Michael's Insight

Speaking to the Lexington Rotary Club

Q & A with the Lexington Rotary Club

I had the good fortune to speak to the Lexington Rotary Club yesterday at the beautiful Fasig-Tipton Catering Center where the warm welcome from Rotarians, the peak-color Autumn leaves, and magnificent horses made the visit truly special.

My main goal was to advance the awareness of the February 17 digital transition and to explain what, if anything, consumers need to do in order to continue to watch broadcast television after the date.  After receiving a couple of questions about the transition, we discussed other cable-related subjects, all of which we've addressed right here on this blog since we began it last spring.

 There was lots of interest about the launch of Digital 4.0.  In addition to wanting more clarity on what to expect, they were also interested in when.  As I told the group of 200 or so community leaders and activists, we expect Digital 4.0 to launch in a couple of waves in late November and December, depending on where you live.

I also explained the reason we use the software industry's policy of numbering service upgrades -- so you can always be assured that by the time we are rolling out our latest version of our products, we're already well into the development cycle of the next release.

Other questions included:

• a-la-carte programming (it would make television prohibitively expensive);

• can we ever get rid of set-top boxes in the digital world (new Tru2Way sets can go box-free but older TV's will need one);

• why do cable rates increase (because our costs are going up, especially for programming, but customers can choose to bundle their voice, video and broadband services and save);

• when will customers have their computer on their TV or their TV on their computer (they can now and more device overlap is on the way, but only for those who want it);

Thanks to the Lexington Rotary for the invitation to speak and thank you even more for the great things you do!

More stations conducting digital transition testing

The Great Two-Minute Television Blackout [NYT Bits Blog] 

We're just over 100 days away from the digital television transition, and in an attempt to increase awareness of the transition and how to prepare for the transition, many broadcast television stations are performing digital transition tests. Earlier this week, broadcasters in New York City turned off their regular analog signal for two minutes as part of one of these tests. During the test, viewers prepared for the digital transition continued to see normal programming, but viewers still watching the analog signal received a message telling them that they needed to make changes to continue receiving a television signal after the transition. 

As we get closer to the transition, I expect additional broadcast stations will conduct this type of testing. Remember, if you're an Insight customer, after the digital transition you will have no problem continuing to receive everything you receive today on all your televisions that are connected to cable. If you have additional TV's that receive their signals with an antenna, just give us a call.

NCTA favors public comment period on white space rules

NCTA: FCC’s white space approval “inexplicable” [CED Magazine] 

As the FCC considers a public comment period prior to a vote on white space devices, the National Cable and Telecommunications Association (NCTA) is weighing in. In a formal letter addressed to the FCC, the NCTA joined in the call for a public comment period prior to the adoption of final rules for white space technology.

From CED Magazine:

The NCTA reiterated its support for the notion of white space broadcasting, but noted that though the Commission is supposed to balance the benefits of new technology with protection of established broadcast systems: “Recent reports of imminent Commission action in this proceeding do not reflect this balance. Instead, there seems to be a complete disconnect between what the Commission’s technical analyses have shown and what the Commission is proposing to adopt.”

 

Disappointing News -- No Meaningful Reduction of Spam

I guess it was wishful thinking but I was hoping to see a meaningful drop in spam traffic after the authorities busted the "HerbalKing" Network, a major source of spam.  Most published reports confirm that there was little or no impact.  I also promised to check with our email experts for a first-hand look and here's what they found -- No noticeable change.  On two Wednesdays before the bust, we blocked 10.2 million spams.  On the two Wednesdays after it, the number was 9.8 million.

Considering this network was supposedly responsible for one-third of all spam, this shows how versatile Internet bandits can be.  Too bad.  It's an unfortunate example of how complicated it is to manage bad things on the Internet.  Almost instantly, alternative routes were established and spammers were enjoying business as usual. 

TV prices falling fast for the holidays?

TV Prices Falling Faster [NYT Bits Blog]

Are you looking to buy a new HDTV during the holidays? If you're looking to get a new television for the digital transition or getting hooked up to high definition content, the NYT's Bits blog indicates that television prices may be falling fast in the next six weeks due to the challenging economic situation we find ourselves in. Retailers are very concerned that consumers are keeping a tighter grip on their wallet, and are expected to respond by slashing TV prices.

An expert on TV prices is quoted in the NYT article, telling consumers to look for these prices.

Paul Gagnon, DisplaySearch’s director of North American TV market research, predicts the following prices in the coming weeks: 

• 19-inch high definition LCD: $199
• 32-inch HD LCD: $399-$499
• 40-inch 1080p LCD: $799-$999
• 42-inch HD plasma: $599-$699
• 50-inch HD plasma: $899-$999

I hate to tell you what I paid for that 50-inch plasma TV in my living room only 3 years ago.  Ouch.  But the NY Giants sure looked great yesterday, coming from behind to beat the Steelers in high-def!

Survey says that majority of upstream Internet traffic is P2P

61% Of All Upstream Traffic Is P2P [Broadband Reports]

Sandvine, the company that manufactures network management equipment and software, has released a survey detailing Internet usage in the U.S. The key finding in the survey is that 61% of all upstream traffic on the Internet is peer-to-peer file trading. P2P applications compose 22% of all downstream traffic on the Internet.

“Bulk bandwidth applications like P2P are on all day, everyday and are unaffected by changes to network utilization,” said Mr. Caputo [of Sandvine].  “This reinforces the importance of protecting real-time applications that are sensitive to jitter and latency during times of peak usage.  Effective network traffic optimization techniques use sophisticated policies that balance network capacity, application requirements and subscriber quality of experience in real-time.”

Members of Congress Support a Meaningful Moratorium on Retransmission Consent Disputes, Internet Regulation, and other Links

Lawmakers Troubled by Cable - LIN TV Spat  [Multichannel News]

Representatives Anna Eshoo (D-CA) and Nathan Deal (R-GA) wrote a bipartisan letter to FCC Chairman Kevin Martin asking him to join with the other four commissioners to implement a short moratorium on the right of local broadcasters to pull their signals off of cable and satellite systems.  The moratorium would last for about three months during the digital transition. 

The Representatives are right to be concerned because the government is receiving an increase in applications for digital converter coupons from cable customers.  From who?  From cable customers  who lost LIN TV signals, many of which are major network affiliates.  They lost them when LIN declined to renew carriage rights or extend their old deal while they continued to negotiate with two cable operators, Time Warner and Bright House. ...

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.

Racing toward the digital transition?

DTV NASCAR Campaign Off To Bumpy Start [Broadcasting and Cable]

In an effort to raise awareness about the transition to digital television, the FCC has decided to sponsor NASCAR driver David Gilliland's #38 Ford. The race car features the phrase "Is your TV ready for digital?" on the hood. The cost to taxpayers?  $350,000!

In its first race, the #38 DTV Ford crashed into the wall at the Martinsville Speedway on Sunday, with 13 laps remaining in the race. Car and driver David Gilliland will be fine but just think about it; in a world where the Federal government is spending a trillion dollars to save the economy, how could the FCC write a check for $350,000 to paint a slogan on the side of a racecar?

White space opponents request public comment period

Broadcasters challenge FCC 'white space' report [CNET News]

The National Association of Broadcasters (NAB) has filed a formal challenge to the FCC's recent report finding that white space devices meet the "proof of concept" burden. The NAB has asked for a period of public comment on the report's findings, claiming that those findings aren't supported by the details contained within the report.

Last week, the NAB issued a press release listing failures of the prototype devices tested in the FCC's report. Generally the devices that relied solely on signal sensing to determine whether they would interfere with broadcast television signals had trouble either detecting the signals, detected them when they didn't exist or both. The FCC has ordered white space device prototypes that use only signal sensing to undergo another round of tests.

Nonetheless, the FCC is poised to vote early next month on the white space proposal unless the public comment period requested by the NAB delays that vote.

Drowning in Spam and other Friday Links

Authorities Shut Down Spam Ring [New York Times]

The Federal Trade Commission has announced that a spam ring that sent up to one-third of all spam email has been shut down. This news comes after a federal court has frozen the assets of the group. Have you noticed a difference in the amount of spam you receive?

Well, I did some checking and was shocked to find out what I did.  Insight, a company with less than a half million Broadband customers (not all of whom use our email servers) currently processes over 2 billion emails a year for our customers.  That got my attention so then I confirmed what the Times article said -- that over 90% of all email arriving into our email servers is spam!  That doesn't even count the ones that slip through and get into your inbox.

Imagine how much more efficiently our equipment could be deployed and utilized if we could cut spam in half or more.  Our email servers have to be configured to handle all incoming email, including the stuff that goes right into the garbage.

I've asked our broadband folks to keep an eye on whether or not we experience a meaningful drop in spam over the next couple of weeks.  2 billion emails a year translates into about 40 million a week.  In case you're curious like I am, check back here.  I'll let you know whether or not we notice a meaningful drop.

FCC: White space devices interfere with cable but meet proof of concept

FCC report: White space devices work as "proof of concept" [Ars Technica]

The FCC's Office of Engineering Technology has released it's report on field testing of white space device prototypes, and while the FCC has decided the prototypes have met the "proof of concept" burden, there's not much good news in the report with regard to the interference the devices cause for cable systems. For those of you new to this issue, white space devices are potential receivers of wireless Internet using parts of the spectrum reserved from broadcast television signals. Here's one excerpt from the report:

"The cable converter (set-top) box was inserted into the signal path and connected to the DTV’s tuner input. The set-top box was tuned to virtual channel 220 (cable channel 77) and a good quality digital picture was observed. The Adaptrum transmitter was tuned to channel 26 and activated at full power (no external attenuation). Interference was immediately observed in the form of a complete loss of picture."

This is exactly the type of interference that the NCTA warned about when it filed a letter with the FCC on this issue. The interference from the device test cited previously was so bad that the testers couldn't stop the interference until they installed "laboratory-grade" cabling between the cable box and the wall outlet. That's not the type of cabling found in most homes. If a device like the one above were to make it to market, cable television viewers might as well forget watching television while they (or their neighbors) use their white space device.

Even though it certified the devices as meeting "proof of concept," the report said that white space devices require a second round of testing.

Concern about a "messy" digital transition comes from FCC commissioner

Digital TV Switch Will Be Messy: FCC Official [Reuters]

FCC Commissioner Robert McDowell believes that next February's transition from analog to digital television will be "messy." McDowell made that comment after returning from a digital transition awareness campaign in Montana, Oklahoma, and Alaska. FCC commissioners are visiting a number of cities with large percentages of over-the-air television viewers - those that will be affected by the digital transition.

According to this article McDowell goes on to request that broadcasters continue their efforts to educate the public about the transition and what they need to do to make sure their television continues to work after February 17, 2009.

It's also important that the FCC continue to make a successful digital transition the focus of its efforts. At this critical time, it's important that we all keep our eye on the ball.

Study reveals most P2P pirates stop with a warning

72% Of P2P Pirates Would Stop With ISP Warning [Broadband Reports]

Broadband Reports writes on a study released by Entertainment Media research which indicates that 72% of those sharing copyrighted material on p2p networks would stop if issued a warning from their ISP. The warning - asking illegal file sharers to choose between file sharing or their Internet connection - appears to be a strong deterrent.

One of the most compelling reasons to quit would be if a consumer received a cease and desist warning notification from their ISP. 7 out of 10 currently accessing un-authorised content state they would stop if this happened. Interestingly, some of the most likely to be dissuaded are teenagers (78% for male teenagers and 75% for female teenagers). Nonetheless people are concerned about stories of prosecution, and nearly 2 in 3 say they would stop if they felt there was more chance of being caught, and over half are put off pirating by news stories.

Some ISPs are considering the use of filters to target illegal file sharing on p2p networks. And at least one cable operator is already sending the type of warnings detailed in the study.

HD programming viewing patterns and other Monday article links

HD Viewing Patterns Equate To Fuzzy Math [Multichannel News]

I ran across this article in Multichannel News that details how HDTV owners use their HDTV. HDTV ownership appears to have the biggest impact on sports programming viewership. According to a Nielsen study cited in the article, HDTV households had 40% to 120% higher ratings for football games than non-HDTV households. But, it doesn't appear that HDTV owners are more likely to watch HD programming just because it's on.

Leichtman also questions the commonly held assumption that viewers with HD sets are much more likely to watch HD content over standard-definition fare. Last year, his survey found that just 27% of HD viewers “strongly agreed with the statement that they would look to see what was on the HD tier before looking for non-HD programming,” he said.

Horowitz's Waterston agreed. “Our research has consistently found that HD programming has not changed the genres that people are watching,” she said.

The most important takeaway from the article is that most of the research available today on HDTV viewership is likely to change as cable operators expand the number of HD channels and HD VOD available to their customers.

Digital 4.0 -- A followup and other links

Not surprising that I received a lot of comments about our Digital 4.0 announcement.  We named a lot of new linear and on-demand channels and most of you will receive at least many, if not all of your favorite channels in HD.

Adding HD channels, and indeed, improving all of our services is an ongoing task for us.  These are not one-shot deals.  That's precisely why we decided to name our services with release numbers like "Digital 4.0 ".  Like in the software world, we are trying to make it clear that by the time you get an "upgrade" or a new release of our products, we're already working on the next one. 

Back to the future - Customers getting rabbit ears

Antennas up in TWC-LIN feud Buffalo Business First

You'll remember that I wrote earlier this week about the retransmission consent dispute between cable operator Time Warner and LIN TV. A week ago, LIN TV's broadcast station signals were pulled off the air in several Time Warner markets. In Buffalo, Time Warner has been handing out rabbit-ear antennas to customers, so they can watch the broadcast stations over-the-air. Time Warner has handed out over 25,000 rabbit-ear sets in Buffalo in the last week.

But this temporary solution is the perfect example why cable operators have asked the FCC for a quiet period on retransmission consent agreements around the digital transition. While rabbit-ears work for over-the-air television viewing today, next February, viewers will need more than just rabbit-ears to pull in a digital broadcast signal.  Confusion and the potential lack of digital converter coupons, as suggested by FCC Chairman Kevin Martin, (which I wrote about yesterday) make this short moratorium of pulling signals absolutely critical to a successful transition.

Running out of digital converter coupons?

Martin Fears Coupon Program Lacks Funds [Multichannel News]

FCC Chairman Kevin Martin has written to Congress about his concerns that the government program that provides citizens $40 coupons for digital converter boxes may not have enough funds to provide coupons to all those seeking them in advance of next year's digital transition.

Part of the problem may be that the government underestimated the demand for the coupons. Here's what this article had to say about the number of coupons needed for the recent DTV test in Wilmington, NC.

In the letters, Martin offered various projections and scenarios showing that NTIA could lack sufficient funding. For example, he said NTIA estimated that in Wilmington, N.C., a test market that made the DTV transition on Sept. 8, the number of broadcast-only homes was 13,759. Martin said 19,187 broadcast-only homes applied for coupons, certifying they didn't have cable or satellite TV. Martin supplied other examples that he said could result in a funding shortfall.

Martin is right to worry about this.  It's also a perfect example of why it's absolutely essential that federal policy makers keep their focus on preparing for the digital transition and not get distracted by other long-term policy issues.  This is the time to leave those decisions to the next administration.

A-la-carte online video and other Tuesday article links

More Media Inaccuracies About A La Carte [Cable Tech Talk]

CableTechTalk takes up the issue of the cost of cable versus a kind of a-la-carte programming proposed by a Washington Post columnist. The columnist proposes turning online video into your own TV service to replace cable. "But would you get the same programming at a cheaper cost?" asks CableTechTalk.

At the $1.99 that Amazon Unbox and Apple iTunes charge for a program, the average TV viewer could run up a bill of over $500 if they try to match their viewing habits with cable television according to CableTechTalk.

I've written about why the a-la-carte programming model is not a good deal for consumers or the diversity of programming currently available. And now, even the online video version of a-la-carte has a hard time living up to the value of cable.

Retransmission Consent Problems and other Monday article links

Cable Operator Sends Viewers to Web [New York Times]

Time Warner Cable and Bright House are in the middle of a contract dispute with LIN TV, which owns several national broadcast affiliate stations retransmitted on both company's cable systems. Due to the dispute, those stations went dark on TW and BH last Thursday. LIN TV is seeking a subscriber fee as part of the contract negotiations - a fee that would make every subscriber's bill go up.

Time Warner offered a solution to customers affected by the broadcast blackout - watch the channels on the Internet.

But Time Warner bristled at the prospect of paying for material “that’s available over the air for free — and now available online for free,” said Alexander Dudley, a company spokesman.

Rather than confronting viewers with blank screens on the disputed channels, Time Warner Cable told people how to circumvent LIN TV and receive the network programming directly over the Internet. The company made a video showing how to watch programs on the Internet, and on Thursday — the same day the LIN TV stations were cut off — posted it to the Time Warner Cable Web site. (In place of the channels, viewers saw a graphic with the Web address for the video, Mr. Dudley said.)

This is precisely what I wrote about a couple of weeks ago.  Broadcasters are asking record amounts of money from cable and satellite operators (and therefore their customers) and threatening to pull their signals off if they don't get what they want.  There are a large number of agreements between broadcasters and distributors that expire at the end of this year and this type of activity should not occur anytime during the first quarter of next year when the nation's broadcasters will turn off their analog transmissions and convert to digital only transmissions. Isn't that enough confusion for consumers? Do they also have to be held captive to these commercial disputes right in the middle of the transition?

I say no.

Video providers comment on broadband caps and other Friday article links

Video Sites Not Sweating New Comcast Cap [Yahoo Tech]

One of the main arguments made by detractors of broadband caps is that a cap will prevent users from consuming the ever increasing amount of video content on the Internet. Yahoo Tech features and article with video providers commenting directly on Comcast's 250 GB cap. The consensus appears to be that video providers are following these developments closely, but don't view caps as a hamper on their business.

"The bottom line on the Comcast issue is, we believe the important thing for all cable companies to do is be transparent with their customers," said Steve Swasey, a spokesman for Netflix. "As far as this 250 GB cap, it would take you eight hours of watching content on the Internet, not just from Netflix but YouTube or Amazon or Apple or anybody else, eight hours a day, seven days a week to reach that cap, so it is pretty high."

The real, everyday effect of the declining economy (from one businessman's point of view)

[Note to readers...When I started this blog I said I'd talk primarily about issues affecting the cable industry.  I also reserved the right to throw in a subject or two, every now and then, that aren't specific to cable.  Today's lead subject is about the distress that's affecting all businesses, including cable, in these unprecedented times.]

Is the current economic situation really impacting people other than the fat cats on Wall Street?  If you ask me, you bet it is. 

I run a business and frankly, it's a good business.  It tends to be somewhat resistant to economic downturns, at least the ones we've seen since the industry was born in the 1950's.  Indeed, when people are staying home more they rely more heavily on their cable connection to keep them entertained, connected and informed.

But make no mistake about it.  This is no ordinary downturn.  In my 35 years in business, I've never had the conversations we're having these days.  We're reviewing our bank group to see if any of our relationships are likely to change because of banks simply disappearing.  We're checking into our insurance carriers to satisfy ourselves that they will remain solvent.  We're analyzing our complex financial securities, like interest-rate swaps, that effectively convert our floating rate debt to fixed, which give us the security that we can afford to pay back our loans no matter where interest rates go.

Insight Digital 4.0 new HD channels update and other articles

Insight Digital 4.0

  Readers of this blog were the first to find out about Insight Digital 4.0 a few days ago. At the time, I didn't give you many details about the new HD channels because they vary by district. Today, I'd like to point you to our new Insight Digital 4.0 web site at www.InsightDigital40.com.

The web site will allow you to see the new HD channels that will be available in your area, the new On Demand programming, and the new HD On Demand programming.

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.”