• Cable’s move to digital signals is resulting in higher prices and reduced channel selection for many video customers. While it will ultimately improve their HD and VOD offerings, customers on the lowest-prices tiers are likely to end up being forced to switch to more expensive digital cable tiers. Many consumers place a higher value on broadband than on video and may find themselves dumping video in favor of online video sites like Hulu or Joost. MGM is fueling the fire by offering full-length movies on YouTube. Increasing prices will also fail to play well with price-concious consumers.
• On the DVR front, AT&T has finished deploying whole-home DVR in 69 markets. This will allow customers to watch recorded programs on any TV in the house and is a smart move on AT&T’s part to drive DVR adoption. While there’s no fee for this service, AT&T does charge for the STBs for each set. Dish Network, meanwhile, will be deploying a new kind of DVR next week that can record from satellite broadcasts, analog over-the-air and HD over-the-air and function as a digital-to-analog converter box. Not all is good in DVR news, however. The Supreme Court is going to hear appeals in the Cablevision networked DVR case and the content cartel is aggressively lobbying to make sure it gets outlawed. This will be an important case to watch as it will have a lasting effect on video innovation.
• Video providers are trying to capture some of the online watching audience. DirecTV is working on its own “web on demand” portal similar to Hulu/Joost/Fancast/etc. while also finding ways to let DVR owners watch that content on their PC. Verizon also made news a few weeks ago by announcing that it would stream videos from YouTube and Blip.tv to STBs.
• With the presidential election behind us, attention has focused like a laser on where President Obama and the Democratically-controlled Congress are going to go with the FCC. Congress is likely to pursue aggressive agendas on Net Neutrality and maybe finally pass the Community Broadband Act that’s been languishing for years. The new president is also likely to tap political veterans to help run the FCC and shape technology policy. Whie I’m sure that cable companies are eager to see FCC Chairman Kevin Martin out, the new FCC will probably continue to keep cable under its thumb while applying equal pressure to telcos, something Martin hasn’t been very good at doing. Cable may have spent millions on lobbying, but it likely isn’t going to buy them any breaks. CTIA seems to have recognized this new reality when they dropped their complaint against open access requirements on the 700MHz C-block spectrum.
• Forget triple-play: welcome to the quad. Cox Communications plans to use recently-purchased spectrum to deploy cell-phone serivce in its markets. Since Cox can leverage its existing infrastructure to keep transport costs low, the profit margins should be substantial. They will also deliver video services to handsets for existing video customers as they had tried to do with Pivot. AT&T and Verizon have been using wireless revenues to help subsidize the construction of their next-generation networks for quite some time with a lot of success. Qwest, meanwhile, has had poor financial performance as it does not offer its own video or wireless products.
• Cable and phone companies are making a big deal about holding the line on broadband prices, except that they aren’t. While the monthly cost is staying the same, the introduction of caps and overage fees (often with a markup of 1000% or more) is likely to start making your broadband bill look more like your cell-phone statement. While bandwidth caps aren’t necessarily evil when done correctly, a really low cap results in significant negative publicity, especially when your overage fees are many times the cost of the bandwidth. The reality is that offering ever-increasing speeds is what’s driving this increased usage and refusing to perform necessary network upgrades to compensate for it is hurting incumbent carriers, particularly cable. Just ask Hughes how it likes being raked over the coals for its “Fair Access Policy”.
• Unupgraded networks are hurting telcos big time. Cable has been stealing away landline customers and consistently offers better speeds leaving some industry analysts to wonder if DSL will survive too much longer. While pair-bonding can improve DSL speeds (both AT&T and XMission are doing it), it’s a stop-gap measure in a world dominated by FIOS and DOCSIS 3.0. Even Verizon is feeling the heat in markets not yet upgraded to FIOS. While ISPs keep on talking about the high speeds they can hit in tests and use smarter network management to keep traffic on their network, such measures are not a cure.
• BPL is dead; long live BPL. IBM is working to deploy broadband over power lines in rural markets not served by DSL or cable. While the speeds fall shy of traditional wireline services, they are much better than resorting to satellite services.
• Quick: who has the best land-line service? According to a study, Comcast takes the crown on quality while AT&T picks up the reliability award. Troubled VoIP operator Vonage didn’t do so well, likely one of the reasons that the company experiences really high churn.
• Content is still king. Verizon has picked up new deals with Major League Baseball, Cablevision is bringing a big selection of Bollywood movies to their VOD and Comcast continues to understand that local programming is a win. This will be especially important as telcos move into the video space and continue to invade cable territory.
• The municipal fiber fight in Minnesota isn’t over just yet. TDS wasn’t so happy about losing its fight with Monticello and decided to appeal the loss. The real losers in this fight are the residents who have to wait for next-generation services. In positive muni fiber news, Chattanooga’s network is moving forward with plans to offer video serivce.

On Monday, I was approached with an offer to do part-time consulting work for a UTOPIA independent contractor who also plans to pursue work with several other fiber optic systems. Their proposal was that I spend a couple hours a week putting together a “reading list” of what’s happening in the telecommunications space to inform UTOPIA staff of industry developments and help keep the project on-track. This feature will also be published weekly on this site (I’m gunning for Saturdays) under the Broadband Bytes banner. Jonathan Karras and Mike Taylor will still be contributing authors on the site, though they will probably tend more towards traditional articles and essays.

I was also asked by an author at a national telecommunications magazine to consider petitioning the magazine’s editor for a position as an article contributor on subjects related to fiber networks in Utah. Paid or not, I’m interested in bringing more information about UTOPIA to a wider audience and followed his advice to inquire about it. We’ll see if it goes anywhere.

So does this mean I’m selling out? I hope not. Much to my wife’s chagrin, I have been steadfastly opposed to running advertising on Free UTOPIA since it benefits me and me only. I don’t want the site itself to be a revenue generator no matter how tempting the paycheck may be. I don’t, however, have any problem with offering paid consulting services to contacts I’ve made via all of this work that I’ve done. I won’t lose any sleep at night over accepting this offer and aside from who’s writing most of the Broadband Bytes features, it should be the same old site.

I’m no lawyer, but from looking at the headend agreement, it appears that Provo sold UTOPIA’s interest in both the VOD and Wildvine servers to Broadweave as a part of the sale of iProvo and used UTOPIA’s unused exercise of the right of first refusal as consent to do so. If that is the case, UTOPIA would naturally like to be paid for their share of that asset; it just isn’t clear who should cut the check, City of Provo or Broadweave. Given that the total is rumored to be in the hundreds of thousands of dollars range, I can imagine that all parties involved are taking a strong stance on their respective positions.

The Daily Herald reported that both Kevin Garlick of Provo and Todd Marriott of UTOPIA are confident they can work something out, though I’ve heard that the problem in all of this is Broadweave CEO Steve Christensen who refuses to reach any kind of agreement. It looks like the headend agreement with Broadweave was signed in August of 2007 and I don’t think UTOPIA was involved in that discussion. This is coming back to bite Provo since they decided to make a lot of assumptions instead of talking it through with their partner.

Given the price tag and the tight financial situations with Provo, UTOPIA and Broadweave, I’m anticipating that this disagreement will get ugly if none of the sides plans to budge. Here’s to hoping they work out some kind of equitable solution instead of ended up in an “all sides lose” expensive legal action.

Commenters who contacted service providers for pricing in Tremonton have gotten quotes of install costs in the $30-60 range. It’s entirely possible that UTOPIA is trying out some new pricing models that build the cost of the install into the monthly fee similar to what cable and phone companies already do. The real question is if pricing will drop once the install is paid for or if customers could choose to pay off the install cost in exchange for a lower monthly fee. I’m also wondering if the pricing in Tremonton will be rolled out to other UTOPIA markets should it prove successful.

As a rarity, I’m going to ask that you drop your two cents into the comments and leave my opinion out of the main post. Do you think Obama will fix broadband? Which policies do you want to see him adopt?

UPDATE: Oops. Almost forgot to link to an article from DailyTech that details some of the proposals.

Unfortunately, Martin is not investigating how wholesale rates from programmers have gone through the roof and has more-or-less abandoned “a la carte” programming options. He’s also ignoring caps from both Frontier (5-20GB) and AT&T (20GB) that are designed to boost revenues. Telcom in general is hurting right now and companies may see rate increases as a way to soften the dropping subscriber numbers. Both Qwest and Cox are planning lay off workers and Comcast had disappointing earnings results.

We may, however, see some big changes in store once the new president takes office. Word on the street is that Martin will voluntarily resign to pursue political ambitions in North Carolina. It’s anyone’s guess as to who would take over his spot and what they would do about these out-of-control telcom prices.