Broadband and community were two recurring threads of a panel conversation at the 2011 Independent Show regarding ways that family run cable businesses can set themselves apart and remain relevant in the 21st century.
Three of the four panelists were 2nd or 3rd generation leaders and brought a younger generation’s perspective to the challenges that face businesses that, arguably, are mature. NCTC president Rich Fickle, who moderated the panel, summed up his impressions of working with panelists and their companies when he said that , “These guys are entrepreneurial and [their companies] are built to last.”
Their businesses, like most small operators, had their roots in providing services where larger companies failed to serve. Geographically, the panelists serve small towns and rural areas. They are family owned and operated, which, as the panelists agreed, provides a different mindset than an outside investor-owned company. This mindset helps both in the deployment and adoption of broadband and other ancillary technologies that will help their rural communities survive and thrive.
- John Andrews – co-founder, president & CEO of US Sonet & Lightspeed Telecom. US Sonet & Lightspeed Telecom is a Fiber to the Home over-builder, with 51% take-rate and 1,300+ subscribers, that formed when the incumbents refused to upgrade their services to the town of Salem, IL.
- Levi Maaia, VP of Full Channel in Rhode Island. He is a third generation leader of this independent, Rhode Island broadband provider started by his Grandfather started in 1965.
- Mark Walter, SVP, Service Electric Cablevision – the oldest cable system in the country (1948), founded by Walter’s grandfather in the rural mountainous part of PA. Walter pointed out that innovation and service were the drivers for the birth of Service Electric.
- Kyle South, GM of West Alabama Cable TV – South’s great-grandfather started the cable television business in 1964 and serves 5,000 households.
Highlights from the panel are below.
What are the key traits for success?
- Levi Maaia – “Surround yourself with smart people.”
- Kyle South – “Most important thing we can do is build relationships with their customers.”
- Mark Walter – “Choose a leader with financial wherewithal and those who will make ethical decisions.
- Mark Walter – “We are able to make decisions for the long-run and not for short-run games. They [family owned operators] take the business seriously, because it is about their family and the other families [in the business and community].”
- Levi Maaia – “The community members identify with them as embracing the local culture.” He went on to explain that the business probably would not still be around in its current form if it was owned by investors.
- John Andrews – The family is there, it is a local effort and everybody works together.
- Levi Maaia – The growth is coming from broadband and online video will complement linear channels.
- Mark Walter – “Choice, control is what people want. Operators have to continue to invest in the network – a core asset – by deploying fiber deeper and deeper in the network. They have to figure out a better way to deliver video. We aren’t just a dumb pipe, but can’t forget about the value of the pipe.”
- Kyle South explained that they have an older, less educated population that hasn’t traditionally embraced broadband. Online video is driving growth opportunities for their broadband .
- John Andrews – They are watching how the cable industry will mold its offering to include multiscreen video services (TV Everywhere). One key question for them is whether they want to do the transcoding.
- Mark Walter – Imparting the value of legacy and instilling values are a key to developing new leaders. He suggested that sound financial management is important and he would recommend an accounting degree.
- Levi Maaia indicated that a particular degree wasn’t critical, point out that his mom was a school teacher before taking over the business when her father passed. He said, “There was no blatant grooming, just modeling and that there is no way to force a previous generation to take over a business.”
- John Andrews – Regarding the values he tries to impart to his sons is that, “It doesn’t matter what your position is, just work.” He tries to, “Teach them (his sons) the caring characteristics so that some day they can step in his shoes.”
- Mark Walter – “The biggest challenge is growth; the big question is figuring out the best way to grow; organic or acquisition. If you don’t grow, you are dying.”
- Kyle South – “Bandwidth issues are the big challenges”.
- Levi Maaia – “That the Cable TV model being imposed on the Internet is his biggest concern [i.e., when cable programmers charge fees for all broadband subscribers in order for the broadband provider to offer the programmer’s programming]. Have to be careful with this, as it could affect the affordability of the Internet.”
- John Andrews – “Getting bandwidth to their facility[e.g., the mid-mile from Internet Points of Presences to their location] is a challenge. Need to start building fiber to towns around them and getting fiber closer to the Internet.”
- Levi Maaca – “They are fortunate, because Netflix doesn’t circumvent the need for their core network. The key is to provide the best possible service. Their future competitors need us, more than we need them.”
- Mark Walter “2% of their customer base uses Netflix and [that 2%] Netflix uses 35% of their Peak Bandwidth.” He pointed out that OTT services drive demand for their broadband platform. Still, they are looking for the best way to manage bandwidth and have implemented bandwidth caps during peak times. Walter said that, “Netflix is going to have both positive and negative effects on the industry and overall its impact will probably will be neutral.”
- Kyle South – “Metered billing might be the route they take in the future. Right now, OTT services are sending people their way [in terms of increased broadband penetration].”
- John Andrews – “We are the pipe to the home. and there is a symbiotic relationship between OTT providers and the cable operator’s broadband offering. There is a, “Lot more money in the utility of Internet than the programming of channels.”
- Mark Walter – Continuing to drive the bundle into the home to compete with DBS.
- Kyle South – Customer service is a distinct advantage for his company
- Levi Maaia – DBS is not really the major competitor for them, as a number of the DBS customers also subscribe to Full Channel’s broadband offering. It is important to note, that Cox overbuilt Full Channel in the early 2000s. Maaia’s grandfather describes the situation that led to the overbuild and what it meant in this 2003 letter to the editor.
- John Andrews – 5% of their customers are also customers of DBS. The local channel is a big part of why people subscribe to their video service.
- John Andrews – What we really need is a better experience.
- Levi Maaia concurred with Andrews, when he said the set-top box interface needs to be updated, “Have to make it convenient for the customer.”
- Mark Walter – TV Everywhere is the right direction – exciting to offer all of their video content on these different devices.
- John Andrews – eliminate MSAs and LATAs. Have no use for them anymore. He asked if we can we open syndication, so that the operator can create their own channel.
- Levi Maaia – I would hold wireless licensees to their community obligation – not only for broadcasters, but to the wireless data and phone providers who are taking over the wireless industry. The standards have been relaxed and won’t service the good of the public.
Maaia elaborates on this last point in an exclusive interview filmed right after the panel. Click here to view.