Heartburn over the pending DTV switch, CES 2009 and a local retransmission battle are the main headlines of the last week. There’s also plenty of sour economic news and a few rays of hope for providers willing to grab onto innovative ways to deliver content. And, as expected, incumbents are trying to get in on the broadband spending bonanza.
- Now that nobody can afford to buy an HDTV and the money for DTV converter boxes is completely gone (not to mention all of the nasty digital signal gaps), politicos and lobbyist are trying to push back the digital conversion date from February 17. So far, president-elect Obama is on-board as are several former chairmen of the FCC and Consumer’s Union. Draft legislation, however, does not move the date, instead choosing to assume a DTV coupon redeption rate of 70% instead of 100%. With anywhere from 2 million to 11 million people unprepared for the digital switch in just 5 short weeks, this could end up being a big issue in the 2010 mid-term election; some folks are rightfully pointing out that with the 10-year lead on this transition, the unprepared should suck it up. A delay in switching could spell problems rolling out services on the freed-up 700MHz spectrums, including delays in LTE deployment. If you still need a DTV converter box, sign up even though the money is gone; the feds will put you on a waiting list until they have more money.
- Ah, CES. A time of releasing all kinds of gizmos you didn’t even know you needed until you knew they existed. For instance, LG is rolling out a TV with Netflix integrated into the set. That could set a trend of more set-topless boxes that can stream video from online providers. If the sets support flash-upgradability, they could even add more providers after you’ve already purchased the set. Sony already provides a module for many of its Bravia line that add sources such as YouTube and Sports Illustrated to the set and Samsung is working on it. This will fuel the projected growth in Internet viewers who use their TV.
Another device worth mentioning is the Pogoplug, a network device that can turn any USB hard drive into an uber-NAS. In addition to the traditional NAS functions, it will also share your files over the Internet and includes both a iPhone app and a robust API. Transferring gigs of stored data means even more demand for bandwidth.
- Are you a DirecTV subscriber? You may have noticed that you no longer have access to KJZZ, the primary source of Jazz games and an exclusive source for USU and WSU games. Despite getting retransmission fees from Comcast and Dish for the previously free channel, DirecTV said the cost was too high and has been attempting to negotiate a lower rate since March. When that failed, DirecTV dropped the station. The messy fight is drawing ire from viewers and causing black eyes for both DirecTV and Larry Miller, owner of KJZZ. With ad revenues sagging, it’s no surprise that broadcasters have turned to retransmission fees as a source of additional revenue. Retransmission revenues climbing at a precipitous rate: 32% in the first 9 months of 2008 with a projected tripling by 2012. With those kinds of rate increases, more subscribers will be driving into the arms of free Internet video.
- Broadband subscriber growth is projected to drop about 12% this year with cable gobbling up about 75% of the growth. Why, you may ask? Because DSL is much slower and next-generation broadband options are few and far between. Verizon is already unsure that it will expand past the initial 18M-home footprint for FIOS, especially since it ends up being Verizon’s biggest competitor to its shrinking DSL subscriber base. Time Warner also dropped a bombshell when it wrote off $25B worth of AOL, an asset that continues to drag the company down. Both AT&T and Verizon at looking at some poor revenue forecasts with global telecom spending to inch forward a meager 1%. Don’t cry too hard for them, however. US companies topped worldwide broadband revenues with a nearly $9B lead over second-place Japan, a country that enjoys wide-spread 100Mbps service. US companies still charge a lot more per megabit than any other first-world country.
Clearwire can’t get away from the bad news either. Despite launching service in Portland, Chicago has been delayed until the second half of this year. Comcast had to write off a significant chunk of its investment in Clearwire and Intel is hurting from the slow adoption of WiMax as handset vendors sit this one out.
- Qwest is already trying to get in on the broadband spending bonanza. Their proposal is to give the money to the states and let them administer it, just like they did with the Telecommunications Act of 1996 that screwed over Americans to the tune of over $200B. Unsurprisingly, they also want broadband defined as 7Mbps downloads, about what their current FTTN system can support. It’s not just the obvious industry shills we have to worry about either; sock puppets and astroturfing are going to be as rampant as they’ve ever been. Given how pooly these companies have done with broadband already, some are rightfully asking if we should give money to the same folks who created the problem in the first place, especially since we so often see rising rates. While the details of the upcoming broadband spending are up in the air, it will include spending for smart electrical grids and improvements in medical IT systems, both of which should result in big job gains. A competing idea that should be thown into the mix is using loan guarantees instead of just giving the money away. At least then we could be guaranteed some some return on investment.
- Remember how Qwest is using FTTN upgrades to degrade ADSL service and poach customers from other ISPs? Apparently other providers think it’s a pretty good idea. AT&T decided to downgrade 2G EDGE service to make way for faster 3G service, a move that forces many to seek a new handset. That spells a lot of angry 1st gen iPhone users who paid big bucks for a device that’s already woefully outdated. AT&T and Verizon have both used delays in moving phone and DSL service as an opportunity to upsell to U-Verse or FIOS. Customers increasingly fed up with incumbents are ready to bolt and Consumer Reports recommends going with a fiber provider. Will you be there to pick them up?
- Speaking of dirty tricks, the fallout from the dispute between Qwest and SkyWi has the latter claiming that Qwest cost the company a bunch of customers that switched to other providers. State regulators in New Mexico slammed both companies for putting their differences before the best interests of customers. New Mexico’s AG also lambasted Qwest for “unfair billing and business practices” when dealing with CLECs. (He’d better watch their northern neighbor; Qwest decided to sue Colorado when it didn’t get the rate increases it wanted.) Idaho’s PUC didn’t get involved in the matter on behalf of that state’s affected customers since SkyWi is a VoIP provider and the PUC doesn’t believe it had authority to act. Small providers would likely be eager to jump to another transport given the opportunity, especially as Qwest flexes its muscle.
- IPv4 is rapidly running out of addresses with another 200M snapped up in 2008. Developing countries such as China, Russia and Brazil had the biggest percentage spikes with most of the new addresses being used in North America and Asia. Google had already started a migration to IPv6; you should too.
- Comcast has flipped the switch on its new throttling system and it appears to be solid engineering as opposed to a cheap grab for more subscriber dollars. (I’m looking at you, Time Warner.) If a particular network segment is congested and you’re part of the problem, your traffic bumps to a lower priority regardless of what protocols or programs you’re using. This is much better than using forged TCP reset packets or cutting off customers for using too much of an undisclosed amount of bandwidth. They still aren’t disclosing what happens when you hit the magic 250GB cap or how exactly we’re supposed to keep track of it, but this is a step in the right direction.
- Broadcom is now offering up 8-channel DOCSIS 3.0 bonding which should be able to support up to 320Mbps downloads. That’s all fine and dandy, though cable operators have been slowing their DOCSIS 3.0 single-channel deployments, not to mention that most of them can’t spare 8 channels as they beef up HD offerings.