decreased while penetration has risen.
Since Cox has already upgraded its plant, the operator has the needed bandwidth to launch such a service. To offer VOD, a system needs to allocate four six-MHz channels for the service. Each channel can support 10 VOD streams simultaneously, Mr. Hildebrand said.
Cox’s VOD service is priced at $3.95 per movie and features more than 100 titles. Cox is currently using S-A’s Explorer 2000 boxes to offer VOD in San Diego and will rely on Motorola boxes in Hampton Roads.