Unprecedented dilemma, what exactly should a cable network do?

Since the launch of the cable digital pilot in 2003, cable network operators have been struggling on the road to digitalization. Today, the entire broadcasting and television industry is facing unprecedented pressure, and cable operators are the first to bear the brunt of strong competitors from the fields of communications, home appliances, and the Internet. The monopolistic advantages are broken, users are lost, and the network is fragmented. The old problems of decentralization, inconsistent standards, and lack of bandwidth exports have not been effectively solved. In the context of converged media, where can cable networks go?

Based on the consideration of practical difficulties, the cable TV industry established the State Grid Corporation of China, launched the TVOS standard, licensed communication services such as broadband and IP telephony, and more and more operators expressed the need to transform from cable TV operators to full media integration. Operators have every indication that the cable TV industry is trying to find a breakthrough point. However, this process is still full of thorns. Opportunities and dangers coexist on various paths. With a little carelessness, a good vision may turn out to be unrealistic. How to break the cable network, how to transform? All industries need to think hard and practice hard.

Cable network faces unprecedented difficulties

In the era of disruptive changes in the broadcast and television industry, cable operators are also facing unprecedented difficulties, and their basic logic of survival is being challenged.

For a long time, the revenue mode of the cable industry is based on basic subscription fees. The business model is single. The increase in revenue comes from the increase of new users rather than the expansion of new services. However, with the increase in the number of cable TV subscriber bases, the growth rate is getting smaller and smaller, and new subscribers are weak in growth. Statistics show that in 2013, the number of cable television users in China has reached 230 million, and the average annual growth rate has decreased from 8.86% in 2007 to 6.14% in 2012. What is even more serious is that under the impact of the Internet, existing users have begun to lose. More and more households have started to choose IPTV, Internet TV, and online video to watch radio and television programs. The core competitiveness of cable networks is weakening. Correspondingly, the reduction in the growth rate of the entire cable industry has dropped from 21.95% in 2007 to 14.21% in 2013. It can be seen that the cable-based model, which is mainly based on subscription fees, is experiencing ceilings, and the lack of growth has become a common phenomenon in the industry.




Even so, the wired network still maintains a fragmented network structure and widely varying technical standards. Even if it is a provincial network that basically completes provincial network integration, it is difficult to realize the interconnection and interoperability of the network and a unified technical standard, not to mention the national one. Zhang network, interconnected.

At the same time, the basic conditions of the network are still weak. Although digital transformation has taken more than a decade, there are still a few networks that can support two-way services and have broadband service capabilities. By the end of 2014, of the 230 million cable TV subscribers in the country, there were 187 million digital television users, of which only 37 million were bi-directional users, while broadband users were only 10 million, accounting for only 4.3%.

How can such weak network infrastructure meet the competition from the Internet and communications industries? How can you support diversified converged services? How can I become an integrated media operator? It is time for the cable network to make major changes.

Where does the cable network go?

Cable networks that are in demand for change are seeking breakthroughs in terms of networks, services, and operations. They have found some feasible breakthrough points in each area, but they also face many problems that need to be resolved.

High quality network is the basis for the development of cable networks

For cable networks, a high-quality network is the basic condition for the development of the entire industry. The so-called high-quality network, there are several basic requirements: interconnection, unified standards, two-way broadband, wired and wireless convergence. Only in this way can it be possible to support the converged media business in order to become the country’s fourth basic information network that competes with communications operators. To this end, the cable industry established the China Radio and Television Network Cable Company (abbreviated as “State Grid”), launched the unified standard intelligent operating system TVOS, actively developed broadband services throughout the country, and began to explore and integrate wirelessly. These actions are all important Strategic significance, but it also faces many problems in actual operation.

1 Question 1: Internet interconnection, State Grid can do it? How can I do it?

On April 17, 2014, the State Grid officially registered. The important significance of the establishment of the State Grid is self-evident. The cable network urgently needs an operating entity to participate in the competition of triple play, and at the same time lead the development of the national cable network, break the limitations of the cable network only in the development of the region, realize interconnection, and play a role in the network. Scale effect. However, after the establishment of the State Grid, it has not received unanimous praise. The road of difficult network integration over the past decade has caused the entire industry to doubt the integration of the network. How can the State Grid solve the problems of network integration and realize its vision?

If you want to start from the perspective of integrating network assets, you will find it almost impossible. To integrate the network, there are no two ways: administrative allocation or capital acquisition. However, for the State Grid, it is allocated by administrative means? No, cable networks are the assets of provinces and cities. Buy by capital means? There are only 8 existing listed companies in the line system. The total assets are close to 70 billion, the market value is more than 200 billion, and the state-owned network is only 4.5 billion registered capital. What acquisition?


So, is the State Grid just a decoration? Obviously not. If you open up and integrate, you will find that the State Grid still has a lot to do.

First of all, the State Grid can apply for the relevant business qualifications on behalf of the broadcasting and TV industry. Even today, cable companies want to do broadband, telephone, and other services. They are still lacking qualifications and have difficulty in the examination and approval. As the nation's main operating entity of the cable network, the State Grid can start from the perspective of applying for qualifications and help the nation’s cable network develop. The qualifications required for various value-added services are applied for, and the qualification barriers are cleared for business development.

Secondly, the State Grid can also start with value-added services and help cable networks to carry out some cross-regional and national value-added services, bringing new growth points to the industry.

In addition, the State Grid can initiate wired network interconnection projects to speed up the scale development of the wired network. The State Grid should not engage in grabbing services from the ground network. Instead, it should focus on interoperability and network, technology, business, operation, and management to achieve physical interconnection between the backbone network and the distribution network throughout the country, and to unify technical standards. Cross-regional transmission scheduling and unified settlement of various businesses and contents ensure the sharing of benefits in the industry chain.

In order to implement interconnection and interoperability, SARFT has put forward the “136 Project” plan a few years ago, namely: a center, referring to the national cable television network content distribution exchange center; three systems, referring to the national cable network operation support System, national cable television network content management system, and national cable television backbone network transmission and switching system; six types of bases, referring to radio and television content integration bases, cultural resources integration bases, digital television publication integration bases, and digital television interactive education content integration Base, integrated information service base, digital television Internet content integration base. After the project was put forward, it has been lacking in the implementation of the main body, and the State Grid can precisely implement the implementation of the “136′′ project to promote the realization of the real interconnection of wired networks.

From this point of view, the State Grid still has a lot to do. The key is to do what local cable networks want to do. If the State Grid can really lead the nationwide cable network to achieve interoperability, expand nationwide value-added services, and promote the development of the cable television industry, it is not entirely impossible at this time to talk about network capital integration.

2 Question 2: Unified standards, how to start?

Since the digitization of the cable network, various standards have not been unified and it has been restricting the development of the industry, further hindering the scale development of the business, and unified standards have become the consensus of the industry. But where do you start to unify standards? On the one hand, the State Grid has been placed in the hope of doing a unified standard. On the other hand, SARFT, as the industry's competent authority, has also begun to promote the unification of standards. The introduction of the TVOS based on the unified technical standards of the TV operating system is a Important progress.

The TVOS 1.0 version was launched at the end of December 2013, and began to scale application trials in July 2014. Shanghai Oriental Cable and Shaanxi Radio and Television Network have become the first experimental networks. The General Administration of Radio, Film and Television requires that, in the future, smart terminals such as OTT set-top boxes issued by cable operators around the world should install TVOS and install other operating systems other than TVOS. In this way, the unified intelligent terminal standards are ensured. Currently, operators everywhere are replacing traditional set-top boxes with smart terminals. It can be foreseen that the TVOS operating system based on the unified standard will become the mainstream, which will further promote other related standards. Unite. According to the plan, by the end of December 2015, the more powerful TVOS 2.0 will also be market-oriented. If most of the cable operators can join this rank, a unified standard set-top box will be possible.

3 Question 3, broadband is very important, but how to get rid of the situation of working for telecommunications?

For cable networks, broadband services are crucial. As long as the user's home broadband access is from the cable network, even if it accesses the Internet company's OTT box to watch TV, it is still a cable network user, and the ARPU value of the broadband service is much higher than the TV subscription fee. Therefore, cable operators should not only stare at TV services, but should also focus on supporting comprehensive business information network service providers.

However, cable network operators have many doubts about broadband services, mainly because they do not have bandwidth exports. According to industry insiders, if the practice of buying traffic from telecommunications is tantamount to working for telecommunications, many cable network operators have little interest in developing broadband services.

In order to solve the problem of being controlled by people, the wired network in some places has started to build its own IDC model, such as Hunan Cable. Through self-built IDC, it can be achieved that about 90% of the traffic comes from the intranet, and only 10% of the traffic needs to be leased by telecom, which greatly reduces the cost of broadband services. Coupled with the increase in service levels, Hunan Cable currently has more broadband subscribers in some counties than the number of broadband subscribers of local telecom operators.

It can be seen that in the broadband market, the cable network is not completely passive. Only by truly opening up broadband services can the value of cable networks be truly enhanced and cable operators can truly become integrated information service providers. At present, the broadband service of the cable network has only just begun. There are only 10 million subscribers in the country, and the number of broadband subscribers in the telecommunications industry is about 200 million. There is still a long way to go.

4 Question 4: How to integrate wired and wireless?

The mobile Internet is the future. This is no doubt. For a fixed-wired home network, how to achieve convergence with the wireless network has become a problem that must be considered.

Within radio and television, there has always been a "small three-network convergence" of cable, wireless, and satellite integration. Wired networks need to jump out and look at problems from a larger perspective, considering convergence with wireless and satellite networks. The State Administration of Radio, Film, and Television (SARFT) is currently actively promoting the technical research of the wired and wireless converged networks, and is preparing to build an intelligent and converged all-media service pilot network in areas where conditions permit, to conduct application demonstrations, and to explore new services, new services, and new models.

Currently, cable operators can use WiFi technology to integrate with wired networks. Through the WiFi-enabled smart gateway, a multi-screen interactive home network can be formed indoors through WiFi, and wireless broadband access can be achieved through WiFi hotspots at public locations. The cost is low and the operation is simple. It is an extension of cable operators to the wireless field. The important means and basic technical route.

Business Development Keywords: Internet Thinking, Platformization, Alliance

From the point of view of business development, cable network operators generally realize that they cannot be limited to broadcasting and television services, but must be transformed into comprehensive information service providers and all-media operators. Therefore, it is necessary to unite all parties in the society and use Internet thinking. establish plantform. In this process, there are still many issues that need attention.

1 Question 1, how can we become a platform?

As a platform, it seems simple to do. The so-called platform is the connection bridge between the supply and demand sides. Both the supply and demand sides must be your users. In the past, the wired network was accustomed to being closed and everything was done by itself. During the digitalization process of more than ten years, this phenomenon has improved. Many value-added services on the cable network have adopted a model of external cooperation, but the problem is that if To your platform, users do not have to, business developers do not have a good income, naturally can not become a platform. In order to become a platform, the prerequisite is to have a scale, have users, and have enough business.

To attract users and form scale, you can refer to the business development model of Internet companies. Unlike cable networks, which rely on their own development to accumulate performance and then invest in construction, Internet companies generally use free models to attract users at the initial stage. At the same time, they use future expected returns to attract capital investment, and use capital investment to further expand their business scope. The scale of users will generate revenue.


In order to retain its own user and portal advantages, it is obviously not enough for the slow development of TV viewing services. Various operators have launched smart terminals to develop broadband services. Is it possible to refer to the practice of Internet companies in this process? From the perspective of platform and user scale effect, attract more social capital and business operators to join?

2 Question 2: With whom? How to unite?

At present, joint development has become more and more common in the operation of cable networks.

There are three common ways:

One is to unite with Internet companies, such as the strategic cooperation between Huadian and Ali, and several companies have introduced Alipay as a means of television payment.

One is to cooperate with Internet TV licensees and introduce OTT services to form a new business model of DVB+OTT.

Another is the cooperation between cable network operators, such as the “China Radio and TV Friendly Network Alliance” established in 2010, the “Digital Cable Television Advertising Alliance” established in 2013, and the launch of Gehua Cable in 2014. "China Television Academy Line Alliance" and "National Video Game Alliance" initiated in April 2015. These joint development methods have brought good help to the cable network business.

However, from a historical point of view, many alliances within the broadcasting and television system are subject to the historical conditions of division and individual warfare, and it is difficult to coordinate the distribution of interests, resulting in the union floating on the surface, and it is difficult to implement it in depth. The various coalitions and alliances that the cable networks participate in must have a reasonable interest distribution mechanism to bind everyone together so that the coalition can really advance in depth.

Operation: How to use capital market effectively

From the point of view of the company's market-oriented operation, more and more cable network operators have chosen to integrate with the capital market. At present, there are already eight A-share listed companies in the cable network system, and Guizhou Province is queuing for IPO. After the listing, these companies have obtained more convenient financing channels, and also invested more in other businesses through the way of holding shares. All these have helped the development of the cable network and become effective in promoting the market-oriented operation of the cable network. means.

For example, in 2014, Hua Digital Media obtained a total of 6.5 billion investment from Ma Yun and others for the construction of a media content center construction project and a national expansion project for China TV’s TV Internet TV terminal. Gehua’s cable business will increase by RMB 33 billion in March 2015. In the construction of high-quality copyright content platform construction projects and cloud service platform upgrades and application development projects, in April 2015, Jiangsu Cable IPO raised 3.2 billion yuan for the province's cable network integration, etc., all of which are examples of using capital markets to promote business development.

At the same time, it must also be clearly seen that listing is not the purpose of the cable network. It is an important issue whether or not the listing can help the development of the company. From the perspective of the development of many listed companies, there are also companies that have been listed for many years but whose performance has been flat. At this time, listing does not bring much help to the development of enterprises. This requires reflection. If, after the listing, it has disrupted the original intention of doing business in a down-to-earth manner, it would have been even worse.

Conclusion

In summary, the cable network actually has a lot of things to do, but each road is also full of thorns. The cable network itself is constrained by many aspects such as institutional mechanisms, and many places have not enough momentum for change. For cable networks, the development path has always been the same. The key is whether or not to do it. The status quo, the key window of development is slowly disappearing and closing. If we do not seize the time change, we will not continue to advance on the old road. The next thing to consider is whether we can achieve glory and dreams, but whether we will survive or die. Now.

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