Opportunity or Trouble with C's - CableB2B, CableHome, Canoe?
Cable's pursuit of a homogeneous nationwide interactive advertising solution.

By: Bruce Bahlmann - Contributing Author (your feedback is important to us!)

Created: February 4, 2008

Cable has engaged in a number of efforts to standardize various aspects of its infrastructure, services, and business relationships. One of its latest efforts is known as Cable Access Network Operations Extensions (Canoe). While many details of Canoe remain confidential, Comcast’s Brian Roberts has pitched this to Wall Street comparing cable’s vision for interactive advertising to Google’s Internet search business, in its ability to match advertising messages with a relevant audience across an aggregated set of content.

When I first heard this, my immediate reaction was to question whether Canoe was any different than CableB2B or CableHome. So, rather than retrace already well traveled waters of describing what Canoe is, the goal of this article is to offer some background on these other CableLabs projects and how similar they are to Canoe. The significance of this comparison lies in the fact that both CableB2B and CableHome represent CableLabs projects that failed.

Back Paddling up Cable’s Past

CableB2B specifications sought to cover portions of the business interface between cable operators and providers of services deliverable over the cable plant, through cable modems, advanced set-top boxes, and other technologies. CableB2B was also a convenient project for the cable industry to undertake during a time when federal regulations were tittering on whether to require all cable operators to open their networks to Internet Service Providers (ISP)s whose dialup customers were rapidly migrating to the now widely available cable modem service. Eventually, as federal regulations eased the CableB2B program quietly went away. In the aftermath, vendors who put time and money into supporting the program began to ask questions. Some of the answers suggested that various cable operators involved in the program could not all agree on the business aspects required to make CableB2B successful and that various technical aspects of the project were not all mutually agreeable either. These struggles suggest that when it comes to having multiple cable operators agree to similar business models or even similar interface functionality (as suggested in Canoe) that the mutual agreement will be hard to come by - they are all separate companies after all.

Figure 1.0  CableHome Vision

Shortly after the swirl of CableB2B blended into the stream, CableHome surfaced to mix things up yet again. CableHome was touted as cable’s foundation for future home services (a market estimated at its inception to reach $5 billion by the year 2005) which built upon entry level features of residential gateways to offer zero customer configuration, cable operator management, and was designed to support advanced QoS sensitive PacketCable services. While the cable industry did what it could to capture the interest in some vendors to build, certify, and deploy CableHome devices, noticeably absent from the program’s inception was the full support and involvement of the Consumer Electronics (CE) industry. CE already had other plans in the works (namely UPnP and DLNA) and as a result was less than enthusiastic to follow through with building custom devices that would only work within cable systems. In the end, it wasn’t the concept of CableHome (see Figure 1.0) that failed but rather the cable industry’s inability to rally CE to build devices that would only service such unique features within a cable system.

CableHome also brought into question the possibility that beyond DOCSIS and the early versions of PacketCable the days of cable rolling its own successful standards are coming to an abrupt end. In fact, many of CableHome’s zero customer configuration features were already part of a much more comprehensive standard (TR-069) championed by the telecommunications industry. Similar developments in PacketCable and even DOCSIS are taking place as CableLabs increasingly taps into international telecommunications standards such as 3GPP, etc. over rolling its own. So, in light of CableLabs’ increasing alignment with international standards, Canoe could face a strong current in rolling its own standard for interactive advertising as national advertising agencies will likely demand universal standards across industries.

Television market share has also drastically changed in the past 10 years for cable. During this time Satellite companies (DirecTV and Dish) have surpassed individual cable companies in terms of numbers of digital television subscribers (see Table 1.0) and Verzion has climbed to a respectable level in just a couple years. Today only 8 operators in the US serve 1 million or more digital television subscribers. Cable operators provide digital television services to 50% of the subscribers in the US followed by Satellite operators with 48% and lastly by the lone telephone operator (Verizon) with 1.6%.

Table 1.0 US digital television providers with more than 1 million subscribers in 2007 (Source Birds-Eye.Net)

While cable’s command of 50% of digital television subscribers in the US is more than Google’s 43% of online search, the big difference is that Google doesn’t need to orchestrate a business and interface agreement between 5 different cable operators as well as engineer such a system in preparation to present something compelling to advertisers in the case of Canoe. Instead, Google is truly a one stop shop for online advertising with unprecedented nationwide (as well as global) reach. Table 1.0 reflects only cable’s digital subscribers as cable’s basic subscribers who use analog cable services or non-digital set top boxes wouldn’t be eligible to receive interactive advertising.

Forward stroke or backwards stroke?

Cable’s foray into standardizing something other than cable infrastructure is not a new concept (see Table 2.0) and while there are examples of successes (such as Go2Broadband), there seems to be a narrow margin of error between success and failure. Go2Broadband was a success because of its simplicity and mutual benefit it provided for all active members.

Table 2.0 Cable’s special standardization products

From a national advertising perspective, the consensus is that there is already plenty of opportunity in cable to advertise on the national level. However, at the regional or local level such opportunities are much more expensive and much less efficient. Cable advertising is generally cheaper than other national advertising outlets, so if cable goes out and strings together multiple operators that could lower the costs of advertising at the regional or local level that would make advertising in cable more interesting.

Conclusion

From the perspective of overcoming obstacles encountered by CableB2B and CableHome, project Canoe faces with the prospect of traveling up stream without a paddle; as overcoming sensitive mutual agreements from a business, operations, and technical perspective will be challenging. These challenges combined with cable’s dwindling market share only make the boat that much smaller. A much better standard would be one that all providers of video (cable, Internet, Telephone, and Satellite) can agree on rather than just one industry trying to standardize its own interactive advertising system.

From an innovation standpoint, cable industry gets kudos for endeavoring to carve out a market for itself in the national interactive advertising marketplace. One would just wish that they had thought of this sooner as the prospects of multifaceted agreements across vastly different companies to achieve a unified interactive advertising front seems unlikely – especially if such agreements are required to battle an enemy with none of these obstacles. Perhaps all project Canoe really accomplishes is forcing the hand of the larger operators to further consolidate rather than cajole more agreements and/or alliances among its elite. On the other hand, the worst thing that could happen is that project Canoe further slows or stifles one of cable’s biggest remaining advantages – its collective ability to act independently and appear to larger telephone companies not just as another large foe it needs to knock out but rather as many strong companies, each of which can come up with different innovative solutions that make it nearly impossible to compete with a one dimensional product line.

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