Broadband Bytes: 2008 Wrap-up Edition
Happy New Year! This Broadband Bytes covers from December 20 through the end of the year. The end of 2008 saw even more retransmission battles (in particular the 11th-hour showdown between Time Warner and Viacom), Qwest trying to unplug a rival that’s suing it for racketeering, and the pending launch of FTTH services in Lafayette, LA. I predict that 2009 will offer up explosive growth in broadband speeds and availability fueled by federal dollars, an increased flight of users from cable to online video streaming and continued greater-than-inflation rises in programming costs.
- The retransmission fights got especially ugly as a contract between Viacom and Time Warner Cable expired at midnight New Year’s Day. Viacom ran a message on all of its channels to ask subscribers to complan to Time Warner which landed it in hot water with the American Cable Association; Viacom ran the crawl for all subscribers, even ones not with Time Warner. The two parties came to an agreement just after midnight which could see rates bumped as much as 25 cents per subscriber, almost 10%. With a lot of people willing to give up cable and stick to online options, cable companies are between a rock and a hard place with these kinds of disputes. Time Warner, in an interesting move, told viewers to go online to look for Viacom shows. Kind of proves the point, doesn’t it?
- Qwest’s official company policy appears to compete on everything but having a superior product at a superior price. After small New Mexico ISP SkyWi sued them for anti-competitive practices, Qwest decides to shut down the ISP claiming that they are in arrears by $1.7M. Regulators in New Mexico responded by demanding that Qwest restore service pronto to “critical” customers. Given Qwest’s attitude with Centerville over RDA funds for UTOPIA and their continued efforts to block pole attachments, I think we can see a pattern from America’s least competent ILEC. At least they’re smart enough to slash prices on DSL service across the board.
- After years of litigation and construction, Lafayette is finally to launch fiber services in the city next month. Packages are priced very competitively with AT&T and Cox with an $85/mo triple-play package that includes 10Mbps symmetrical Internet service. Lafayette is both wholesaler and service provider, so it makes their financial goals a good deal lower than open networks like UTOPIA that have to share revenue with third-party providers. The Lafayette Pro Fiber blog has a breakdown of pricing options.
- It wouldn’t be 2008 without some more bad economic news. The Washington Post reports that the housing slump is hitting homebuilders pretty hard which means you can’t depend on greenfield development to power your growth. New providers will have to look at expensive brownfield development in order to gain new customers. One bright spot is that a think tank has recently called for lowering pole attachment rates as a way to spur broadband deployment. That could spell good news for overbuilds.
- As if it wasn’t bad enough that video rates keep on climbing (thank the Governor of New York for some of those increases), text messaging rates are seeing a precipitous climb in overage charges even though it costs fractions of a cent to send each of them. Providers have uniformly increased the cost per message from 10 to 20 cents. Given that a text message is no more than 140 characters, you’re essentially paying over $1400 per MB for texting.
- Could big broadband kill Blu-Ray? ZDNet seems to think so citing the growth on online HD video options and the high cost of both players and movies. (h/t: Woods Cross Citizen) A few high-profile flops aside, online HD video has been exploding with manufacturers like Roku and LG integrating Netflix, YouTube and a bevy of other video providers into set-top boxes and DVD players. Even the Wii is getting in on the streaming action. To really compete with Blu-Ray, however, requires a solid 16-24Mbps of bandwidth, something most households only dream of having access to. Will the explosion of on-line video kill cable and broadcast TV? Probably not. Despite some strong warnings to get ahead of the online viewing trend, a recent study showed that online viewers are just as likely to watch live TV as everyone else.
- While CableCARD is enjoying deployment in almost 10M set-top boxes, cable providers have distributed a scant 392K of them to consumers who ask for them. Ars Technica basically rips the entire CableCARD effort for poor device integration, high install and monthly fees and clueless cable providers. tru2way should alleviate some of the two-way issues incuding offering up a program guide, but CableCARD will still be needed to decrypt channels; Comcast has just rolled out the head-end equipment required to support tru2way in Chicago and Denver. One consumer in California got so fed-up with the mess of equipment rentals that she filed a class-action suit against Comcast for not selling the STBs and CableCARDs. The Consumer Electronics Association is also fed-up with waiver shenanigans by cable operators that they feel is holding up CableCARD deployment and market acceptance.
- The FCC’s free wireless plan is still not quite dead yet. Kevin Martin, in his waning days, has tried to bring it back by dropping the porn-filtering requirement. With broadband shaping up to be a major issue before Congress in 2009, this plan is very likely to get lost in the shuffle. We already have telcos lining up to get some coins dropped in their cups, not to mention a push to subsidize the winner of the public safety spectrum auction. The same lobbyists that are trying to get a piece of the stimulus pie are responsible for trying to kill off any national wireless broadband plans. Both Wired and DSLReports are frustrated by the inability to come up with clear definitions and plans. Lawrence Lessig is angry enought to say that the FCC should be permanently disbanded as the agency is overrun with lobbyists and corruption.
- Kevin Martin has also been busy with a few last-minute items being wrapped up. He nixed a plan by the MPAA to restrict how you can watch movies and allowed TV stations to broadcast warnings on analog channels for a month after the digital switch (though up to 35% of markets won’t be eligible for the warning broadcasts). He even managed to score one last ticket to CES.
- Remember how much TV sucked after the writer’s strike and how some shows (I’m looking at you, Heroes) managed to never quite recover? The Screen Actor’s Guild is getting dangerously close to authorizing a strike after it’s January 12 meeting. If, like me, you’ve been eagerly anticipating new seasons of hit shows like Lost, we might end up waiting a lot longer. Maybe it’s time to get around to watching Jack of All Trades on Hulu.
- The RIAA and MPAA are intent on making life for ISPs difficult, this time by trying to get them to be their copyright cops. Some ISPs are pushing back and demanding payment for enforcement, not content to potentially make their customer service suck even more as they deal with angry customers. Given how “succesfully” Australia’s filtering plan is going, this seems like a recipe for disaster. Of course when your only case to go to trial results in having your posterior handed back to you on a silver platter, you’re liable to try anything that doesn’t involve the courts.
- Here’s a list of predictions to watch. Infoworld compiled a list of 10 things they believe will not survive this recession. Included are video rental stores, landlines and paid WiFi. Business landlines are starting to show significant weakness and online sales dropped the least of any venue with most brick-and-mortar retailers taking drops as high as 35% over last year. With efficient distribution chains like Amazon, Netflix and VoIP, it’s time for some of these old paradigms (I hate that I used that word) to buy the farm house.
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.
Tags: 3G, ADSL, ADSL2+, AT&T, Charter Communications, Clearwire, DirecTV, DOCSIS 3.0, DSLReports, DTV switch, FCC, FIOS, Free Press, FTTN, HD, HDTV, Kevin Martin, Qwest, Sprint, USF, VDSL2, Verizon, VoIP, WiMax
Broadband Bytes: December 6-12, 2008
This week was kind of a slow news week. Most of the telecom world has been focused on President-Elect Obama’s plans for broadband stimulus and the continuing bad economic news from providers, programmers and manufacturers.
- Yes, there’ still even more layoffs and bad economic news. Level 3 is planning to cut about 8% of its workforce and Brightcove is looking at a 15% reduction in headcount. DirecTV has also implemented a hiring freeze, usually a first step before issuing pink slips. Multichannel has a good roundup of layoffs throughout the industry totalling over 15,000 employees. With the tough times, providers are looking at cutting perks for subscribers, raising rates or agressively pushing bundles. While ad spending is going to worsen overall, cable may already be over the hump. There’s still good opportunities for small and growing companies to pick up top talent on the cheap and move quickly to outmaneuver larger rivals by taking advantage of their sagging bottom lines.
- Qwest is planning to keep spending flat in 2009 which could mean a halt to construction of its FTTN network. There’s a lot of concern that Qwest won’t be able to meet its 2010 debt obligations which has investors seriously spooked. If Qwest does halt or slow FTTN deployments, it could mean that Comcast will make similar cuts to DOCSIS 3.0 rollouts in shared markets as they get bloodied in FIOS territories. Fiber projects like UTOPIA can capitalize on these stalled rollouts to snap up more customers. Part of Qwest’s problems could be related to its tendency to litigate and legislate its way to success rather than offering compelling products. Its shenanigans have recently gotten it sued by a CLEC in New Mexico.
- There’s still ways to survive the tough times by focusing on business services and localizing your product offerings. Also be aware that customers are looking for a good deal and have no problem asking you to cut their bill. It’s often worth it to take a hit on your profit margin in order to keep the customer. Comcast regularly offers a 6-month promo rate to retain customers.
- Speed matters. Comcast has rolled out DOCSIS 3.0 in a handful of markets, CableVision is getting ready to do the same and across the pond, Virgin is getting 50Mbps into the hot little hands of subscribers tomorrow. Good thing, too: subscribers have a need for speed. It’s not just the last mile either. Satellite is getting a big bump with a 100Gbps satellite to be launched in 2-3 years and Ciena has shown off a 100Gbps fiber connection on a single wavelength.
- Wireless also matters… kinda. Verizon is going to make a push to have the first LTE markets ready for service by next year, no doubt spurred on by the Clearwire WiMax juggernaut. It’s mostly a marketing ploy, though it could end up being a very effective one. Clearwire is already facing substantial hurdles and it’s probably safe to assume that even cash-rich Verizon won’t have a solid product for several more years. There’s also the problem of transport from the towers, an area where UTOPIA can shine. In other wireless news, AT&T is planning to stream satellite TV to cars and trucks, yet another move beyond the triple play. Augmenting a wired infrastructure with wireless offerings such as this is going to be critical in the future to increase revenue streams and keep bundled customers, especially if they don’t blend in.
- Obama’s plans to allocate a substantive chunk of any stimulus package for broadband is being called a “Broadband New Deal”. The real question is how much of any package will be allocated to broadband and how it will be administered. Obama’s plan is to give states “use it or lose it” grants and let them best figure out how to spend the money. If additional conditions aren’t attached to the grants and vigorously enforced, we could just get a repeat of the Telecommunications Act of 1996. It will be very important that providers start now to get their political ducks in a row and line up for some of the cash.
- Add Congress to the list of people who are miffed at the FCC under Kevin Martin. The House released a 110-page report slamming his management of the agency and calling for substantive change. With the White House changing hands in 6 weeks, I don’t think that’s going to be much of a problem. Given Obama’s legit technology chops, I’m optimistic that the new FCC head will do a better job.
- Even though households with HD sets have doubled since 2007, only a quarter of homes are using the latest technology. With converter boxes and subscription services that don’t require a new set, plenty of consumers are content to keep using what they have, especially during a pinch. Your standard-definition packages will still be relevant for some time to come.
- Speaking of content, you’d better learn how to play nice with local broadcasters. There’s a lot of instances of over-the-air stations flexing their muscle against cable over retransmission issues. CableOne and Dish have both ended up dropping local channels when they couldn’t reach agreements on fees and Lafayette’s fiber networkfound itself in the same kind of squabbles.
- Online video is still booming. Netflix is now streaming to TiVo, AppleTV and Linux PCs while YouTube has added a Watch in HD option to all of its videos. Hulu also managed to explode to 24 million viewers in October though Google properties still own the online video market. Even the NFL is starting to get a clue with a $20 season pass to watch games in HD after they air. Smart providers will want to focus on delivering products to their customers that bridge the gap between PC and TV since there’s no content provider to pay and the possibility of a strike from the actors guild could put new shows on ice. ZvBox already does it, though you’ll need to find something that lacks its hefty $500 price tag.
Tags: AppleTV, AT&T, Brightcove, Broadband New Deal, cable, CableONE, CableVision, Ciena, Clearwire, Comcast, DirecTV, Dish, DOCSIS 3.0, FCC, FIOS, FTTN, HD, Hulu, Kevin Martin, Lafayette, layoffs, Level 3, LTE, Multichannel, Netflix, NFL, Obama, Qwest, Telecommunications Act of 1996, TiVo, UTOPIA, Verizon, Virgin, WiMax, YouTube
Broadband Bytes Doubleheader Edition: November 22-December 5, 2008
Between visiting family in Sacramento for Thanksgiving and a business trip to Montreal (where the hotel apparently didn’t believe in reliable Internet service), I got a bit behind on the Broadband Bytes feature. Never fear: I’ll make it up to you with a special double feature to get caught up on the previous two weeks.
- A recent study shows that 18% of HDTV owners can’t tell the difference between standard and HD programming. This may be why DirecTV can get away with claiming over 150 HD channels when they include 480p digital broadcasts. Also of interest is that 38% of all HDTV buyers are motivated by a broken/old TV set or are buying an additional set. A scant 22% bought their set for the better picture quality. There’s also a significant number of people who won’t upgrade to an HD set until well after the digital cut-off in February. Standard-definition video will be a significant player for some time to come.
- So just what are folks watching on those HDTV sets? Fewer of them will be buying premium packages from satellite and cable providers, so bet big on basic video packages and over-the-air signals. With online video sites such as Hulu and YouTube expanding their selection of HD content and Blockbuster making an entry into set-top boxes (albeit very lackluster), few may see the value in the ever-increasing cost of paid video packages. You can even find NFL games (though sometimes of questionable legality) using your PC. Internet hasn’t killed the video star as TV viewership continues to rise, but it is creating a challenging advertising market for video providers. Comcast is already seeing predictions of increased video churn.
- It’s no wonder subscribers are shedding video packages. Price increases have been as regular as Yellowstone’s Old Faithful with Comcast, Time Warner and Bell Canada continuing to jack up the rate you pay. Qwest has decided to go in the other direction and extend their $15/mo offering (1.5Mbps/YourGuessIsAsGoodAsMineKbps). Comcast also upped the speeds on their value tier (from 768K/128K to 1M/384K), but it’s not as competitive as Qwest’s offering and was a direct response to Verizon making the same speed changes. Consumers are taking it into their own hands and finding ways to negotiate lower rates with thier providers. The French, however, are laughing all the way to the bank. Fierce competition has resulted in a triple-play package with 100Mbps data, VoIP and 120 channels of video for $38/mo.
- All of these problems are driving customers to defect to other ISPs. Or at least they would if they thought a better option was available and it wasn’t such a torturous process. A recent survey shows that as many as 75% of current broadband subscribers would jump ship if the process were quick and easy. That makes for easy pickings for competitors and new entrants.
- All of these industry woes are capped off in some massive industry-wide layoffs and financial problems. AT&T decided to issue 12,000 pink slips, Windstream is lopping off 170 and looking at ways to trim pensions, Hawaii Telecom declared bankruptcy (I can’t imagine that Fairpoint will be too far behind), Comcast is closing call centers in Indiana and media companies Viacom and NBC Universal and also lowering thier headcounts. It’s not just telecom in the US either: Telecom Italia is looking to layoff 4,000 while it looks to sell off various divisions. Qwest is also feeling the heat as it settles with disgruntled investors for $445M and the CFO tries to assure everyone that they can manage their debt load. Verizon doesn’t escape the bad news either: regulators in Florida are considering heavy fines for neglecting the old copper infrastructure as they roll out more FIOS. These layoffs and financial troubles present opportunities for small and growing providers to pick up experienced employees on the cheap and capitalize on the uncertainty with entrenched incumbents.
- A broad group of telcos, cablecos and broadband activists have decided to put aside most of their differences and join together to call for a national broadband strategy. While these kinds of things aren’t new, the biggest players in the industry have decided to join in this time, no doubt inspired by sagging bottom lines and the chance at a bunch of federal dollars. Of course, not everyone is happy at the idea of incumbents getting a slice of the federal pie and I can’t blame them. After all, these jokers are the same guys who managed to get nearly $1B in bogus USF funds over a one-year period. That sure would have paid for a lot of broadband. Saskatchewan isn’t standing still: the Canadian province plans to drop nearly $200M to promote universal access. Vermont also has a plan of its own.
- Next year will be a mixed year for broadband. Reports say that shipments of DOCSIS 3.0 gear have dropped like a rock and cable operators are holding off on selling off some of their markets. Clearwire is also slowing down its deployment schedule in the face of tight credit markets. Despite a fierce race to the 100Mbps threshold (Verizon may be there next year and Europe is totally handing our collective posterior back to us), the higher speeds are more likely to be available to existing footprints as system expansions either slow or halt. Now would be a good time to figure out where the competition has DOCSIS 3.0 and FTTx and market outside of those areas to lock in the customers, especially if they have to spend a lot of time making repairs due to increased copper theft. Of course, you could always take matters into your own hands and build your own personal fiber connection.
- There’s big money to be made in backhaul. Cox Communications is looking to use its network to link cell towers and provide big bandwidth to medium-sized companies. Deals between carriers and cell companies aren’t the only source of wireless traffic. Research shows that explosive growth of femtocells could increase cellular capacity over 10-fold. Cell companies would really like to go this route since the customer bears the cost of this equipment and their ISP bears the backhaul costs. Don’t worry about bandwidth, though. The coming “exaflood” has been debunked as pure myth.
- Verizon continues to draw blood by not-quite-overbuilding AT&T U-Verse service areas. If the incumbents get into a full-scale war for customers down in Texas, you can bet consumers will be the winners. In other overbuilding news, it seems that BPL isn’t quite dead yet. While it’s a poor choice for end-to-end connectivity, it shows promise as the last mile of a FTTN system. With speeds of up to 400Mbps, it could very well spur even fiercer competiion.
- Even as Cox chases wireless backhaul, it’s also working on a wireless network of its own to move its voice, video and data products into the mobile world. Analysts are, er, “pessimistic” about cable companies moving into wireless, but AT&T and Verizon have been using wireless revenues to subsidize building fiber with great success. Given the growth in cross-device viewing and predictions that the wireless data market will be recession-resistant, I think that the analysts have pegged this one incorrectly, especially as speeds ramp up. Wireless has already proven popular in emerging markets where wireline options are scarce and could prove strong in rural areas.
- Keep your eyes on Cablevision. Not only could they end up busting heads at the Supreme Court over their network DVR product, they’re also trying to get programmers to ease up on their byzantine requirements for carriage. Feel lucky that Cablevision is the one brave enought to pick these expensive fights.
- The FCC is still trying to push a nationwide porn-free wireless network. The latest incarnation allows adults to opt out of the filtering, but, as usual, pretty much everybody is going home unhappy and nobody knows how the carrier that will eventually operate the network can end up turning a profit.
- In transfer cap news, Comcast is going to roll out a meter to let you check your bandwidth. (You know, that thing that XMission has been doing for many, many years?) AT&T, meanwhile, has chosen to join Time Warner in punishing the poor folks of Beaumont, TX with more low-ball transfer cap trials. T-Mobile has also resurrected caps, except they won’t really tell you how much is too much.
- And from the “holy crap” file: Embarq has chosen to have real, live people answer the phones when you call, just like the days of yore. It’s so crazy that it just might work, especially since telecom manages to do so poorly in customer satisfaction.
There’s still a lot more going on in the industry, but that covers the big highlights.
Tags: AT&T, Bell Canada, Blockbuster, bpl, cellular, Comcast, Cox, data, DirecTV, DOCSIS 3.0, femtocell, FIOS, FTTN, FTTx, Hawaii Telecom, HDTV, Hulu, NBC Universal, NFL, overbuild, Qwest, Time Warner, USF, Verizon, Viacom, video, Windstream, wireless, YouTube
Broadband Bytes: November 15-21, 2008
Mike just posted a Broadband Bytes, but there’s a few other things that are worth mentioning in the world of telecommunications.
- Remember how pinched consumers are more likely to drop video service than data service? A recent survey shows that unhappy people watch a lot more television than happy people do. With economic times getting tough, it may be a smart move to come up with innovative low-cost video packages to snag/retain these customers. Comcast is already trying out a $50/mo data/voice combo and is offering free basic cable for a year for anyone who subscribes to either voice or data services.
- Comcast is looking at sneaking in data rate increases after all. Their plan is to upgrade various tiers of service to higher speeds with accompanying higher rates. If you want to downgrade to a lower-priced package, tough noogies: speeds under 12Mbps will be gone except for a 768Kbps “value” tier. Competing providers should be able to snap up a lot of customers by offering a slower and cheaper tier between the two. T-Mobile is also raising rates on data packages, but with a 10GB monthly cap and terrible ping times, few are likely to use it for primary access.
- Copper is dead? Multichannel is pretty sure that DSL is DOA and the subscriber numbers back that up as cable dominates. (Ars Technica offers some excellent commentary on the Multichannel article.) AT&T, while still clinging to FTTN with U-Verse, is already using WiMax as a DSL replacement in rural areas and could very well push voice over WiMax. Businesses are also seeing the light (bad pun, I know) and choosing Ethernet and big-pipe services (think OC-3/OC-12+) over T1 and T3. The price of T1 lines is also leading many small businesses to look at business-class DSL and cable options. Some are going so far as to say that copper landlines could be dead by the end of Obama’s first term as customers flock to VoIP and cell phones.
- Telcos are hurting but cable could stick around for a while as coax offers a good chunk of bandwidth. They do, however, feel the pinch from the massive amount of bandwidth eaten up by video services. Even as SDV and DTA boxes ease some of that up, the demand for higher-quality signals to all of these shiny new HDTV sets will eat up a lot of the gains as cable operators are forced to move from 480p to 720p and 1080p signals. Competing providers will need to move quickly to offer true HD signals with low compression and superior data rates while the cable companies perform system-wide upgrades over the next 18-24 months. There’s something said for being first to market.
- Speaking of HD, incumbents are still making agressive inroads with their HD channel counts. Comcast and Time Warner announced more HD channels this week and Dish Network is agressively adding OTA HD to many of their markets. HD isn’t the only content being expanded; both Verizon and Dish are adding more international programming as well.
- Video isn’t just for your TV. Netflix is rolling out HD streaming with coincides with Watch It Now movies on the XBox360. YouTube is also doing a trial of high-quality video. Of course, streaming isn’t everything. Bright House is also pushing customers towards online video, just of the pay variety. They’ve inked a deal with RoadRunner to sell via their online store. All of these things is going to increase demand for greater bandwidth. And speaking of “content” delivery, you can now use your TiVo to order a pizza from Dominoes.
- Comcast apparently feels bold enough these days to blow off the FCC. FCC Chairman Kevin Martin asked for data on the operator’s policy of moving channels out of analog tiers and into more expensive digital ones, but Comcast was bold enough to give him only partial data even as threats of fines loom.
- It also appears that DTA boxes could be a sticky subject. CableONE asked the FCC for a waiver for a HD-capable DTA box with integrated security. This could shut out CableCARD (and possibly Tru2way) as well as a number of third-party devices like TiVo DVRs. Manufacturers are already pushing these boxes which could very well kill the Carterphone of video before it gets off the ground. Competitive operators will see the opportunity to be fully interoperable with CableCARD and Tru2way and ensure that customer DVRs will work on their systems.
- Local programming is in high demand, but there are some chinks in the incumbents’ armor. Since local programming options like high school sports, General Conference and rebroadcasts of local news are so popular, competing operators should mimic what Comcast is doing and look into an old-school public access channel.
- Online college classes are starting to show serious promise. Minnesota is pushing to get a quarter of college credits completed online by 2015. A collection of Utah colleges and universities headed by USU is pushing OpenCourseWare, entire courses in digital format that are free to reuse and distribute. These kinds of initiatives could drive demand for metro area networks between the universities and students.
Tags: AT&T, Bright House, cable, CableCARD, CableONE, coax, Comcast, data, Dish Network, DSL, DTA, FCC, FTTN, HDTV, Kevin Martin, Netflix, rate increases, RoadRunner, T-Mobile, Time Warner, TiVo, Tru2way, U-Verse, Verizon, video, voice, WiMax, YouTube
Broadband Bytes: November 8-14, 2008
Here’s a quick list of what’s going on in the telecommuncations market for the week of November 8-14:
- 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.
Tags: 700MHz Spectrum, AT&T, bandwidth caps, bpl, broadband prices, cable, cableco, Comcast, community broadband act, DirecTV, Dish Network, DOCSIS 3.0, DVR, Fancast, FCC, FIOS, HD, Hughes, Hulu, IBM, Joost, Kevin Martin, MGM, monticello, municipal networks, net neutrality, President Obama, Qwest, satellite, TDS, telco, Transfer caps, U-Verse, Verizon, VOD, VoIP, Vonage, wireless, XMission, YouTube
FCC to Investigate Skyrocketing Cable TV Rates, Ignores Telcos
Have you noticed that video rates have been going up at a painful rate? FCC Chair Kevin “I love Ma Bell” Martin did and he wants answers. Despite also naming Verizon in the inquiry, it’s pretty obvious that cable is the real target. The focus is on the move of more and more channels out of analog tiers and onto more expensive digital tiers, a practice he believes is compelling consumers to pay bigger prices for the same set of channels. We’ve already seen a bunch of cable providers up their rates with Cablevision and Time Warner both getting in on the hikes.
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.
Tags: a la carte, AT&T, bandwidth caps, CableVision, Comcast, Cox, FCC, Frontier, Kevin Martin, Qwest, Time Warner, Verizon
Sticker Shock: Telecom Service Prices Rising All Over
Cox is doing it. So is Comcast. In fact, prices are rising all over the telecom industry as stock prices plummet and subscribers prove fickle (as AT&T found out with a loss of 3.9M landline customers so far this year). Many of them are also ramping up higher-speed tiers and premium services to pad the bottom line.
Unfortunately, prices are likely to continue to rise in our current anti-competitive telecommunications market. Byzantine phone regulations are used to block new voice carriers, the programming cartel consistently flexes its muscle to increase wholesale television rates and data providers continue to increase markup even as the wholesale rate of bandwidth drops to new lows. DSLReports lambasts the lack of competition in a scatching editorial that details why telecom has the lowest consumer satisfaction ratings of any industry in the nation. As we continue to support duopolies and exclusive providers via HOAs, the problem is only going to get worse.
The Need for Speed: Comcast Plans to Up Speeds, Qwest Putting FTTN on Ice
As a sure sign that the souring economy is causing broadband issues, Qwest is planning to ramp down deployment of their FTTN-based ASDL2+ service. While one of their supplies cites the coming winter weather as the reason for the slow-down, but analysts are reading between the lines that plunging landline subscriptions paired with a slowing economy means rough rides ahead for telcos. AT&T is also seeing some effects of slowing subscriber demand. It’s good news for ISPs, though: the wholesale price of bandwidth continues to drop and consumers are more willing to drop cable TV than high-speed Internet, especially as Comcast continues to raise rates.
Meanwhile, details of Comcast’s new DOCSIS 3.0 deployments is coming to light and, while good news for current subscribers or those switching from DSL, it’s hardly competitive with offerings from UTOPIA. In addition to a 50Mbps/5Mbps tier at $150/mo, Comcast plans to upgrade current subscribers to 12Mbps/2Mbps at $42.95/mo and offer a 22Mbps/5Mbps tier at $62.95/mo to compete with a similar offering from Verizon. Compare that to a 15Mbps/15Mbps plan at $40/mo or 50Mbps/50Mbps for $55/mo from either MSTAR or XMission. Just be thankful you aren’t a SureWest customer. They charge around $192/mo for a 50Mbps connection.
Qwest and Verizon Sittin' in a Tree… M-E-R-G-I-N-G?
For several months now, rumors have been swirling about that Verizon may attempt to purchase Qwest, a move that would put us one step closer to a reversal of the 1984 breakup of Ma Bell. Most cite Qwest’s switch to selling re-branded Verizon Wireless service as testing the waters. Qwest is also in a weak financial position with dropping profits and subscriber losses. It’s no secret that the company has spent years trying to find a buyer after the company suffered precipitous drops in customer satisfaction and service quality from 2001 onward. Could cash-rich Verizon be the white knight they’ve been waiting for?
Maybe. More »