Earlier this week, I sat down with UTOPIA to discuss the Macquarie deal and their general operations. One great part of these sit-downs is that I can get candid answers to some of your common questions. Some of you have asked more than a few times about TV service. Right now, only Beehive Broadband and Brigham.net sell video service to new customers using UTOPIA’s headend and Veracity is using their own. Most providers sell satellite packages to plug the gap. Why? Because video doesn’t make money.
Yes, it’s true. Video is a break-even product at best. Look at the numbers from any cable provider and you’ll see the same story: video and voice make data customers more “sticky”, but it’s the broadband that pays the bills. They’ve quickly become commodity products that help the revenue side but don’t do much on the profit side. The consensus at FTTH conferences is that video isn’t something that most of them want to do.
So what does this mean for you? Right now, you’ll have to fall back on satellite TV or pick one of the providers that does video service. Since Brigham.net is sticking to Brigham City, that means Beehive or Veracity. This doesn’t mean that all hope is lost, though. UTOPIA has been talking to its video partners about an over-the-top live TV service to plug the gap. It would be sold Netflix-style, but it would have all of your favorite TV channels and possibly some good on-demand stuff too. It’s a ways out (I’d guess years), but it’s where we’re all headed anyway.
It seems like the entire Internet is raging and fuming about Netflix raising prices on some of their services. Most of it is coming under super-dramatic headlines such as “NETFLIX JACKED UP PRICES 60% OMGWTFBBQ!!!” Naturally, this rage is not only misplaced, it’s totally blown out of proportion.
The skinny is that Netflix has decided to break up the entry-level tiers into “streaming only” and “one DVD at a time”, each priced at $8/mo. The tier that includes both of these will cost $16/mo instead of the previous $10/mo. Some of the other tiers will see pricing changes as well. I’m not saying that I’d be happy with the increase either, but nobody is taking the time out to actually understand why it’s happening.
For several years now, service providers have been terrified of the so-called “dumb pipe” and its potential to remove them as the gatekeepers to various services. Many of them use protectionism as a way to lock customers in. CenturyLink denies CLECs access to any node upgraded to FTTN, Comcast requires bundling to get their fastest service, and Verizon even goes so far as to snip out the old copper lines when you jump to FIOS. The reality, though, is that the dumb pipe is already here and they are ill-prepared for it.
Comcast is apparently a bit of a slow learner. After getting publicly smacked about for tinkering with bitTorrent, they’ve really stepped in it now by messing with Netflix. The audience is much bigger than the guys running protocol analyzers on their connections; you’ve gone and upset regular folks too. (How do you see that one working out?) Unfortunately, this is playing out as badly as anyone can hope.
Comcast is unfortunately trying to realize the dream of Ed Whitacre by essentially double-dipping for data at a time when bandwidth is so cheap you can almost afford to give it away. Imagine if the phone company tried to charge you for making a call and the recipient on another phone network for receiving it. Can you imagine the uproar and outrage at attempting to bill someone that’s not even their customer? That’s what Comcast is essentially doing, trying to charge both sides of the transaction instead of providing you the service you already paid for.
If you’re a content distributor, odds are that you and the Internet aren’t really on speaking terms these days. The recording, movie, and publishing industries all blame it for sagging sales, declining revenues, and shuttering up operations, even in cases where it just isn’t so. (I’m looking at you, Hollywood.) The problem is that most of them fear what they don’t understand. For cable, though, they understand perfectly what the Internet is. That’s why they’re so terrified of it.
This week’s top stories include a white spaces fight, a clearing backlog of DTV converter coupons, and the wrapping up the The Pirate Bay’s copyright infringement trial. There’s also cool gadgetry (including some that should give studio execs heartburn) and a little bit of kissing and making up between Boxee and Hulu. All that and more in this week’s Broadband Bytes!
Broadcast stations aren’t very happy with the decision to open up the space between stations, “white spaces”, to allow access by unlicensed devices. In fact, they’re unhapy enough to sue the FCC over the decision claiming that such devices will interfere with their signals despite extensive testing to prevent it. It could be a while before white space devices are offering up Internet access, but, like others, I doubt the blockade will last.
Weeks after Congress approved more money for DTV converter box coupons, the backlog is finally starting to clear up. Everyone who was on the waiting list should get their coupon within 3 weeks. Good news for the procrastinators, presuming that boxes can still be found.
The defense and prosecution in The Pirate Bay’s trial have made their closing statements and wrapped up what could change the face of filesharing (and bandwidth consumption) forever. The short of it is that the prosecution says that TPB got filthy rich from pirating works and the defense says they’re in the same category as Google and didn’t even cover operating expenses. Now we have to wait until April 17 to find out what the judge thinks.
News sites jumped all over the announcement of a new streaming STB, then yawned and said, “oh, another ‘me too’ effort“. ZillionTV hopes to sell a dirt-cheap box with no subscription fees to stream online content and do paid VOD. Their angle? Get ISPs to give their traffic priority over competitors. Given how touchy users are over net neutrality issues, I’m betting they don’t go far with that last bit. But hey, more STB choice is a good thing for consumers, right?
Roku isn’t standing still either. Their $99 Netflix box now has Amazon VOD support. It’s been long-rumored that Roku is also working on adding options like Hulu to their menu of options. Cord-cutting may be a myth right now, but at $99 + $10/mo, those boxes are looking really attractive to early adopters.
If you’re looking for the top-end of third-party STBs, go check out the Tesly BLOBbox. It combines a OTA HD tuner with a 160GB DVR, then tosses in a bitTorrent client, RSS feeds, Last.FM support, an open SDK… basically an entire HTPC in an easy-to-use interface. The Linux-based box carries a relatively steep $490 price tag and is currently only available through an Italian reseller, but it shows how cheap technologies can help viewers watch TV on their own terms without monthly fees or a lack of extensibility.
Boxee and Hulu are on the mend. Kind of. Boxee released a new alpha that allows pulling in Hulu video from RSS feeds, but it’s not as slick as the old menu system that allowed you to browse all of the available content. The content providers want to get Hulu out as much as they can, but they’re also terrified of canibalizing more lucrative broadcast revenue. The disconnect between financial incentives and user desires has driven XMBC hackers to piece together new plugins to allow Hulu access without the ads and many users to go back to downloading torrents of their favorite shows.
President Obama picked Julius Genachowski as the new head of the FCC weeks ago, but the nominations is just now official. Genachowski is a net neutrality supporter, but that doesn’t stop the praise from both sides of that issue from flowing in. I imagine it’s because anything is an upgrade over Kevin Martin.
Sorry about the late post, folks. I had family in town over the weekend and, well, you know how that goes.
Cable’s been trying to make some waves with online video announcements as The Pirate Bay continues to dominate the prosecution in their trial. There’s also allegations that the US might be #1 in broadband, but it depends on which metrics you use or give weight to. I’ve also got a bunch of stories on online services and home media extenders. All that and more in this week’s Broadband Bytes!
Verizon will allow you to stream music, pictures, and (soon) video from your PC to any FIOS STB in your house. FIOS MediaManager is available to all double-play video/Internet customers for free and while the initial interface is a bit on the clunky side, it’s that kind of innovative product that keeps customers. Providers can also extend this to offer media streaming outside of the home. If you don’t have to mess around with a HTPC or setup your own streaming solution, why would you? Verizon is also letting subscribers remotely schedule DVR recordings.
What’s 400MB, written by John Carmack, and totally changes online gaming? Quake III in a browser, that’s what. Quake Live launched to queues of over 55,000 players waiting to get their hands on what is likely to be the most popular free-to-play non-casual browser game. This isn’t your typical small casual flash game and it’s likely to draw a big crowd. With a success like this, will you be ready for browser-based games pushing gigabytes of data?
The first Blu-Ray quality movies for purchase on an STB come from VUDU, not a big-name MSO or media store like iTunes. At between $14 and $24 per title, that’s a considerable discount over Blu-Ray discs, though you do sacrifice some portability.
Netflix plans to launch a streaming-only plan this year or next. The powerhouse in mail-order DVDs has seen most of its subscriber growth centered around the 12,000-title strong Watch It Now feature and its availability on everything from PCs to XBox360s to TV sets. The company has proved itself savvy enough to be ahead of what consumers want, a lesson that others could learn from.
T-Mobile is rolling out unlimited voice plans for long-time customers at a mere $50 per month. Customers will also be able to tack on data and SMS/MMS for just $35 per month more. With competitive pricing like this, you have to give customers a reason to keep a landline around.
If you’re being hit by black hat hackers, it could be personal, not business. About a quarter of malicious activity in 2008 was aimed at making a statement rather than the traditional ID theft or malware planting. I’m sure that’s not much comfort to Time Warner as they ride out a DDoS attack on their DNS servers.
Congress passed the broadband portions of the stimulus package and just barely dodged some really nasty provisions while the DTV delay looks less than crystal clear. We’ve also seen Qwest’s abuse of monopoly power to shut down a rival ISP, both good and bad economic news (including Charter’s bankruptcy) and Fairpoint’s big bucket of fail in taking over Verizon assets in rural New England. All this and more in this week’s Broadband Bytes!
The Qwest vs. SkyWi fight got even uglier as the CLEC sold off its VoIP business citing the problems it has had with Qwest. The incumbent’s willingness to throw around its weight was no doubt designed to put other CLECs on notice as to who exactly is in charge. This certainly highlights a stronger need for competing transport options like UTOPIA.
Fairpoint has managed to make a fine mess of their takeover of Verizon’s rural New England network assets. Not only did they manage to screw up a bunch of e-mail accounts, they also seem to not be paying employees for overtime owed as a part of the transition. Not exactly a good first impression, is it? Unfortunately for them, Verizon’s last network spin-off in Hawaii ended in bankruptcy. Hopefully Fairpoint can avoid a similar fate.
As The Pirate Bay prepares to go on trial for copyright infringement and faces the possibility of shutting down, some have started wondering if it could lead to a collapse of bitTorrent as a whole. The website currently indexes over 50% of all torrents and the remaining torrent sites would probably be unable to handle the load created by the resulting vacuum. I’m sure that would make Cox’s planned network management a bit easier.
Good idea: trying to retain customers. Bad idea: using LNP requests to do it. The US Court of Appeals told Verizon that using LNP requests to convince customers to not switch their phone service is a big no-no. That means that the time for retention is before you get the Dear John letter.
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!
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.
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.
This week saw the DTV transition delay get, uh, delayed (though not for long), Cox’s new traffic management plan, and a competing version of the broadband stimulus package that offers 50% more cash for 90% fewer conditions. Qwest also renewed its fight with SkyWi, Charter dropped a 60Mbps gauntlet, and Google launched tools to find out if you’re being throttled by your ISP. All that and more in this week’s Broadband Bytes!
Cox Communications is the latest large ISP to implement some kind of network management, opting for a system that’s a lot like what Comcast did. Unlike Comcast, however, they plan to throttle specific “low-priority” traffic types once the congestion gets too high including FTP file transfers, torrents and newsgroups. Predictably, there are a lotof peoplecalling bunk on the plan, but I don’t think it’s so bad. Comcast is getting ripped by the FCC since their protocol-agnostic version would degrade competitor’s VoIP traffic if you end up being one of the hogs, so it makes sense to try and only smack around the data types that generate a lot of packets and a lot of transfer. Most users are fine with network management schemes so long as they are transparent and generous; the complaining just happens to be very, vey loud.
Qwest decided to ignore an order from New Mexico’s PRC and disconnect some of SkyWi’s customers without the required 10-day warning. Qwest has likely figured that whatever the penalty is, it’s worth it to kill off a competitor and SkyWi might not be around to finish its lawsuit. The company tried to pass it off as a clerical error. Expect New Mexico’s PRC to give Qwest a serious smackdown (provided it can survive Qwest’s army of robot lawyers) and keep an eye open for possible FCC involvement. Spurned CLECs like SkyWi are prime companies to recuit onto open networks like UTOPIA.
Charter, despite its severe financial problems, stole the St. Louis speed crown from AT&T by launching a 60Mbps DOCSIS 3.0 service at a wallet-busting $140/mo. This bests Comcast and Verizon by about 10Mbps, but it far faster than anything AT&T can do with ADSL2+. Verizon took the opportunity to make fun of DOCSIS 3.0 and its limits as compared to fiber. Users on UTOPIA are likely very “ho-hum” about the announcement since 50Mbps service has been available for quite some time.
Google fired a shot at ISPs who employ any kind of throttling or traffic management by offering up free tools to test for it. Even if your ISP isn’t engaging in these kinds of practices, the presence of these tools will help keep them honest. In the debate over network management, it’s very important to be clear and upfront about any caps or network management policies you plan to employ. Comcast got a PR black eye by hiding its policies for months as angry users took to the Internet and flooded forums with complaints. They get kind of stabby when you mention it after the fact (and for good reason).
I imagine users on Comcast and AT&T will appreciate these new tools. All three ISPs have signed on with the RIAA to disconnect users who are sharing copyrighted files. It’s part of the RIAA’s broad approach to turn ISPs into their copyright cops in exchange for a cut of the action, something they have successfully pulled off in Ireland. Given the lack of an appeals process and frequent ISP mistakes, you can bet that this opens the market for competing providers to snap up those customers.In the UK, they’re debating a different approach: a £20/mo “piracy tax”. Such a tax has already been implemented in Isle of Man which allows residents there to pirate as much as they want for under $1.50/mo. The RIAA would probably do better to offer an “all you can download” music service or some kind of “piracy license” that gives you the right to download whatever you want.
Comcast is thinking about offering WiFi to subscribers, but no word yet on if they plan to charge for it or use it as a perk to lure in customers. They’re currenting testing it out in New Jersey in a partnership with Cablevision. Cox Communications really took the lead on this by snapping up a lot of regional 700MHz licenses so that they can start offering wireless services as well, including leasing tower space to cell phone carriers. Thinking beyond the triple play to include these kinds of services is a smart move for any service provider.
Smart companies also focus on customer service. Charter has taken up permanent residence on the DSLReports forum and, like Comcast, has a customer service team assigned to Twitter. And while Sprint has announced that they will layoff 8,000, they plan to avoid sacking anyone in a customer service position even as subscribers decline sharply. High customer satisfaction leads to low churn and lots of free word-of-mouth advertising. I recently got support from Sprint’s Twitter team and got my issue resolved in record time.
Guess who’s making money hand over fist? If you guessed Netflix, give yourself a red envelope. Or don’t, since most of the company’s revenue has come from users switching from mailed DVDs to streaming on their PC or TV. Even with the switch to streaming, Netflix is going to start shipping DVDs on Saturdays to help speed up processing and delivery times. (No word on how the post office’s plans to drop Tuesday service will affect this.) I wouldn’t be surprised if the secret sauce in Netflix’s bottom line is customer satisfaction. The few times I’ve had an issue, I had a short hold time to talk to a live person who was empowered to make me happy.