? MCTV is deploying fiber-to-the-home technology paired with a passive optical network to provide symmetrical download and upload speeds of up to 100 Mbps.
? By building a fiber network, MCTV has "future-proofed" itself, its president says.
? Regulatory uncertainty remains a top concern, lending weight to calls for a legislative solution to the ongoing net neutrality debate.
When S&P Global Market Intelligence spoke to Robert Gessner — president of MCTV, a midsize operator in Ohio, and chairman of the American Cable Association — a year ago, the top issues of the day were the Federal Communications Commission's proceedings on unlocking the set-top box and privacy. With a new regulatory environment taking shape, Gessner sat down to chat about what the future holds for his company and the cable industry in general. The following is an edited transcript of the conversation.
S&P Global Market Intelligence: What are you most excited about as you look ahead to MCTV's future?
Robert Gessner: I'm very excited about what we're calling our Excellerate project, which is a fiber overlay, a passive optical network being overlain on top of our coaxial system. We look at it as a multiyear project that's going to give us the unlimited capability of a fiber-to-the-home network. We repurposed so many of our people to learn how to design a passive optical network and they did the research to find the best vendors and do the construction and the splicing. They really changed themselves from 20th Century cable guys and gals into 21st Century fiber guys and gals.
MCTV President Robert Gessner
If you think about the success of our industry, it has to do with jobs you can't outsource and great service. And that's what our people have done — they've basically future-proofed themselves where they know the system intimately because they built it, they designed it and they know what's good and what its eventual flaws might be.
Why fiber instead of DOCSIS?
When we built our hybrid fiber coaxial plant, we started in 1995, and we completely rebuilt our system. But cable internet didn't exist then, cable modems weren't available then. We designed a system optimized for television with really big nodes. When the internet came along, we were able to successfully split the nodes to make them smaller over these last 20-plus years. But if we went to DOCSIS 3.1, we would have to deploy a lot of new fiber and it was only incrementally more fiber to do fiber to the home. So it will be a little more expensive, but we'll have the benefits of a full fiber-to-the-home network.
We also don't have any debt and we have sufficient cash flow to pay for a fiber-to-the-home network. And our coaxial network is still working great, delivering 100 Mbps no problem, so we figure we can start building our fiber network now. That way we can build it more cost efficiently over the course of time.
It makes sense that if you are making a long-term investment, you want it to be a solution that will serve you through the long-term future.
I think that's the reason the largest companies are doing a lot of fiber to the home. But they don't talk about it and I think it's because if they were to say, "Fiber to the home is great," it denigrates their coaxial networks. If that were to happen to Comcast Corp. or Charter Communications Inc. or someone like them, it hurts their stock price. The second someone on Wall Street says coaxial cable is no longer any good, their stock price goes down.
What are you most concerned about?
It's probably the regulatory environment. It's always kind of frightening because it seems like it's out of our control. Our representation in Washington through the ACA is doing very well for us, but it's the uncertainty of regulation that's my biggest concern.
And I'm always concerned with competition. We compete with AT&T Inc. and DIRECTV, with DISH Network Corp. and now with the wireless providers that are looking at 5G for the future. But I think we're well positioned for the future.
The FCC is looking at overturning the Open Internet Order of 2015, which reclassified broadband as a Title II service under the Communications Act, making it subject to more stringent regulatory authority. Would you prefer to see a legislative solution? Or is that just wishful thinking at this point?
It probably is wishful thinking at this point because Congress is so dysfunctional. The ACA generally believes we should only seek legislation when we are being disproportionately disadvantaged, preferring a hands-off approach. But a legislative solution might be the only way to resolve the ping-pong battle at the FCC over jurisdiction and regulation. Because four or eight years from now when we get a new administration, another FCC chairman could come in and say, "I want to go back to Title II." And so with each new administration, in the first year the rules change, and then the fight takes three or four years to get through the courts. And then you get a new administration and it starts all over again.