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.
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.
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.
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.
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.
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.
Bring up the term "regulation" and you're often going to think of heavy-handed mandates, byzantine rules and unresponsive bureaucracies. Despite this popular image of regulation, it sometimes works.
Ars Technica reminds us of the 40-year-old Carterphone decision that the FCC handed down 40 years ago yesterday. The landmark decision allowed third parties to start attaching any device they wanted to the public phone network so long as it did not cause interference. Not only did it let us pick and choose our handsets, it also gave birth to devices as varied as the answering machine and modem.
Even so, regulation sometimes fails us. Some small ISPs are having their day before the Supreme Court to nail AT&T to the wall on wholesale line-sharing rates. Their argument is that the fees were designed to give the incumbent carrier a significant advantage over competitors. Many CLECs and competing ISPs brought up the same allegations throughout the 90s, and with fewer ISPs today than in 1997, the accusation has legs.
There's also the issue of network neutrality hanging up in the air. Big companies like AT&T and Verizon are scared to death of mandates from Congress, especially with how badly Comcast has been skewered over their secretive throttling and booting users who use too much of their "unlimited" Internet. Their angle is to try and get the FCC to approve a plan favorable to their interests before a less-friendly White House takes over. The good news is that the mere threat of regulation has forced them to move pretty far from their original positions, a move that's good for consumers.
When you have a network with competing service providers, interchangable equipment and freely-moving applications, consumers and innovation win. Open platforms like the kind that Carterphone created should be encouraged instead of hampered.