The NCTA board picks a new chairman Wednesday, June 13, the closing day of its annual convention. NCTA custom would give the nod to current Vice Chairman Michael Willner, president and CEO of Insight Communications. Insight is the country's 10th-largest MSO, with 1.5 million subscribers in Illinois, Indiana, Kentucky, Ohio and Georgia. With the caveat that sometimes the board bucks tradition and refuses to promote the vice chairman, the 49-year-old Willner recently talked to BROADCASTING & CABLE Assistant Editor Bill McConnell about the issues confronting cable today and NCTA's priorities.
What are the biggest challenges facing the cable industry right now?
It's important that we start acting competitive as opposed to being complacent and relying solely on our core multichannel business. If we don't innovate, we're going to be slaughtered. Once, cable was the only way people could get multichannel television. Today, customers all over the United States have at least two choices and sometimes even more.
DBS has gone from zero to 18% penetration in five years. We have a two-way platform that can do more things than other platforms. We need to exploit that with multiple products for video and voice, such as local phone services and interactive television.
What should the cable industry and NCTA do to promote new services?
To develop new businesses, the industry needs to make additional investments in the interactive digital environment. There are many young, under-funded companies that need financing in what today is a difficult market to obtain financing. Cable operators have to make huge economic decisions to make investments on what needs to happen. NCTA and the industry must make Washington understand that virtually all of the competition anticipated as a result of the 1996 Telecommunications Act has occurred, with the exception of the local phone loop.
We're the only logical option to provide that competition. Too much tinkering with the legislation will only disrupt progress. We need to keep status quo and provide a stable investment environment.
You're asking Washington to give you the benefit of the doubt on prospective business, but how should the industry deal with Capitol Hill frustration over continual cable rate increases?
All we can do is educate legislators that our costs are not necessarily increasing in line with the general rate of inflation. Double-digit increases in sports programming is our highest single external cost. Operators, to keep rate increases below the level of the increase in costs, can launch new services that spread revenue growth over multiple businesses. We have the ability to build new business on the existing platform for relatively small incremental capital investments. That helps us with political pressure by keeping rates relatively stable.
Does product bundling really offer much opportunity? After all, AT&T, once the most dedicated bundler, has backed away from that strategy and is breaking the company into separate parts.
AT&T is still one of most aggressive operators launching bundled products. And it's clear that, once customers take a package of services, they will keep the relationship with a single company and single biller. Customers also understand that buying multiple services will get them a bottom-of-bill discount they like.
Disney and other independent programmers have asked the government to guarantee carriage of their ITV services. Do you worry that the ITV dispute is a harbinger of future disputes between integrated operators/programmers and stand-alone programmers?
The notion that government should regulate a business that barely exists is the most absurd notion I've ever heard. This is exactly the same approach broadcasters took on digital must-carry. If Disney wants to come up with a product that makes sense for cable operators to deliver, they can come in and discuss it, just like they did when they launched Disney Channel. They didn't get regulated into business; they created a product people wanted. Anybody that comes to us with an idea that makes sense is going to get carriage. If you want carriage, deliver a product that cable operators will want to deliver.