July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

U.S. cable giant Liberty Global has agreed to purchase hot U.K. cable and broadband provider Virgin Media in a $23.3 billion cash-and-stock deal, the two companies announced this morning.

The consolidation of these two companies, if approved by regulators, will create a company with 25 million customers across 14 countries. That would make it the largest cable and broadband company in the world outside of China.

Liberty Global expects that the new entity will become a powerhouse in offering digital TV, broadband and telephone services to homes and businesses. However, Virgin Media will keep its name and brand.

“Adding Virgin Media to our large and growing European operations is a natural extension of the value creation strategy we’ve been successfully using for over seven years,” Mike Fries, President and CEO of Liberty Global, said in a statement. “After the deal, roughly 80% of Liberty Global’s revenue will come from just five attractive and strong countries — the UK, Germany, Belgium, Switzerland and the Netherlands.”

The deal is so big that Liberty Global will “relocate” from Delaware to the U.K., but it will still retain its U.S. headquarters. Liberty Global will continue to be listed on the Nasdaq stock exchange but it might also add a listing to a European exchange too.

Under the agreement, Virgin Media shareholders will get $17.50 in cash, 0.2582 Liberty Global Series A shares, and 0.1928 Liberty Global Series C shares for each Virgin Media share they hold.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Cable companies such as Comcast and Cox need to take a good look at their technology as streaming services Netflix and Hulu take away their profits. In order to avoid becoming obsolete, it makes sense for cable companies to recycle their infrastructure into home automation.

Conceptually, most people are intrigued by the possibilities of home automation. The ability to program a home environment to automatically adjust to optimal comfort levels while performing a variety of other useful functions is no longer a far-fetched vision reserved for future generations. Rather, this technology is available now. While we expect home automation to rapidly spread in the next few years, it is currently only being used by a small percentage of homeowners. Cable companies, however, just may play an integral role in bringing smart home technology to the masses, especially now that major players such as Comcast and Cox are so deeply invested in its growth with products like Xfinity Home.

Despite the popularity of streaming content, cable providers have managed to maintain respectable positions within the industry, but recent leaps into the smart home market may just be a sign of things to come for future cable television companies and home automation, in general.

Home Security and Automation

According to Parks Associates, which provides analyses on the home security industry, a quarter of all American households are currently equipped with home security systems. The industry’s largest growth occurred in the years just prior to the nation’s housing crisis, according to a report on the Parks Associates website. Since then, however, the home security industry has experienced a marked decline.

But as long as crime exists people will surely want to protect themselves against it, right? Which is why quality home security devices are still a good bet in the marketplace.

Where most are familiar with the home security market, the automation industry, on the other hand, is just getting started. According to a recent article on Reuters, only three percent of homes in the U.S. are currently equipped with smart home technology, but this number is expected to reach double digits in just the next few years. Globally, this cottage industry could explode. It’s only found in approximately 16 billion homes now, but the market forecasts it will control more than 36 billion home environments worldwide by 2016.

Adapting To a Changing Landscape

Neither Comcast nor Cox are likely the first — or even the second or third brands that cross one’s mind when contemplating home security. Once upon a time, however, neither was American District Telegraph, which is now known simply as ADT. Before becoming one of the most recognizable brands in the home security industry, ADT actually helped expedite telegraph deliveries. Failing revenues at the beginning of the 20th century prompted the company to focus its efforts in a new direction, namely money remittance as it became a subsidiary of Western Union. It wasn’t until the company’s communication and remittance services were sold to AT&T that ADT finally entered the home security sector in the early 1900s.

With this in mind, it doesn’t sound all too unusual that leading cable companies are beginning to edge their way into home automation and security markets.

As one industry begins to decline, new ones emerge. Historically, the only companies that survive fading markets are those that are able to identify inevitable shifts in consumer trends while at the same time demonstrating a willingness to adapt to new ones. This is particularly true of the tech industry which, at times, tends to move at exponential speeds while often causing new businesses and products to rapidly surpass those with more traditional growth models. Then there are those unexpected events where systems that are deemed to be the hottest and the best today literally change overnight into newer and sexier technologies.

Cable Companies Help Consumers Embrace Home Automation

When we reached out to Comcast to ask why the company chose to offer a home security product with its new Xfinity service instead of one geared strictly toward entertainment, Comcast’s Senior Manager of Corporate Communications, Jamila Patton said, “We continue to look at ways to bring innovation and value to our customers. We feel that home security is a natural extension of our sophisticated network because it allows us to leverage our existing infrastructure to develop new integrated products for our customers.”

Not everyone is tech savvy and many are plain unaware that tools allowing them to remotely control a home’s environment are even available in the marketplace. A lot of people simply do not know that they can turn lights on and off, regulate a home’s temperature, or view every room inside of a home while at work or even while on vacation hundreds of miles away. Of those who do know that such technology exists, many expect it to be expensive or much too technical to install in an existing home.

When cable companies offer affordable home automation and security products to their existing customer bases, much of the fog that separates consumers from the smart home market begins to dissipate.

Currently, both Comcast and Cox offer wireless remote home automation services which include 24/7 alarm and video monitoring, door and window sensors, environmental controls such as lighting and heating adjustments, as well as the ability to receive notifications whenever a door or a window is opened in a home after the security system has been armed. It helps that all of this is controlled by a tablet-like remote and that it can also be accessed on smartphones and tablets via free apps offered by each company. This sort of control is likely to be attractive to consumers who cannot let a new gadget pass them by.

Operating Outside Of the (Cable) Box

Comcast and Cox are real-time examples of major corporations using “the pivot” to their advantage, not wanting to go the way of companies like Kodak or Block buster. At least they are attempting to.

Comcast is no stranger to operating outside of the cable box. In addition to subscription television service, the company already offers voice and data services, controls a broadcast television division, which includes major networks Telemundo and NBC, and operates a large film division, which includes Focus Features and Universal Pictures. It owns Universal Studios in California, a major athletic arena in Philadelphia, as well as other restaurants and retail businesses. After giving the cold shoulder to Netflix earlier this year, it also launched its own streaming service, Xfinity Streampix. All this in addition to its home automation services.

This also isn’t Cox’s first go-around either. Its parent company Cox Enterprises started in newspaper publishing and still owns several television and radio stations. Cox also offers voice and data packages, invested in the automobile auction industry through its Manheim and Auto Trader brands, and once entered the 3G wireless phone market. It dismantled that service in March of 2012, however.

Being that cable television is already an integral part of so many households, companies like Comcast and Cox are undoubtedly hoping to transfer a great deal of brand recognition to their new home automation and security services. Whether they succeed or fail, though, ultimately they will bring awareness to home automation, and hopefully ignite a fire under the still-growing trend of home security technology.

Madison Parker is a security industry expert who’s been following the progression of the home automation industry on her site HomeSecuritySystems.net.

Home automation image via Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Yet another report has surfaced indicating that Apple won’t be releasing a new Apple television device this year, or for the foreseeable future.

The new device allegedly would mix the innovation and developer enthusiasm of Apple’s App Store for iOS devices with the current pay-TV subscription cable and satellite services. However, to accomplish success, Apple needs to forge partnerships with the media companies that produce popular TV content and ally with a cable TV provider allowing Apple’s new device to be used in place of a regular cable box.

Thus far, Apple hasn’t been very successful in its negotiations with media and cable companies, which put its plans for a revolutionary TV device on hold for the time being, according to a recent Bloomberg report. One of the main disagreements centered on how to sell the device. Apple obviously wants to sell it directly to consumers via its online store and many retail locations. Cable companies, on the other hand, are leaning towards distributing it along with a TV service agreement.

Bloomberg’s report lines up with early information indicating that Apple was hitting a brick wall in its content licensing discussions with major broadcast networks, as VentureBeat previously reported.

Some speculate that Time Warner Cable was the most likely candidate to partner with Apple, much in the same way that the technology giant partnered with AT&T to launch the iPhone.

Regardless of what Apple’s plans are for the television industry, it seems we won’t see any solid developments for quite a while.

Apple iTV mockup by Guilherme Schasiepen/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

As much as cable companies don’t want to admit that their users are getting rid of traditional TV and using services like Netflix and Hulu to fill their watching needs, new research shows North Americans dropping cable at a fast clip.

A new report titled, “The Battle for the American Couch Potato: Online and Traditional TV, and Movie Distribution” from Toronto-based Convergence Consulting says 2.65 million Americans cut the cord between 2008 and 2011, with more than a million leaving cable in 2011. By the end of 2012, that number is forecasted to reach 3.58 million cord-cutters.

Between 2000 and 2009, cable companies in North America added an average of about 2 million subscribers a year, but lately, growth has been slowing sharply. Subscriber growth for cable considerably slowed from 2010 to 2011, with 112,00 subscribers added in 2011 from 272,000 added in 2012. But on a mixed note, the report forecasts 185,000 additions will happen in 2012, some of which could be people returning to cable after trying the cord-cutting lifestyle. (It should also be noted that Leichtman Research Group has counter research that says major U.S. cable companies added 380,000 subscriptions in 2011.)

Although the stagnation of cable subscribers might seem like good news for Netflix and other video-streaming services, the report also had bad news for them. The research suggests the audience for free full-episode sites like regular Hulu “has started to plateau.” It also suggests paid services such as Netflix are screwed because of the high cost of programming. The only way Netflix can overcome new cost barriers will be to “achieve sufficient subscriber/revenue growth.”

As a cord cutter myself, I identify greatly with this data. I miss my cable subscription and access to live entertainment and sports events. I’ve adjusted to using free and paid streaming services, but I’ve seen the quality of Netflix’s content decline over time, especially with its loss of Starz as a partner. Thankfully, Netflix CEO Reed Hastings might be looking at alternatives to find a coexistence between the cable and streaming. I for one, would welcome such a truce.

Cord cutting photo: GoodLIfe_Studio/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

After conspicuously losing its bid to acquire T-Mobile, AT&T is still out in the cold when it comes to wireless spectrum. But a new report says the telecom company could now buy Dish Network at a considerable premium to obtain its highly coveted spectrum.

AT&T’s primary motivation to buy T-Mobile USA was to get access to that company’s spectrum, a high-value commodity that makes it possible for customers to make calls and send and receive wireless data. AT&T simply doesn’t have enough 4G spectrum to provide a good experience for future customers, especially if its customer base grows. Chief AT&T rival Verizon Wireless, on the other hand, has much more spectrum available thanks to an enterprising $3.6 billion deal it made with cable companies.

A Dish Network acquisition, as first written about by Bloomberg, could be the solution to AT&T’s woes. Dish owns lots of wireless spectrum to deliver its television service to customers and it even has talked in the past about partnering with T-Mobile to offer wireless phone service.

Bloomberg’s report suggests AT&T could pay as much to $50 a share for Dish, which would be a 77 percent premium. That would be the biggest acquisition premium in more than a decade. Dish’s stock is currently trading at about $29 a share.

Other options for AT&T (or its rivals) to get more spectrum could be to purchase regional carriers or mid-size carriers like MetroPCS, Cricket, Leap Wireless, and Clearwire. But Dish would be easier to get regulatory approval from the government versus a carrier, because we all know what happened last time.

Do you think buying Dish would be a good move for AT&T?

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Communications giant Verizon is scaling back efforts to grow its FiOS television and Internet services, according to comments made by the company’s Chief Executive Lowell McAdams during the UBS Global Media and Communications Conference in New York Wednesday.

McAdams said the company will end its wireless LTE partnership with DirecTV in favor of new agreements with major cable companies Comcast, Time Warner and Bright House, reports the Washington Post.

Under the terms of that new agreement, Verizon will pay the three cable companies $3.6 billion to license a portion of wireless spectrum currently not in use. In return, the cable companies will cross-market Verizon’s phone, video, Internet and cell phone services to its customers.

Verizon also plans to stop building out the infrastructure for its FiOS services, McAdams said. There are two main reasons for this decisions: One, FiOS directly competes with big cable companies, and two, Verizon would rather spend its money expanding its wireless business instead of the expensive costs associated with building out the FiOS infrastructure.

McAdams said Verizon intends to maintain and promote FiOS within existing markets. However, judging by Verizon’s current strategy, it seems more likely that the FiOS portion of the business will get split up and sold off eventually. That’s sad considering the lack of high-speed Internet options available in the U.S.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

If Apple is planning an interactive television, former Apple executive Jean-Louis Gassée has a pretty good idea of how it will work.

Gassée’s explanation, on his “Monday Notes” blog, takes a little careful reading, but it builds a compelling argument that Apple can — and probably will — make a set-top box, which he calls the iTV, that will cut cable providers out and replace their bundles of channels with apps that you purchase and install.

Gassée starts with the insight that 40 percent or more of smartphone and tablet customers use their devices while plunked down in front of the television. That means there’s an opportunity to use those gadgets as the interface for controlling the TV. Meanwhile, people are fed up with overpriced cable TV packages filled with junk they don’t care about, and they have a proven interest in on-demand video — just look at the success of Netflix and Hulu.

What’s needed is a device to bring it all together. Gassée argues that could be some version of the current Apple TV. Instead of flipping channels, you’d install, say, the “60 Minutes” app on your set top box and iPad. Then you could access the current week’s show, scrub forward and back through it, pull up the entire archive of past shows, and interact with the content in other ways.

Whenever you chose to show a new clip or show, your iPad would send commands over Wi-Fi to the iTV. The iTV would then download your show over the internet and display it on the TV.

“With channels as apps, all you need is a net connection (sometimes provided by the cable operator). You can throw the set-top box away,” Gassée writes.

It’s an interesting hypothesis, and Gassée’s hand-sketched illustrations make it especially clear how an iTV would differ from the current set-top box model.

However, Gassée’s insight into Apple’s actual workings are probably fairly limited: He left the company more than 20 years ago, in 1990, after which he founded Be, Inc. He is now a venture partner at Allegis Capital.

Also of note: Gassée’s not convinced that Apple is going to make an actual television. He thinks the model that it currently uses, of adding a set-top box to your existing TV, is more likely.

Image: Sketch by Jean-Louise Gassée showing how iTV could fit into your TV and Wi-Fi network.