Further adventures in video

I have always been a big fan of telcos' video strategies. Even though their video strategies have shown no worth as investments and seem to change as often as most TV viewers change channels, I continue to be a hopeful fan.

If you are a loyal Telephony reader, you should not have to ask me why I feel this way. I first documented my stressful and otherwise enormously annoying travails with my local cable TV company in these pages more than 18 months ago (Telephony, Sept. 9, 1996, page 36).

But this isn't just about me. I know others out there are tired of inactive customer service, inconsistent service quality, billing snafus and other problems that they have never had with their telephone companies.

A year and a half ago, salvation seemed to be waiting around the corner. Just about every major local telco had some kind of video plan, whether it was owning TV facilities or constructing its own video networks.

These telcos saw video as an easy sell and salivated at the idea that they might be able to woo a double-digit percentage of the cable TV market away from the big MSOs while maintaining near monopolies in their core local telephone markets.

The telcos, in fact, were so ambitious and hopeful about video that they joined massive programming consortia spiced with executive talent from Hollywood. The most ambitious among them were so gung-ho about content development that they virtually mocked fellow carriers less sure about parti-cipating.

These days, telcos are still trying to get into video. Certainly, some are already there in one way or another, but nothing has happened quite the way anyone predicted. The viability and popularity of Internet-related ventures are partly responsible for taking telcos' minds off video.

But mostly, the empty promise of video can be pinned to the fact that telcos did not try hard enough to understand the spirit of the video business. Or perhaps they tried too hard, surrounding themselves with every possible aspect of the business-window dressing they often didn't need-and hoping that magic would happen.

Their innate fear of risk allowed them too little time to succeed. Cable company ownership took them on a stock market ride through hell. Video network construction was a somewhat valid idea with, in most cases, misguided direction that had telcos challenging cable TV companies only in their strongest markets-1980s boom towns virtually built for cable TV networks, rather than the other way around.

These customers are the least likely to care about discount pricing that might be associated with bundled services. In fact, cable TV is water to many of these people-a natural necessity they pay for, consume and take for granted.

Going after the cream of the crop is a good idea only if you have a serious edge, and only if you are willing to flood the marketing channels, which telcos were not. Otherwise you need a broader strategy. You should go after the low-hanging fruit-anyone, any where who wants out of the cable TV miasma (and there are many)-prove your ability to run a sound business, and watch your reputation grow.

Having said all that, maybe success is just around the corner again.

Early last month Bell Atlantic and SBC signed distribution agreements with satellite video provider DirecTV and programmer USSB.

These deals require nothing of telcos that they don't already know. They need to maintain and improve network facilities and take responsibility for service performance, but they are not spending more money than their risk alarms would allow, and they are not would-be Golf Channel auteurs. Their responsive customer service models will serve their new customers well. Best of all, they can start selling DirecTV virtually overnight without giving it more time or priority than their quickly escalating data transport businesses.

It will be interesting to see if other telcos move in the same direction. They may find that the video business is best addressed as a low-risk secondary project requiring secondary commitment, rather than something they must own, import in entirety or recreate on a vast scale. They can gradually take advantage of a new revenue model while giving a choice to the customers who want it most.

I know I'm still waiting for mine.