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.
