Broadband Bytes: January 31-February 6, 2009

It feels like the summer TV season as most of the news this week is reruns from last week. The DTV delay and broadband stimulus continue to dominate the news headlines. We also saw the launch of Lafayette’s fiber project, some new gadget news and more bad news from device manufacturers and SPs. All this and more in this week’s Broadband Bytes!

• The DTV delay has now passed both houses of Congress complete with another $650M for converter box coupons, enough to fund over 16M more of the devices. The bigger problem, however, is that the supply of converter boxes is nowhere near that amount and shortages are projected by the end of this month. That might be alleviated by the relatively small number of homes still unprepared for the switch, currently estimated at 5.1% of all procrastinators viewers or somewhere in the neighborhood of 5.8M homes. Even at two boxes per each remaining home, that still wouldn’t eat up all of the available coupons, even though it would likely out-strip the available supply.A bigger problem, though, is that many broadcasters have said they have no plans to abandon the original transition date since they’ve already spent so much time and money preparing for it and haven’t allocated the funds to continue doing analog transmissions. As many as 61% of broadcasters will not extend analog transmissions all the way until the new June 12 deadline and they have until February 9 to tell the FCC about it. Here in Utah, only the PBS and UEN stations have firmly committed to continue broadcasting in analog past Feburary 17.
• The proposed broadband stimulus continues to take shape as various special interests massage the House and Senate versions of the bills. The Senate dropped their version to $7.5B under pressure to trim back the total cost of the stimulus package. There’s still disagreement as to who should administer the lion’s share of the funding, though the National Cable & Telecommunications Association and Free Press, two groups long at odds with each other, are both in favor of allowing the NTIA to take over instead of RUS. The NCTA and Rural Telecommunications Alliance also are in agreement that money needs to go to unserved areas first. There’s also plenty of nay-sayers who think the state of broadband is just peachy, though it’s not too terribly hard to put them in their place.
• After years of lawsuits, construction and industry sock puppetry, Lafayette finally has a fiber network open for business with highly competitive pricing. The utility system owns and operates the network as the sole service provider, offering both triple-play packages and 100Mbit connections on-network. The network should be fully deployed by 2011. Prices are averaging a good 20% below what Cox Communications and AT&T, the local incumbents, currently offer. I’m sure you can expect both of them to go on a price-slashing frenzy, much like local incumbents have done ahead of UTOPIA and iProvo. Of course, you could be a smart incumbent like Dutch provider KPN. They partnered with municipal efforts to deploy FTTP and have reaped big rewards, even with a bunch of competing service providers.
• Your customers are perfectly content to stick with free TV choices, especially as programmers cook up new DTV uses like more programs, more options, and more local programming. Options like PlayOn, which streams video from your PC to your XBox360, PS3 or any DNLA-compliant device give consumers even more free and paid VOD options. Roku, makers of the $99 Netflix box, is also looking at adding support for Amazon’s VOD platform. So what are you doing to get a cut of that action? Are you partnering with online video providers to stream online video from your own STBs? Do you offer an over-the-air HD DVR? What are you doing about Netflix’s 1.5 billion minutes of video served to XBox360 owners since November? And, more importantly, how can you keep savvy customers who know how to slash their bill? Free is a very competitive price. Verizon is trying to get ahead of the curve by streaming video to the Verizon Hub.

  Speaking of streaming video, it seems that cable networks are content to use streaming to sell directly to customers. Netflix is reportedly working on streaming HBO’s library of original programming for $10/mo. With cable networks producing more original content than ever before, it’s incumbent upon service providers to find ways to keep on delivering the content and getting a slice of the revenue or risk being put out of the video business entirely. Internet video viewing was up 41% in December and shows no signs of slowing down. One of the few things that keeps advertisers from jumping ship entirely is a lack of standards for online video and a glut of data on who’s viewing what and how.

• It wouldn’t be 2009 without some bad economic news, would it? Motorola, Time Warner, Cisco, and Windstream are all reporting hard times. Time Warner topped the field at a $16B Q4 loss and plans to cut over 1200 jobs.
• Caps and throttling refuse to get out of the news. Cox Communications is busy trying to defend its network management plan to the FCC as video provider Vuze keeps on sniping at them in the news. Comcast also had to explain how its VoIP system works in relation to its network management policies, claiming that because it is a managed service it shouldn’t be treated the same as other traffic types. Time Warner, meanwhile, is rolling out caps to more markets, albeit with higher caps that what they’ve been playing with in Beaumont, TX. Charter is going whole-hog with a system-wide cap policy that’s about as generous as Comcast’s. The best way to make sure you don’t get on the bad side of customers, the FCC or some of the “net neutrality” zealots is to make a clear and concise policy, publish the full details and make sure that any management scheme is generous, fair and only active when absolutely necessary. Software companies are already putting out packages to make management easier and less likely to alienate your customers.
• The need for speed continues. Canadian cable company Shaw launched a 100Mbps service for CDN$250 a month (albeit with a 200GB monthly cap) and Time Warner rolled out 20Mbps service to Hawaii, the highest speed the island has seen from residential service. Cox Communications also plans to upgrade more of its network to 1GHz equipment; combined with SDV, Cox will be able to offer more SD and HD channels as well as a 25M/4M service without DOCSIS 3.0 upgrades. Verizon finally caught a break in Comcast’s hometown of Philadelphia and will be installing FIOS. Fiber competition is especially noteworthy for consumers. Powell, WY has sparked a price war just days after opening its FTTH system for business. Don’t count Comcast out, however; they’ve got DOCSIS 3.0 in a large swath of their footprint. And Time Warner is pulling its head out of the sand and realizing that as long as the trenches are open in a greenfield, they might as well drop in fiber.

  Of course, we’re still being put to shame internationally. Korea plans to drop in 1Gbps fiber by 2012 with an investment of nearly $25B to deploy the network upgrades.

• Are you moving beyond the triple-play? AT&T is doing just that with an integrated network portal and femtocell. Such a device could let them turn every U-Verse subscriber into a miniature cell tower. Networks without their own wireless solution should look at partnering with wireless companies to roll these out along their own footprint and pick up some extra revenue. Qwest has gotten into the game by offering up to 2GB of free online backup space to its subscribers (while, simultaneously, trying to screw over landline customers with higher rates). Verizon is also exploring new network services, albeit only the kind that next-generation fiber can support. They plan to roll out videoconferencing, home security and home energy management services Real Soon Now™. Distance education could also take a big leap forward with new low-cost online universities that use peer learning and open coursework to offer classes for as little as $15 a pop.
• Comcast got some egg on its face during the Superbowl when its Tuscon operation accidentally popped 30 seconds of porn into the last few minutes of the game. They handled it very gracefully, however, by offering all affected customers a $10 service credit along with profuse apologies and a vow to track down the culprit. Comcast has been claiming it was a malicious act, but cheekier suggestions are that an employee was watching porn and accidentally hit the wrong button on the switchboard. In either case… oops.