Video 'Pulls Through' Broadband Customers – CenturyLink's Sklar

Steve Sklar is a video guy. He's been involved with developing video services for the past 25 years, both with content providers such as HBO and Starz, and with operators including Insight Communications, Cablevision, Qwest and now CenturyLink Inc. (NYSE: CTL). As such, he has a great perspective on the role of video and how network operators can best fit in a rapidly evolving video value chain.

Telco Transformation tracked him down following his contribution at BCE in May for a follow-up discussion on the role of video for service providers. (See CenturyLink's Sklar on Navigating Partnerships & Customer Experience for OTT Video.)

It's an important topic, as video is an expensive and complicated business. Not only does content cost a lot to aggregate, it's a complex process, often with difficult negotiations involved. And it's a fat, unforgiving service, requiring substantial bandwidth for a high-quality end-user experience.

So is it even worth offering? Are service providers better off just ignoring video, and just focusing on managing their network for broadband services? We put that question to Sklar.

Telco Transformation: Do you think service providers should offer video services? And why?

Steve Sklar: We're seeing a massive amount of video on our networks, and it's growing rapidly. So from a service providers point of view, we are looking for ways to manage it, and to monetize it. In a sense, offering our own video services offers us a way to monetize the video content [which will be going over our network anyway].

We see ourselves primarily as a broadband provider, but video is arguably the fastest growing, and arguably the most important app, on the Internet. By bundling video with our broadband service, we have an opportunity to sell more broadband and provide a better customer experience and also potentially have a "stickier" subscriber.

So getting into video is to do with offering customers choices and services they want. It's not that getting into video will suddenly make us a lot of money, it's more about the bundling value proposition -- the pull-through of broadband, the value of broadband.

TT: How has that bundled broadband and video value proposition worked with Prism? (CenturyLink's IPTV service)

SS: Prism has allowed us to reach new subscribers. More than 50% of Prism subscribers were new to CenturyLink. And they tend to come with broadband, many add voice as well. We get great pull-through with Prism -- and we want to get the same benefits with across the CenturyLink footprint with our streaming services.

[CenturyLink is planning the rollout of a web-based streaming bundle which will be offered in several of its markets, slated for launch later in 2017.]

Plus, there are advantages with a streaming services. We don't need a truck roll, it's a self-activated service. And multi-contact costs with customers are less. And there's another advantage -- it puts us in a position to uniformly market our product across our footprint.

TT: What are your thoughts on new, emerging video technologies like 4K/UHD and virtual reality (VR)?

SS: I do think 4K is something that is coming. We are looking at it, and we have a 4K box for the new OTT service. That's also a bring-your-own-box (BYOD) service, so there's third-party partners with 4K compatible boxes.

But 4K content is limited. We are trying to find more content. And it looks like it's coming; we do have our content partners saying that they are doing more 4K, but it's mostly VoD. We can count 4K linear channels on the fingers of one hand right now. We're keeping an eye on it, in terms of optionality, but we'll see.

VR is interesting but we are more focused on 4K today. We need to make sure the ecosystem is supported first. We could pull the trigger of 4K any day, but VR is a bit further along for us. We're keeping an eye on it [and we'll move if] we see an opportunity for us and our customers. But otherwise still waiting to see how it works.

In terms of other technology, voice search is something we are looking at. We are working with our device partners -- it's becoming a much bigger area with Apple, Google, Amazon all getting into it.

Watch this space for part two of our interview, where Sklar discusses the trade-offs across OTT and more traditional IPTV/pay TV services for an operator, and how best to market and position them.

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation