Charter, Cisco Unveil New Cloud-Based Cable-TV Service

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Charter Communications Inc. unveiled a cloud-based cable-television service backed by technology from Cisco Systems Inc., bolstering the company’s efforts to compete against much larger rivals.

The system is called Worldbox and will let Charter update the look and feel of its services regardless of the set-top box used by customers, the companies said. Charter Chief Executive Officer Tom Rutledge showed the initiative today at the Consumer Electronics Show in Las Vegas with John Chambers, CEO of Cisco, which is supplying data-center and networking equipment to Charter.

“Smart networks make dumb screens smart,” Rutledge said today at a CES presentation. “We can take any kind of device and make it a sophisticated device.”

By using cloud-computing technology to deliver software updates, Charter will be able to add features and content quickly, instead of sending technicians to install new machines in homes and businesses. The approach will let Charter compete more effectively with Comcast Corp. and other pay-TV companies by lowering costs and delivering new products to customers more efficiently, according to Craig Moffett, a founder of research firm MoffettNathanson LLC.

“Charter’s approach is much faster and much cheaper, because there’s no set-top boxes to install,” Moffett said in an interview. “Financially, it’s a transformative strategy.”

TV Services

Charter’s new technology will be marketed as part of its Spectrum brand, and is already in use by 25,000 customers in Fort Worth, Texas. Rutledge told investors in December that Charter planned to make a new video guide available to all of its subscribers by the end of this year, without providing further details.

Comcast began rolling out its X1 service -- which moves some jobs to the cloud and still requires a special set-top box -- two years ago and won’t be done until 2017, according to Colin Dixon, founder of NScreenMedia, a research firm.

“Comcast is bound by what it can run on its set-top boxes,” Dixon said. “Charter will be bound by what it can run in a few data centers.”

Moffett said Charter could save as much as $4 billion by eliminating the need to buy millions of new set-top boxes. That includes the cost of the devices, which range from $70 to $350, as well as the labor and transportation needed to install them.

The cost-savings estimate assumes the new service is adopted for all of Charter’s current subscribers, as well as the 3.9 million new customers it would gain as part of an agreement made with Comcast.

Cisco’s Push

Cisco became a leading provider of set-top boxes through its acquisition of Scientific Atlanta for $6.8 billion in 2006. Cisco has been focusing its efforts on a more software-oriented TV product called Videoscape, built in part with technology from its acquisition of NDS Group Ltd. in 2012 for $5 billion.

“The set-top box is transitioning to the cloud,” Chambers said in an interview. The change will reduce infrastructure costs for Cisco, he said, increasing profits for the company’s video business. Cheaper delivery will spur other cable providers to adopt cloud-based services, he said, though he declined to provide any specifics.

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