Chaotic change—to the tune of billions of dollars—is rapidly churning the troubled waters of advertising, retail marketing, cablecasting and broadcasting. It is also churning the traditional relationships between the ad side and the operational/telecast side of these industries. Yet, as the rather trite (but true) old adage “where one door closes, another opens” conveys, these players must begin wedding their businesses to digital signage in order to better survive in the Brave New World of Giving Consumers Relevance.

Take the local cablecaster in Denver, CO, Comcast. Like most all broadcasters and cablecasters in many larger metro centers, Comcast in the Mile High City has the pieces to add a new revenue stream and a new business model called digital signage to its Triple Play collection of video, telephone and data/broadband delivery.

These tools include content production personal, equipment and facilities; local, regional, national and global content libraries; and local marketing and customer service operations (including billing bases). 
Digital signage is deployed today on over 500,000 U.S. flat-screen monitors, and for the year just ended, The Carmel Group estimates almost $1 billion was generated, toward an estimated $2.5 billion as of year-end 2010. Moreover, this says nothing about the money that will no longer be spent in traditional advertising for shot-gun-like scattered ad messages – aimed at masses of consumers wherever they travel or reside – as ad agencies and their clients realize the importance of sending pin-pointed pitches to precise pods of people.

With the new-found ability to avoid ads, especially those that are thrown at the masses in a typical CPM-fashion, consumers are instead reacting to content, including commercial messages, that help them and is relevant to their lives. A typical consumer today can use satellite radio, an MP3 player, a Digital Video Recorder (DVR), or any number of other tools to duck the ads thrown at them via the traditional media. As but one further example, as they drive, consumers can chose to ignore the same vinyl sign that they pass every days for weeks or months on the way to work.

But take the same consumer and give him or her a specific message that conforms to what he or she wants to buy, and do it on a bright display that is easy a quick to read, and he or she will even accept a limited incursion into their privacy (and what makes them tick), in order to capture that helpful information. Once advertisers find out what individual consumers like and want, more and more doors open to that consumer, especially if the delivery and the message is sensitive and apropos.

Another opportunity for the Comcasts and Time Warner Cables of the Digital Signage World is to build and invest in the operational sides of the new business, buying up and leasing digital signage infrastructure, which they then populate and run, in their own communities. In addition, content delivered to digital signage flat-screen monitors can be specifically adapted to special audiences in special venues, run by special clients, more and more economically and flexibly.

To sum up, digital signage deserves a much closer look by cablecasters across the U.S. and Canada, and beyond those borders, as well. The world is moving toward the mantra of “Relevant Content,” and the match between them is largely there and ready to become more. 

Any Shot of XM-Sirius Merger?

After compiling data and developing arguments for the government review of EchoStar’s effort to purchase DirecTV during the 2002-03 time frame, I see many similarities—and some notable differences—comparing a possible merger between the satellite-radio duopolists, Sirius and XM. That said, it’s a good time to vent some ideas and analysis. This comes especially in light of recent company and government dialogues suggesting that the satellite-radio rivals want to combine to create a single U.S. satellite-radio monopoly.

One of the filings in the proposed EchoStar-DirecTV merger in 2002-03 involved a so-called ping-pong chart. This graphic indicated one of the party’s competitive responses to the other’s when it came to things like retail promotions, customer incentives and many other marketing efforts to attain and retain subscribers.

Not unlike the EchoStar-DirecTV competition—which that ping-pong chart proved was quite significant—the same type of hyper-competition exists between the U.S. satellite-radio rivals, XM and Sirius. To hear the aggressiveness as the two talk about the other’s efforts can almost be comical at times.

Then merge that reality with the Federal Communications Commission’s core DNA, which is a single mission statement supporting three key motivations: competition, diversity and localism. As the FCC has found in the DirecTV-Dish rivalry, the fact that Sirius and XM compete so vigorously pours fuel upon the FCC’s “competition is good” mantra. In fact, section 170 of the FCC’s Digital Audio Radio Service (DARS) rules states, “Even after DARS licenses are granted, one licensee will not be permitted to acquire control of the other remaining satellite DARS licensee. This prohibition on transfer of control will help assure continuing competition in the provision of satellite DARS service.”

This is not to say that the FCC would not change rule 170. But what it does say is that the FCC, if nothing else, gives market dynamics involving competition the benefit of the doubt, which is probably appropriate in a free-market economy. To take that competition away will probably require a full set of remarkable new dynamics. Those dynamics would include not only both companies’ financial dynamics hitting a long-term dead end (not likely), but also a significantly different lobbying and political agenda in Washington, D.C.

Even if the 2008 presidential elections bring in a new administration, most doubt whether that would make much difference. That is because the real lobbying force in Washington, the National Association of Broadcasters, is as equally positioned to support Democrats as it is Republicans. And the NAB does not like satellite radio.

The Department of Justice’s Antitrust Division would still be expected to see the competitive arena as a rather limited one, where XM and Sirius—and only XM and Sirius—compete as a product/service. This would mean the DOJ would still not recognize MP3 devices, HD terrestrial radios and Internet radios as competition to satellite radio, at least not until each has a defined service and significant competitive base. That change is still years away. 

And finally, another political note puts an additional crimp on any plans Mel Karmizan or Gary Parsons may have to possibly bring their companies together, despite the obvious advantages that come from the economies of scale and power of one competitive force. Politics and the law are huge creatures of precedent. If, anytime in the near future, the powers that be in D.C. were to OK a proposed Sirius-XM merger, they would also have to give much more significant and perhaps lasting consideration to two huge potential future nightmares based on the same precedent: changing the rules on media ownership and readdressing the proposed merger of DirecTV and EchoStar.

Which means we’re just about right back where we started. Go figure.

Jimmy Schaeffler is chief service officer and senior analyst at The Carmel Group, a Carmel-by-the-Sea, Calif.-based telecom, computer and media conference organizer, publisher and consultancy. He can be reached at (831) 643 2222 or at jimmy@carmelgroup.com.

In a recent interview with Multichannel News, The Carmel Group’s Jimmy Schaeffler talked about cable and satellite’s customer care practices. An edited transcript follows:

Q: Why do satellite companies tend to score better on customer service
surveys? What do they do that the cable companies don’t do?

A: When they were created in the early 1990s, satellite companies realized
they had an opportunity to build a better multichannel service than the
entrenched cable monopoly that existed. One of the ways they would do this
was by tapping into the public’s dislike of what was then ‘typical cable
(dis)service.’ This was at the time when Hollywood got away with a movie
called The Cable Guy, which did not reflect well on the wired services. By
focusing very closely on customer service, the satellite companies were able
to quickly leverage a cable weakness. The same approach would not succeed as
readily today. Nor could Hollywood get away as easily with a movie and a
message like The Cable Guy.

Q: Will the addition of phone companies change people’s perceptions of
customer service?

A: Customer service is a case-by-case and company-by-company activity. In
some companies, it even changes remarkably quarter-by-quarter. The short
answer is that if the telcos, especially the big ones like AT&T and Verizon,
are not pushing cable and satellite to deliver better customer service, then
they will not be gaining new subscribers, they will not be serving their
shareholders, and they will not be doing their jobs.

Q: How does Wall Street calculate customer service when it comes to
analyzing a cable/satellite/phone company’s worth?

A: In checking with two of the top analysts, Craig Moffett of Sanford
Bernstein and Steve Mather of Sanders, Morris, Harris, neither looks at
customer service as a specific measurable metric quarter-over-quarter.
Mather notes that ‘it is tough to accurately measure the quantitative impact
of customer service as a single definable metric. Customer service is part
of a firm’s secret sauce. If firms execute, it helps their overall profits.
If they stumble, like DTV last quarter, it hurts subscribers and overall
profits. But it’s really not a specific metric covered.’ Adds Moffett, ‘No,
I don’t incorporate CS per se, although I suppose it factors into everyone’s
share forecasts regardless of industry.’

Q: Liberty Media chairman John Malone isn’t known for his close attention to
customer care. Will DirecTV’s customer service standards be affected by
Liberty Media’s ownership of the company?

A: In this case, I think Malone is going to adhere to the ‘if it ain’t
broke, don’t fix it’ model. Customer service works for everyone in the
industry today, and good quality customer service is the standard, so I
don’t see either EchoStar or DirecTV - or the cable or telco folks - letting
it stagnate. The multichannel customer is just too valuable and too fragile
to treat him or her like cable did back when it was the only show in town.

Q: There is a lot of debate on whether international call centers affect
consumers’ perception of the care they receive. Has it negatively affected
companies like Dish Network, which have call centers overseas?

A: International call centers are a tough decision. On the one hand, they
save the parent company good money. On the other, indigenous people seek
easy communications with customer service reps, and sometimes, fairly or
not, those customers perceive language, cultural and distance barriers that
come from foreign reps making decisions for them. Plus there are always
those that don’t like the idea of jobs being taken overseas.

Q: Is it better for customers to have a bunch of regional call centers or a
few big, national centers?

A: The closer you can get to the customer, in general, the better. On the
other hand, if the faraway center gets the job done, that has to be the
bottom line, right? At least common sense tells me that should be the
result.

The Carmel Group’s Jimmy Schaeffler, senior analyst, and Robb Hawkins, an associate analyst, agreed. “If they can roll out advanced services and get a bundle in place, they’ll be ahead of the competition for the next few years,” Schaeffler said. “Satellite doesn’t have a bundle and the telcos are just getting started.”

“As soon as the telcos really become a competitive force, then there’s a significant possibility that this can happen,” said Jimmy Schaeffler, senior analyst for The Carmel Group. “But until that time, I don’t see that happening. It’s just too close on the heels of the EchoStar-DirecTV merger, which was turned down 5-0 by the FCC at the time, and against which the DOJ filed.”