March 20, 2006 11:01 PM PST
Customer is king in new telecom era
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During a two-hour keynote session, CEOs from Verizon Communications, Disney, Time Warner Cable and NTT told a packed audience at the TelecomNext trade show in Las Vegas that the future of telecom lies in the hands of consumers who nowadays have more choices when it comes to the content and services they subscribe to and how they use them.
"We're seeing a great shift in how consumers spend money, and our business models need to be flexible," said Robert Iger, CEO of Disney. "It used to be said that content was king, but the consumer is king."
Verizon CEO Ivan Seidenberg said that his company's multibillion-dollar investment in deploying fiber directly to consumers' homes will eventually deliver bandwidth of 100 megabits per second to consumers. He said consumers are already clamoring for faster speeds.
In markets where the company has deployed its Fios fiber network, the company has an average penetration rate of 14 percent, the fastest of any product Verizon has ever launched, he said. In Keller, Texas, where Verizon first deployed its television service, more than 30 percent of potential customers have subscribed since the company started offering the service six months ago.
"The marketplace is telling us that there's a great opportunity out there," he said. "And we are investing to get ourselves on the right side of the big ideas that will push our industry forward."
But as consumers get access to more content, there will inevitably be issues. Iger of Disney and Norio Wada, who is CEO of NTT, the largest telecommunications provider in Japan, voiced concerns over digital rights management.
"Digital piracy needs to be addressed," Iger said. "Without content protection, investment in content can't be supported. We need secure distribution. If you (telecommunications equipment and software makers) help us, we will make it easier for you to distribute our content," he said.
Iger and other CEOs, namely Time Warner Cable's Glenn Britt, also cautioned against interference from the government, which could stifle innovation.
Iger said he supports making it easier for new entrants to obtain video franchises, so long as cable and phone companies are treated equally. He also said that Disney is not supporting new laws to ensure Net neutrality. And he came out strongly against the Federal Communications Commission's calls to offer TV programming a la carte.
"No matter how appealing government regulation may sound, it will be bad for my business, bad for your business, and bad for consumers," he said. "Consumers will be paying more for less choice. The free market is working. There's not policy justification for the government getting involved in how TV offerings should be structured."
Britt of Time Warner Cable said that his company should not be regulated like the old phone companies have been in the past.
"Regulations should be used judiciously," he said. "You can expect us to oppose any regulation that tilts toward one side."
Aside from piracy and overregulation, other challenges await content providers, said Dick Wolf, the creator of the popular "Law and Order" television shows. He said that the current business model in television likely won't work in 10 years, when people likely will be downloading more shows directly from the Web.
"Internet downloads could destroy the current business model for TV syndication," he said. "How much will USA and TNT be willing to pay when the core audience has downloaded the shows a year earlier?"
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