Broadband Bytes: February 7-13, 2009

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!

Broadband Bytes: January 31-February 6, 2009

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!

Broadband Bytes: January 24-30, 2009

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!

  • The DTV delay got stalled up as the House failed to consider the bill for a fast-track passage despite unanimous support from the Senate. The Senate later passed a second DTV delay bill that the House should vote on next week; it’s widely expected that it will pass and President Obama has already said he will sign the bill as soon as it hits his desk. Now Congress just needs to figure out if/how to fund the 3.2 million (and growing) backlogged requests for DTV converter box coupons. I think the whole thing is kind of silly since Hawaii made the switch and there was no TV armageddon. Besides, interim FCC Chairman Copps says that a seamless transition is impossible.
  • 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 lot of people calling 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.
  • The US Senate has put together a competing version of the House’s broadband stimulus plan. The good? It ups the funds by 50% to $9B. The bad? It strips out all of the open access language and allows anyone to get in on the action. DSLReports rightly calls it a giveaway to Verizon since they can become eligible for money at the flick of a switch without having to really do much of anything differently and, as expected, Qwest doesn’t like how the plan is shaping up either. The House has already passed the $6B version and kept open access provisions intact. It also keeps the money restricted to rural and underserved areas and will only be available via loans and grants, not tax breaks as incumbents had hoped for. GigaOm has a great breakdown of who wins or loses in the various proposals.Telco lobbyists are already launching a multi-pronged attack. They want to scrap special access rates for competitors, up the spending, drop the speed requirements, get more tax breaks… pretty much anything they think might stick. Incumbents, though, seem to have missed the memo that the goals of this plan are to increase availability of braodband AND increase competition, not entrench the incumbents. I suppose they’re too used to abusing the USF and getting their way.
  • 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.
  • Speaking of Verizon and AT&T, they announced earnings this week that reveal that DSL and landline users are being cannibalized by their FIOS and U-Verse systems, respectively. Both systems are picking up a lot of video users, but the margins on most television packages are very slim. Wireless revenues were the real shining spot, but it didn’t stop AT&T from posting a large drop in revenues and announcing a sharp decrease in spending for system upgrades. Guess the iPhone wasn’t enough to save them as AT&T also froze executive compensation (including bonuses) and brought a lot of jobs back to the US from India. Verizon is also rumored to be contemplating layoffs despite a good quarter.
  • 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.

Broadband Bytes: January 10-16, 2009

Holy moly has the country gone crazy about the impending DTV transition deadline. There’s also more talk about the broadband spending in the upcoming stimulus package (where the money will come from is still a mystery), Charter’s impending implosion, the new FCC Chair, and continuing tech layoffs. We also know who’s going to replace Kevin “Ma Bell is my Homeboy” Martin on January 20.

  • The DTV transition is getting much, much uglier as Congress prepares an Obama-backed proposal to delay the switch from analog signals until June 12. Verizon isn’t very happy about it since it would delay their planned deployment of LTE, a move that also hurts Qualcomm, the company who makes the equipment. Ars Technica unveiled that an Obama cabinet member proposing the delay may have a conflict of interest as the delay would benefit Clearwire. It’s also not surprising that AT&T is in favor of the delay since it would hurt one of their largest competitors. Public safety groups also don’t want to delay their use of the freed-up 700MHz spectrum for a new public safety radio network. House Republicans have also voiced opposition to the delay citing the increased confusion of moving the date. Dish Network is already trying to capitalizing on it with misleading sales pitches. Wilmington, NC carried out a DTV test with few problems and Hawaii has already gone all digital.Add this blogger to the list of people who thinks that delaying the inevitable is a really bad idea. It’s been in the works for 10 years, we’re been talking about it publicly for at least three and stations have been bombarding consumers with warnings for at least the last 6 months. If you aren’t ready by now, then you just don’t want to watch TV. And if you do, there’s plenty of options available, including calling up local video providers for service.
  • Six billion dollars. That’s the figure being put out there for broadband spending in the new stimulus package and it may not be the final spending total. Of course, nobody knows what funding mechanisms will be used (grants vs. loans), what speeds we should expect (Skype says 50Mbps or bust) or even which technologies to support. A lot of broadband advocates (including yours truly) are concerned that the funding could become just another USF-style grab-bag for incumbents that gets used to shore up their antiquated networks and further entrench them in their marketplaces. Telecom experts are wise enough to see that writing on the wall and have proposed splitting out the USF and any broadband initiatives. Incumbents like Qwest already lobbying quite loudly for as much of the pie as they can get.
  • Maybe we should have a Charter Death Watch. The company recently missed a scheduled interest payment and filed suit against Verizon in an escalating series of patent and legal disputes. For months analysts have been predicting the bankruptcy of this debt-heavy MSO, though given their abysmal ratings in the American Consumer Satisfaction Index, this shouldn’t be much of a surprise. Companies that rank highly on the ACSI end up having a better financial picture and healthier stock price. (Hey Comcast? You’re tied with Charter on the ACSI. For last place. Just saying.)Charter isn’t the only one facing some tough times. Motorola laid off 4,000 employees and Nortel networks had to file for bankruptcy protection. Qwest is also looking at closing down a Seattle call center. Commerical account losses are the steepest, so don’t expect telecom as a whole to be very rosy this year unless you figure out way to sell other services to make up the difference. Even in all of the doom-and-gloom, however, online advertising is expected to grow. With targeting ad campaigns based on better subscriber data, there’s a much better bang for the buck. Comcast is trying to extend that intelligence to video advertising with a massive 500TB database of user behavior. Providers are also trying to shoot down privacy laws that could compromise such data-collection behaviors.
  • Speaking of selling additional services, you might want to reconsider coming up with an in-house solution. Telephony Online proposes you start partnering up with companies that already do a really good job at providing services outside of the triple-play such as telemedicine and home security. There’s a lot of wisdom to this embrace of wholesale models since you can focus on your core business instead of being distracted by expensive (and often faulty) products with a high liklihood of being discontinued in a few years. The report focuses on FTTH operators (and part 2 discusses some of the regulatory hurdles that prevent more FTTH systems), but there’s a lot of wisdom in this for HFC, FTTN and POTS systems as well.There’s also looking at The Dark Side to make more money. The RIAA is offering up a portion of settlements with pirates if ISPs will turn them in (most of them aren’t biting) and most of the proposals to cap users are focused on squeezing out additional revenue.
  • As Kevin Martin prepares to ride off into the sunset for a new think tank position, Obama has named Julius Genachowski as his pick to head the FCC, a move that was applauded by a lot of media reform and broadband advocates. Tops on the agenda? Net neutrality, fighting media consolidation (see above about partering instead of building a vertical monopoly) and managing the DTV transition. You can kiss a la carte video proposals goodbye and not expect as much focus on video pricing. White spaces may also take a back burner. Cable companies have probably already started the party to celebrate Martin’s departure. If you feel a small tear of sadness over Kevin leaving the FCC, why not relive some of his greatest hits?
  • Get ready for more pricing wars. MVNO Boost Mobile dropped a bombshell with a $50 unlimited wireless plan that includes voice, text and walkie-talkie services. That goes head-to-head with offerings from all of the major cell providers (most priced at $100 per month or greater) and even takes on brands like Cricket. The New York Times reports that Sprint did this with their pre-paid value brand to try and utilize more of their Nextel network. Embarq also dropped prices on it’s top-tier DSL product by $10/mo.One area that isn’t falling, however, is pay video services. While promotional rates are very attractive, rates have been rising quickly (no doubt because of higher retransmission fees). Oddly, churn hasn’t yet been affected, but that might be because a lot of customers are trapped in contracts with early termination fees. Many customers have also wised up; they know that calling to cancel can land them the promo rate for a few more months. Despite service complaints, price is the main factor driving subscribers to seek alternatives. Verizon seems to have taken the lead on this in at least one case, something that no doubt improved customer loyalty.
  • Despite what AT&T and Verizon are doing, Qwest is still going to stay out of the video market. Their rationale? Consumers will end up watching all of their video on the Internet soon anyway. That’s true in a lot of cases (especially for network television content), but there is still a lot of paid content that consumers want, especially as cable networks continue to make big investments in original programming. In the end, Qwest is going to have to come up with something more compelling than upload-crippled FTTN and reselling DirecTV.
  • As proof that Qwest might be onto something is CastTV, a relatively new site that aggregates content from various other video portals like Hulu, YouTube and others into a clean interface. If that got paired up with an Internet-connected TV, you might be able to ditch (or complement, your pick) your paid programming package. Demand for such a set is very high, over 71%. Microsoft has spent a long time working on an IPTV product for the XBox360 and its Netflix integration is supposed to be top-notch. Blockbuster also realizes the power of streaming video and is trying to push a new streaming product even though they totally flubbed their first attempt. The moral of the story is that providing gobs of bandwidth and not much else seems to be where telecom is heading.
  • Is Verizon planning to kill off POTS lines in favor of VoIP? It depends on which day you ask. Initial reports said they were going to within 7 years, then they came back and said they had no timeline. On the plus side, VoIP is inexpensive and has made a lot of quality and reliability improvements. On the downside, it’s still not as reliable as a POTS line and, as we learned from the Qwest-SkyWi dust-up, it may fall outside of the purview of your state PUC.
  • In gadget news, the Supreme Court has asked the DoJ to give them some input on the Cablevision DVR case. Pretty much every content producer in the country has come out against the proposal which would offer up 160GB worth of DVR for an inexpensive $10 per month.

    Clearwire is showing off a portable WiMax “hotspot” that acts as a WiFi-WiMax bridge. Any WiFi device could be surfing over the speedy new network (if/when it becomes available in your area) with minimum fuss. Somewhat related to this is the emergence of subsidized netbooks from Dell and Acer for a cool $99 if you pair it up with a $60/mo or greater data plan from AT&T. It’s not a bad deal, but it does inspire memories of the ISP-subsidized PCs of a decade ago that ended up flopping. AT&T is also getting ready to push an in-car satellite TV and radio service – at $1300 for equipment and $22/mo for service. I somehow don’t see that catching on anytime soon.

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.