Broadband Bytes: December 13-19, 2008

I think 2009 is going to end up being the year of broadband. Advocates are very well-organized and the new administration is putting a lot of post-election emphasis on telecom policy, an issue that’s typicaly given only election-cycle lip service.

• FCC Chairman Kevin Martin decided to up and cancel a vote on what to do about a free nationwide wireless network rather than stare down the angry lobbyists on both sides of the issue. Industry execs want the spectrum free and clear whereas privacy advocates are in a tizzy about the mandatory filtering requirements. Some members of Congress are pretty ticked off and claim that it wasn’t legal to delay or cancel voting on the issue. I’m sure that most of them will be happy to have someone else in charge, whoever he or she may be.
• Spending $44B or more on broadband? That’s what Free Press would like to see over the next three years to bring 5MBps+ connections to every home in America with a goal of hitting 100Mbps in the future. The Fiber to the Home Council thinks that we should drop closer to the tune of $100B to get fiber to 90% of American homes. Naturally there’s some distrust; these are the same guys who botched the USF to the tune of billions.
• It’s a bad time to be Qwest. They recently got slapped around by a federal judge in Nebraska for trying to jack up rates on competitors and fared about as well before Montana’s PSC. Then DSLReports comes out and breaks the somewhat-dated story that Qwest is intentionally using FTTN upgrades to degrade ADSL connections and poach customers from other ISPs, something that Qwest predictably denies. Then Qwest goes and slashes the price on its 20Mbps/896Kbps service by $40/mo, something sure to cut into the bottom line. It’s probably not surprising to hear that the company is considered to be a prime takeover target since it has no video offering, no wireless and sub-par ADSL2+ offerings. You know, if it can find a company willing to invest the billions needed to make America’s least competent ILEC competitive.
• Charter Communications is headlining this week’s bad economic news. The debt-laden cable company hasn’t managed to turn a profit since going public in 1999 and repeatedly gets low customer satisfaction ratings. (On a personal note, I know a lot of disgruntled Charter subscribers who would happily jump ship if something better came along.) Odds are that they’ll sell off chunks of the network to get investors and analysts of their back and stop the talk of bankruptcy. I guess the 8.4% jump in cable ad revenues haven’t helped the company’s bottom line. TV Week has a pretty good round-up of questions about how the industry is going to weather the tough times.
• There’s more retransmission disputes with local broadcasters and cable/satellite providers than I can shake a stick at. Anyone want to take bets on it being related to the precipitous drop in local ad revenue while cable revenues are up? Local stations no doubt want to flex their muscle to get a bigger piece of that pie. There’s more drops predicted and the biggest advertisers are, as a whole, cutting back on spending.
• Customers are still ditching and downgrading services in large numbers. Landlines have lost more market share to wireless (though the profile of your average wireless-only household is less-than-flattering) and customers are giving video service the boot as rates continue to increase and free online alternatives prove just as good if not better. In fact, broadband seems to be the only service people are consistently keeping or upgrading, even if those connections come with a dubious definition of “unlimited”. And no, consumers are not dumb enough to fall for low-priced packages that scrimp on features and aren’t too keen on hidden charges.
• What are you watching on that new HD set? At least a third of you aren’t watching HD content according to a recent survey. Both broadcast and on-demand options are lagging behind as standard-definition sets continue to play a large part in the video market. Providers are doing a good job of adding more HD options in their markets and online providers like YouTube are matching suit, but there’s a long way to go. (And no, DirecTV, 480p is not HD.)
• As the deadline draws nearer, the DTV switch is starting to send some folks into full-on panic mode. Nearly 7% of viewers are entirely unprepared for the digital switch, no doubt confused as to what exactly is going to happen. Cable operators have offered to stop moving all of the channels you actually want to watch from analog to digital tiers to help reduce the confusion that their misleading DTV advertising probably caused in the first place. (I recall a particularly scummy satellite ad on the radio several months ago that claimed you wouldn’t get TV signals without their service come February.) With television sales predicted to fall off by 18% or more and a lack of reliable data, you can bet there’s going to be a lot of angry people on February 17.
• The need for speed continues. Virgin Media rolled out DOCSIS 3.0 service in the UK this week without any of throttling that affects their other tiers. Cable speeds are also increasing as prices stay stable, no doubt thanks to FIOS ripping them to shreds where available. Other providers, though, are scaling back speeds. SureWest decided it was much cheaper to buy up new systems than keep expanding its FTTH in existing footprints. AT&T also let its VDSL2 bonding trials slip yet another year as hardware problems keep on causing issues for them. (An Australian company recently used VDSL2 to get 85Mbps/47Mbps speeds in MDUs.) The really good news in speeds is in wireless. Sprint snagged top honors in 3G network speeds and is offering a dual-mode 3G/WiMax modem to let you get the best available speed as they slowly get Clearwire rolled out into new markets. AT&T won’t be outdone as they test 7.2Mbps connections in Chicago on existing 3G equipment. All this speed matters. A lot of small businesses have been avoiding a switch to VoIP because of bandwidth concerns.