Michael's Insight

More on A-La-Carte; DSL Falls; Young Men and Tech Glitches; The Prez and His BlackBerry

Professor Cory O'Connor, from Chapman University and formerly the Senior Vice President of Communications of The Disney Channel disagreed with my a-la-carte position in a comment he posted on this blog last week. 

I was SVP of Communications for The Disney Channel when it moved from a la carte to basic. I'm not without some loyalties to your industry, but you guys are overplaying your hand to protect your status quo, forcing us to pay for Sumner Redstone's excrement. ....  I am firmly in the camp of a la carte, Michael, and I intend to stay on your case about this. I hope David Lazarus from the Los Angeles Times does also.

To fully review his position I am linking to his entire post as I want to give everyone an opportunity to consider his position.  

Professor O'Conor did not, however, address the economic issue I raised in last week's post.  Instead, he responded to an earlier post of mine in which I argued that a-la-carte would dramatically "dumb down" television by reducing the number of choices people have.

Two congressmen asking questions about DTV issues

Congressmen look to resolve expected DTV problems [CNET News] 

Two more members of Congress are expressing concerns that the FCC, broadcasters and the federal agency responsible for the digital converter box coupon program need to do more to prepare the public for the digital transition. House Telecommunications Subcommittee Chairman Ed Markey and Commerce Committee Chairman John Dingell have written letters to broadcasters and the federal agencies asking them to detail plans to remedy concerns that arose during the September digital transition test in Wilmington, NC. 

The letters noted that the FCC's trial conversion in Wilmington, N.C., this September "revealed many problems related to the transition, including consumers who did not know they needed to rescan their boxes to search for new channels after the switch, needed to obtain or adjust antennas to receive digital signals, or were no longer able to receive a station's signal because the station's digital signal contour differs from its analog coverage area."

While a majority of Americans are well aware of the digital transition, primarily because of a public service campaign by cable operators and broadcasters, there are still lingering issues for many over-the-air television viewers. It's critical that the FCC continue to focus on solving these issues prior to Februrary 17 of next year.

Remember, if all the televisions in your house are connected to cable, you're already prepared for the digital transition. If you choose to use an over-the-air digital converter, you will need to determine if your antenna is receiving the digital signals and that the converter is properly programmed to the frequencies in your local area.  Come next February, your televisions will continue to work normally during the switch from analog to digital broadcasts as long as they are connected to cable. 

New customers choose cable two-to-one over DSL

Cable Beating Back DSL [Broadband Reports]

Third-quarter results are showing that new broadband subscribers are choosing cable broadband at a 2-1 rate over DSL. The gap between cable broadband and DSL continues to grow because of the significant speed differences between the two. Cable broadband is faster than DSL, and promises even faster speeds as cable operators begin to roll out DOCSIS 3.0 technology.  Another BBR report declares that DSL has cemented its title as the next dial-up.

Unlike phone companies, cable companies do not view technology as the end-game of their services.  Instead, it's a means to an end.  Do customers really care if they receive their blazing Internet speeds via a network that delivers their service via fiber to the curb or fiber to the node?  No.  Unless there is a difference in the quality of service.  With DOCSIS 3.0, cable has put to rest the belief that a complete fiber optic rebuild is needed to compete effectively with Verizon's FIOS technology.  Instead, both Verizon and AT&T remain burdened with huge capital investment requirements in order to compete with cable's already-installed platform that easily adds DOCSIS 3.0 to it.

The remaining question is when does Wall Street figure it out and start reflecting these economic differences in the values of wireline phone and cable companies.

Facebook to take their election tools overseas

Facebook's political squad looks overseas [CNET News]

Having had a major influence in the presidential election this week, Facebook is looking abroad to provide the social networking tools that allowed campaigns to organize their supporters and to recruit additional supporters. 

"This week is definitely all the post-election aftermath, but I'm definitely looking forward to jumping right into some of the international politics (and) international elections," said Zuckerberg (who is, in case you were wondering, CEO Mark Zuckerberg's sister). "It's a little more fun to work on some of those because they don't draw out their elections for a year and a half."

According to Facebook, more than 5.4 million users clicked on the "I Voted" button on their Facebook account on Election Day. Over three-quarters of Facebook users live outside the U.S., so there are plenty of users that can take advantage of Facebook in their home country's elections. 

 

Studies say net neutrality regulations will raise broadband prices

‘Net neutrality’ could raise broadband prices [Financial Times]

As the European Parliament considers changes in telecom law, two studies are set to be released that indicate that imposing net neutrality regulations stands to drive up the cost of broadband to consumers. One study has been commissioned by the telecom industry and another was written by the Centre for European Policy Studies.

An industry-commissioned report from consultants at Copenhagen Economics, due to be published next week, is set to warn that imposing net neutrality in Europe will “pass on the cost of scarcity to all consumers” and significantly increase broadband prices. That, in turn, could depress broadband demand.

It appears that Europeans have discovered that creating additional regulations that restrict responsible network management has a deleterious effect on broadband consumers. I'm looking forward to seeing both of these upcoming reports on this issue.

Tracking broadband access and other Wednesday article links

Senate passes broadband data bill [CED Magazine]

America should soon have an accurate picture of consumer's access to broadband service, thanks to a piece of legislation passed by the Senate - the Broadband Data Improvement Act. Currently the FCC tracks broadband access, and defines it as any Internet connection above 200 kbps. That's a lot lower than the speed most consumers consider "broadband." Also, the FCC's broadband tracking was only at the granularity of ZIP code boundaries - leaving out a great deal of detail of broadband availability.

This legislation promises to reform the metrics and process of tracking consumers' access to broadband. I applaud this legislation which should focus the discussion on the reality of the state of Broadband rather than on how we measure its success or failure.

From the article:

NCTA President and CEO Kyle McSlarrow said: “We applaud the Congress for approving this important legislation, which will enable policymakers to have a much clearer picture about the state of broadband in America. Improved data about the availability and speed of all broadband offerings will help accomplish the important goal of universal broadband for all Americans. As the largest broadband provider in America, our industry will continue to support efforts designed to spur broadband adoption and access in those areas where it currently doesn’t exist.”

What should the FCC focus on for the rest of this year?

America begins the Digital Television Transition

Wilmington, North Carolina entered the digital age yesterday when it became the first television market in the US to pull the plug on analog broadcasting.  In a ceremony yesterday at high noon, Mayor Bill Saffo and FCC Chairman Kevin Martin flipped a big cardboard switch signifying the end of the type of television broadcasting that has been in place since television broadcasting began 80 years ago.

Cable and satellite customers were not impacted by the switchover on televisions that are hooked up to them.  However, in addition to non-customers, cable and satellite customers who have analog TV's in the household that are hooked up to an antenna need a digital converter to continue to work.  According to the Wall Street Journal, over one hundred people called various broadcast stations and hot lines to find out what happened to their televisions when the switch was flipped.

Let the market drive

When I posted my first blog upon my return from Africa on Monday, I told you I wanted to discuss how important a light touch in government regulation was in telecommunications policy.  Just so you know, I wasn't born with an anti-regulation gene that caused me to be so firmly in the camp of being pro competition and anti regulation.  Indeed, it was an acquired taste for me, drawing from several very real experiences in my life-long career in cable. 

Here's one of them. 

In 1994, the cable industry was in dire straights.  Two years prior, Congress had passed the Cable Act of 1992 which imposed massive regulation on the industry ending a decade of dramatic expansion into new areas and an unprecedented increase in program options.

Reflections upon my return from Africa

I'm back from vacation.  I think this was the first time I actually took a full two weeks off from work.  Even more unique for me, it was the first time I was pretty much incommunicado for more than a few hours. 

We flew into Arusha in Tanzania.  I knew instantaneously that we "weren't in Kansas anymore, Toto."

Cable broadband now the choice of 4 out of 5 new customers

Today, guest blogger John Dobken writes about the decided majority of new broadband Internet customers choosing cable over DSL.

Michael has IP Democracy on his list of must-read blogs, so I thought I'd write about a story that blog posted last week about the fact that cable broadband Internet is now the overwhelming choice for new broadband customers.

Surveying the second-quarter broadband subscriber additions for the top nine cable operators and the top four telephone companies, IP Democracy finds that 81% of new broadband subscribers chose cable over DSL. That's an increase from only 44% a year ago.

As IP Democracy puts it, customers are choosing cable broadband's speed over DSL. DSL is the new dial-up, and the customers are making that choice clear in these latest results.

By quarter's end, the cable operators served a collective 34.2 million high-speed customers, while the phone companies served 27.1 million broadband subscribers.

Both cable and phone companies have acknowledged the sudden disparity between cable and telco broadband growth rates. Cable operators say that speed, not price, is the ultimate killer app and DSL just can't compete. It's the new dial-up.

Phone companies say that a weak economy and a marketing pullback hit them harder than expected. It's hard to tell at this stage just what really happened during the quarter, although I tend to think that the telco broadband price war, which started in 2003, has, in fact, played itself out.'

...

Whatever the case may be, if this disparity keeps up, phone companies could soon actually lose broadband customers.

NYT: Phone companies struggle & other Wednesday article links

Phone Giants Fight to Keep Subscribers [New York Times]

Ma Bell is scrambling as landline customers are disconnecting from the phone companies at an ever increasing rate. Where are they headed? Well, many are opting to go with lower rates offered in bundled packages by cable operators. Some are getting connected through other broadband VOIP companies, and some are foregoing landline connections entirely - opting to only have a wireless phone.

This article, from the New York Times, details the travails of the telcos as they continue to churn landline subscribers and at the same time aren't seeing any substantial increases in wireless subscribers.