BLOG.MULTIPLAYCOM

Cable’s About-Face on à la carte

Ben Piper — Wed, 28 Sep 2011 14:19:52 GMT

Reuters is reporting that cable operators are working on a plan to allow customers to purchase channels on an individual basis, also known as à la carte. This represents a 180 degree change in strategy and position, from an industry that has long held that established advertising models preclude any departure from the “tiered” channel system.

Glad to see you’re finally coming around, Cable.

Not that you had much choice. And not to be uncharitable, but golly, it feels good.

You see, our camp (those who have been citing the need for à la carte bundling for the past 4+ years) has been rather sparsely populated of late. In countless reports, presentations and one-on-one meetings with Cable executives over the years, we have pointed out that à la carte is not just a consumer preference—it is a Pay TV imperative. Meanwhile, through industry blowhards and paid quote-models, we have been told that it can’t work, that it won’t work.

Our response has always been that it has to work, if Pay TV is to survive.

And after years of dismissing it out of hand, of categorically rejecting any survey data or consumer insights contradicting their established talking points, Cable is finally listening—the wires and airwaves are filling up with the sounds of pundits finally changing their tunes.

“There is a growing recognition that the current model is broken," one epically overexposed talking head quipped yesterday.

How’s that for groundbreaking insight?

US Pay Cable operators posted net subscriber losses for the 15^th consecutive quarter in Q2’11. For fourteen of those fifteen quarters, the industry has regularly pivoted on its explanation.

First, they said net losses were just a “blip”—an anomaly. When losses persisted in sequential quarters, the stagnant economy and high unemployment were to blame. When that no longer held water, the talking point morphed into a we didn’t want you anyway argument—that those churning or dropping were low value customers. A report we just published completely discredits that explanation as well.

Fresh out explanations, and having bled 400,000 subscribers in Q2’11, Pay TV really has no choice.

For as long as I’ve been covering this space, I’ve cited survey after survey confirming a strong consumer preference for à la carte —and indeed, a willingness to pay MORE for à la carte. Consumers feel ripped off—they want to feel that they are in the driver's seat. They need choice—or the illusion of choice.

And contrary to what some suggest, money is not the primary motivator for consumer churn —it’s about perceived value. It’s about control of content.

Indeed, our latest report, which draws on a recent survey of of 2,000 US households, further confirms this notion. It shows that 21% of American Pay TV subscribers would be willing to pay more than they currently do if it means they have some say in what channels they get.

Glad you’ve seen the light, Cable. What took you so long?

Technorati Tags: Cable,Pay TV,a la carte

Are the stars aligning for Smart Home Applications? Moves by Verizon and AT&T point that way

Ben Piper — Tue, 03 May 2011 20:29:32 GMT

At this year’s CES, we said that 2011 would the year of the Smart Home Applications. To be sure, tablets took the forefront at the show, but the “smart home” could not be ignored. We estimated the US market value alone to be on the order of $5.6 billion by 2015. While the term “Smart Home Applications” could conceivably a variety of services, in our analysis, we included Remote Energy Management, Broadband-enabled home security, and Telepresence

Up until now, despite what seems like years of trade show mockups, demos, and media hype, Smart Home Applications have failed to garner the attention of Service Providers on any measurable scale. In 2011, market conditions and consumer interest appear to be finally aligning.

Two recent Service Provider announcements suggest momentum:

AT&T and Xanboo

AT&T’s acquisition of its longtime home monitoring and smart home application partner, Xanboo late last year garnered some brief media attention, then quickly receded below the radar. AT&T was—and continues to be—reluctant to disclose their plans with regards to the acquisition. A March 31^st letter sent by AT&T’s counsel terminating dealer relationships effective July 2011 suggests that the company may be preparing to rebrand and relaunch in the near future.

Verizon’s Moves in MDU

Verizon last week announced a partnership with Healthsense to provide remote health monitoring to senior communities—another indicator that years of industry talk is finally being converted into action. Penetrating the target-rich MDU (multi-dwelling unit) market is one way to reach CEO Ivan Seidenberg’s stated goal of 40% takeup of the FiOS service. Adding Cisco’s umi Telepresence to the mix could make virtual doctor consultations a reality though, as always, pricing is an issue.

Recent talks with clients confirm this renewed interest in the Smart Home area—Service Providers are clearly eager to uncover new revenue streams, and view Smart Home Apps (SHAs) as a new and uncluttered adjacent market. They are likewise keen to mitigate churn, and our research has consistently shown that bundling provides some “insulation” against churn. Manufacturers see SHAs as a potential “hook” into the home, and are just as interested in how this plays out.

Technorati Tags: AT&T,Verizon,Cisco,Smart Home Applications

Is the Dumb Pipe a Smart Move for Cable?

Ben Piper — Thu, 28 Apr 2011 20:14:43 GMT

The past two years have been tough on Pay Cable TV. In 2010 alone, the industry saw over two million video subscribers drop their subscriptions. While certainly not great news, there was a silver lining. In the same seven quarters, Cable High Speed Internet (HSI) gains more than compensated for Pay TV losses.

Has Cable been in the wrong business all these years?

Following that same trend, Time Warner Cable today announced that it had lost another 66,000 Pay TV subscribers in the first quarter. The good news? It added 177,000 broadband subscribers.

We’ve heard (and indeed, have been saying) for so long that traditional Service Providers were threatened with “disintermediation” and risked being relegated to the role of a “dumb pipe.” I, along with many analysts, have advised Service Providers to avoid this trap at all costs.

But in retrospect, is being a “dumb pipe” such a bad idea?

High Growth, High Margin

As Pay TV subscribers (and margins) continue to dwindle, Cable Broadband profitability is growing. Our analysis shows that HSI margins are anywhere from 70% to 110% higher than Pay TV (depending on whether or not advertising is included in the calculation). Broadband is likewise changing the face of the “traditional” Cable bundle. In 2008, Video contributed 59% to Cable’s Revenues. In 2010, the number was 53%.

TWC’s CEO Glen Britt told analysts on the company’s Q1’11 earnings call that the company is rethinking the role of broadband in the company’s portfolio. “High-speed data is quickly becoming the anchor product in the eyes of our customers," he said.

Don’t reprint those business cards quite yet

While on the surface it may seem like a no-brainer, doubling down on broadband may not be the best long-term strategy for Cable.

As a highly commoditized consumer offering, it is extraordinarily challenging to differentiate, and is one easily duplicated by competitors. Furthermore, prospects for increased ARPUs in fixed broadband are decidedly limited, as few have been able to successfully monetize incremental bandwidth offerings.

To be sure, it’s doubtful that any MSO would abandon its core TV offering. But as Cable ponders its next move on the OTT front, it should be of some comfort that broadband continues to take up the slack.

-Ben Piper

Technorati Tags: Cable,Broadband,Time Warner,Video

Netflix Surpasses Comcast: Does Cable Have a Charlie Sheen Problem?

Ben Piper — Mon, 25 Apr 2011 20:15:52 GMT

Netflix today reported 23.6 million subscribers in Q1’11, surpassing Comcast, the number one Cable operator in the US. This represents a major turning point for so-called “Over the Top” (OTT) distribution of content—services that allow consumers to bypass the Cable or Satellite company to grab their shows via the Internet. Long accustomed to underplaying and dismissing OTT, Service Providers can no longer afford to bury their heads in the sand.

US Cable TV providers witnessed over two million video customers evaporate from their rolls in 2010—losses not seen in other competing platforms such as Satellite and Telco/IPTV. Until very recently, the industry was in a state of denial, dismissing any semblance of a problem.

It’s not me. It’s you

Does Cable TV have a Charlie Sheen problem? Can they really claim to be “winning,” while at the same time losing customers at the rate of roughly 500,000 per quarter?

The industry at large has come up with various and sundry explanations for the losses, none of which holds up to close scrutiny. In fact, a report we've just published looks closely at the role of macroeconomic factors on Cable’s subscriber losses. In short, the piece finds that neither the economy nor the housing market is to blame for Cable’s losses.

In addition,” cord cutting,” whereby customers drop their Pay TV subscription altogether in favor of Internet- based or free to air television, is rearing its ugly head again. Even though Cable would like nothing more than to change the subject, the evidence is clear that it’s not going away.

That’s one way of putting it

Even Cable’s favorite talking head has been forced to change his tune. Not even one year ago, we heard that cord-cutting was “perhaps the most over-hyped and over-anticipated phenomenon in tech history.” Last week, the same analyst told Ad Age “it's hard to pretend that cord cutting simply isn't happening."’

I couldn’t agree more.

We have always maintained that cord cutting is real, and that it does pose a threat to traditional Pay TV providers. Research we published in late 2010 found that 13% of Americans intended to “cut the cord” in the upcoming 12 months. While the numbers are not extraordinarily large today, they are indicative of a trend. Our research has shown that the profile of a cord cutter is far from the deadbeat some would suggest, and are the rising demographic Cable needs to keep its eyes on.

As the technical sophistication required to get content from the Internet becomes less and less onerous, we anticipate a shift from the “early adopter” cord cutters to a segment of convenience and value-motivated consumers.

Check Engine Light

The hyperbole has been quite fantastic on both sides of the cord cutting debate—and while we’re not forecasting a falling sky any time in the near future, nor do we believe that Service Providers can simply continue on status quo. Though the numbers might not be jaw dropping today, cord cutting is a reality. Service Providers need to keep their eyes on the issue, before it balloons into something unmanageable.

Technorati Tags: Netflix,Comcast,Cable,Cord Cutting,Over the Top

Cisco’s New Strategy and the Flip Flop

Ben Piper — Tue, 12 Apr 2011 20:18:32 GMT

Cisco today announced a “comprehensive plan” to restructure its operations—pulling out completely from certain segments of its consumer offerings and refocusing efforts on five key priorities. This should come as welcome news to customer and shareholders alike, and provide some clarity to an otherwise confused marketplace.

Flip? Out

Closing down the Flip business should come as no real surprise. Once hard to keep on the shelves, the small and affordable point-and-shoot camcorder was unable to compete with an array of new entrants, and increasingly high-quality video on smartphones. I still have one—somewhere.

“Double Down” on Service Provider Space

The pulling back from the direct to consumer space does not appear to mean abandoning existing lines. In fact, in talking to Cisco today at the NAB show, it was clear that the Videoscape business was spared, and remains fundamentally unchanged. Rather than building devices, though, the strategy will be one of enabling them.

On the other hand, ūmi –the consumer Telepresence product/service launched late in 2010—will be folded into the existing enterprise Telepresence business, and the focus will be on devising “go to market” plans with Service Providers, rather than trying to sell and service end users directly. The Cisco exec I spoke with today referred to this as a ‘doubling down’ strategy.

As I mentioned back in October, the high price point, exorbitant service fees and limited utility made ūmi a tough sell from the beginning. I’m still not writing it off, as there are real applications, particularly in the Business to Consumer (B2C) space, but this will likely only achieve any measurable traction under a subsidy model.

Back to basics

Cisco’s consumer strategy had many customers (and industry analysts) scratching their heads. As my colleague, David Mercer points out in a blog posted today, reconciling the company’s dual strategy (Service Provider + Consumer) was never an easy task.

It is, therefore, encouraging to see the company righting its course. Cisco’s core competencies have always sat in the network, and it is exactly there that they should refocus. The most relevant customer base for the company is the Service Provider community, and the announced plans to focus attention that segment is a positive one.

Technorati Tags: Cisco,Flip,umi,Service Providers,Videoscape

How Japan’s Sun Will Rise Again

Ben Piper — Wed, 16 Mar 2011 01:18:00 GMT

I spent several years of my impressionable twenties living and teaching public school in remote and rural Iwate, Japan –the very region that has sustained much of the tsunami and earthquake damage over the past week.

Watching the news each night, I feel a pit in my stomach as I see and hear reports from town after town in the area where I once had friends. Names of villages and cities long since filed in the dark recesses of my brain now come back, many with painful familiarity.

Amid the carnage, destruction and multiple disasters profiled incessantly on TV, it is surprising for many to see the calm and resilience the Japanese public is exhibiting.

There is no looting of convenience stores. Despite seemingly interminable lines and food shortages, the expressions on the faces of people who have lost everything appear eerily unfazed. There are teary eyed reunions, certainly, but there is no panic. There is an unsettling sense of tranquility amidst human tragedy and horror.

And while many do find this type of behavior remarkable and surprising, I do not. To me, it’s part of the script.

I find the reactions and behavior we’re witnessing to be absolutely in character for the Japanese. Indeed, one of my observations one year into my teaching assignment in Japan was that the entire country seemed to be reading off a script. The verbal exchanges of virtually every interpersonal connection (teacher-student, teacher-boss, teacher-neighbor, teacher-ramen shop owner) appeared to be predetermined and guided by verbal cues. Social harmony in the country depends on it.

I still cringe when I think about how slow I was on the uptake.

On one occasion in the Japanese municipal government office where I worked, I recall becoming visibly frustrated at the glacial pace in which a request I had submitted was being handled. I’m not sure, but it is very likely that I let out one of my signature deep sighs. The woman who sat next to me—a co-worker who would later become an adopted Japanese mother of sorts—in a terrifying departure from her usual cheerful character went into parental mode, audibly scolded me.

Gaman shinasai she said abruptly.

It’s an expression often overheard at grocery stores and on trains, in lines at the post office and in elementary school classrooms. Mothers regularly tell their toddlers to gaman. Shape up and shut your yap seemed to be the message. Little did I know at the time that gaman goes way beyond “shut your piehole.”

Translated literally, the characters that make up the word gaman are those for 我“self” and 慢“neglect.” Though regularly mistranslated into English as “patience,” the concept of gaman goes light years beyond that.

Paper training a puppy requires patience.Losing your house, your belongings, your family and your village while simultaneously suppressing any outward sign of remorse, entitlement or anger falls squarely into gaman territory.

Years ago, a Japanese friend once colorfully described the concept of gaman as a “silent endurance,” and to this day I struggle to find a better description. Two years later, I left Japan convinced that the concept of gaman is what sets the country apart.

In English, we tell people to be patient. In Japanese, you do gaman. It’s an action verb.

Are the faces we see on television really devoid of human emotion? Of course not. They are devastated, hungry, disoriented, sleep-deprived, anxious, lost and pissed off. But rather than pretending to “be” patient, the Japanese are following the cultural script, and “doing” gaman.

And that doing is exactly what will lead Japan out of this chaos.

Can Comcast Put The Sizzle Back in 3DTV? Sure, But Who Will Pay?

Ben Piper — Fri, 18 Feb 2011 18:44:28 GMT

Followers of the industry will no doubt recall the unstoppable buzz at the 2010 CES Show in Las Vegas, where the story was 3DTV, and how it was poised to overtake the American living room. In the ensuing 12 months, though, it seems that much of the excitement around the technology has subsided—if not evaporated.

Indeed, we shared our views on the 3DTV opportunity at this year’s IBC in Amsterdam: essentially saying that consumer excitement around the technology was quite high, but that translating that enthusiasm into a viable business model would be a challenge. Our feelings in that regard haven’t changed substantively.

Content and the Indelicate Topic of Money

What we have seen in the past five months, however, has been a swift roll out of 3DTV programming worldwide. Two notable examples are 3net, the joint venture of Sony Corporation, Discovery Communications and IMAX Corporation, as well as ESPN’s announcement of its dedicated 3DTV channel.

Now Cable and Media behemoth Comcast has announced the launch of its 24/7 3DTV Xfinity 3D channel for next week, focusing, it says, on “music, sports, movies and original programming.”

A crucial, and often over-looked, question is: who will actually pay for this? There are significant premiums associated with producing content in 3D compared to 2D. Our estimates based on industry interview set the premium in the range of 80% to 100%. In the theaters, it is the moviegoer who pays the premium to see the latest 3DTV release—indeed it is evident in the ticket price.

The question is, who pays at home?

Market for 3DTV: It’s The Cube Tubers

As we have pointed out in the past, our US consumer survey research and forecast modeling suggest only a relatively modest opportunity for 3DTV in the home. Overall, fewer than half of respondents showed a willingness or expectation to pay any premium for 3DTV.

We have, however, identified and isolated a group of consumers we believe to be most likely to actively view (and more importantly, pay for) 3DTV services.

This group of individuals, whom we dub “Cube Tubers,” represents between 8%-10% of the overall population. Cube Tubers are unique in their intentions to purchase a 3DTV in the upcoming year, and to be active premium/HD customers.

Compared to overall survey respondents, Cube Tubers exhibit a much higher interest in receiving 3DTV programming at home, with 74% saying they are “somewhat” or “very” interested, compared to 36% in the overall sample. Likewise, they were significantly more likely to expect to pay some sort of monthly or one-off premium than the general sample.

Content aside, 3DTV still faces an uphill battle in other respects. Perceived health risks (true or not) will stifle widespread takeup, as will the need for specialized glasses.

Despite impressive demonstrations of “Auto-stereoscopic” 3DTVs by vendors at recent trade shows, we don’t expect to see a commercially viable “glassless” solution any time soon.

Technorati Tags: 3DTV,Comcast,ESPN,Discovery

NBCU-Comcast Merger: Sweetheart Deal or Regulatory Shakedown?

Ben Piper — Mon, 31 Jan 2011 02:14:00 GMT

The FCC’s recent approval, by a 4-1 margin, of the merger between Comcast and NBC Universal effectively transforms the nation’s biggest cable company into its largest media company as well. The $30 billion joint venture which was first announced in 2009 has many—including News Corporation, Time Warner and Disney—calling foul. To nobody’s surprise, the affirmative ruling (all 279 pages of it) came with some significant strings attached, including provisions around Net Neutrality, Over the Top (OTT) distribution and transparency, broadband affordability, as well as the new company’s role with Hulu.

Net Neutrality: Special Rules Unit

The FCC’s Net Neutrality ruling last December was a compromise of sorts, leaving none of the interested parties particularly happy. In essence, the decision created “rules of road” for the Internet, though different rules for fixed and mobile services. As stated previously, we believe that the final disposition of this issue will take place in the Supreme Court.

It is interesting, then, that one of the “voluntary commitments” (as opposed to “conditions”) of the deal concerns net neutrality. The order states that “neither Comcast nor Comcast-NBCU shall prioritize affiliated Internet content over unaffiliated Internet content,” Furthermore, the order protects the commitment against any future (and probable) modification. It states, “in the event of any judicial challenge affecting the latter, Comcast-NBCU’s voluntary commitments concerning adherence to those rules will be in effect.”

What this commitment essentially does is to lock NBCU into Net Neutrality, irrespective of the potential disposition in the courts. The implications could be significant if NBCU-Comcast eventually finds itself subject to rules that its competitors aren’t.

OTT, OVD, FCC? OMG!

One condition that could potentially open the floodgates to new Online Video Distributors (OVDs) is the provision stating that “Comcast offer its video programming to legitimate OVDs on the same terms and conditions that would be available to an MVPD,” and that it make “comparable programming available on economically comparable prices, terms, and conditions to an OVD that has entered into an arrangement to distribute programming from one or more of Comcast-NBCU’s peers.

From an OTT video service perspective, the conditions that FCC attaches to the merger approval do not harm—and could actually benefit—the value proposition of OTT services. The FCC requires that Comcast make available certain comparable content to an online distributor if one of its competitors does so. Although it does not imply a dramatic change to the current media distribution environment, it shows the FCC’s gesture to ensure OTT video services to have an equal opportunity of acquiring content and competing with MVPDs. Given emerging OTT services’ efficiency of formulating and executing strategies, an equal competitive environment gives them the upper hand to out-innovate those larger and slower MVPDs.

The single OTT video service that will benefit most from this merger approval is Netflix. As Comcast is spending its time integrating NBCU and probably will have to restructure or realign the company and redesign its online distribution strategy, Netflix is running far ahead in terms of expanding its content catalog, releasing more apps on different platforms and CE devices and improving user experience.

The Matter of Hulu

Another provision of the ruling requires Comcast/NBCU to relinquish managerial control. uncertainty has mounted around Netflix’s main competitor in the online video space, Hulu, as Comcast/NBCU will have to relinquish managerial control in the online video distribution site. It makes possible for NBC to pull back its investment from a venture it would have little control, making Hulu less attractive to consumers and financially weaker than it is now.

For Hulu, the provision requiring Comcast to relinquish the managerial control of the OTT service could be beneficial as long as Comcast continues its investment in Hulu both in terms of financial backing and content availability. But different from NBCU, the new Comcast has had its own online strategy, which might be at odds with Hulu’s proposition. So Comcast may not want to invest in the Hulu business as much as NBC did before. On top of that, Comcast might eventually prefer to reduce or sell off its stake in Hulu due to the relinquishment requirement of managerial control on Hulu’s board.

Nobody wants to buy something that they don’t know much about and cannot control. If that were to happen, Hulu could still get NBC content as the approval requires, but it would lose its favorable position in the OTT space as the son of NBC--especially important when it comes to content deal negotiation.

Overall, the merger approval makes the prospect of Hulu fuzzier, if not gloomier.

‘Naked’ Broadband, Soviet Style

One of the most under-reported and potentially worrisome provisions of the order requires that Comcast provide standalone broadband access at “reasonable” prices. In theory, of course, this makes sense. Consumers should not be required to take on a cable package in order to receive broadband, nor should it be constructed in such way that a bundled offering is, as the report notes, “the consumer’s only reasonable economic choice.”

Where it gets hairy, though, is in the details. The order goes so far as to mandate the minimum acceptable package and pricing (“At a minimum, Comcast shall offer a service of at least 6 Mbps down at a price no greater of $49.95 for three years”). Seeing the FCC set pricing and package specifications should send a chill down the spines of free market enthusiasts.

Critics of the merger—and there are many— fall into two camps: those who feel the conditions go too far, and those who fear that they don’t go far enough. Dissenting FCC Commissioner Michael Copps pointed out that the ruling has implications on every corner of the media landscape, and that it “confers too much power in one company’s hands.” Others call it a regulatory shakedown, setting a potentially worrisome precedent of the FCC inserting itself in the workings of an industry over which it has no mandate or authority.

Dead Skunks, Yellow Lines, and Net Neutrality

Ben Piper — Tue, 21 Dec 2010 19:45:51 GMT

The only thing in the middle of the road are dead skunks and yellow lines

Or so goes the Texas adage.

Today’s 3-2 FCC vote on rules pertaining to so-called “Net Neutrality” may once again prove that compromise guarantees only one thing. That nobody’s happy.

The debate, which has been a five year long rollercoaster ride, came to a head in what is being described as “rules of the road” for the Internet. The inherent fuzziness of the provisions, which include such vague concepts such as “transparency,” “network management,” and “unreasonable discrimination” all but guarantee that the matter will ultimately be decided in the courts.

Furthermore, the same rules don’t apply to fixed and mobile networks.

Fair to Middling

FCC Chairman Julius Genachowski made a point of characterizing the rules as “middle of the road” approach—though likely one where no side even feels a little bit ok about it.

“On one end of the spectrum, there are those who say government should do nothing at all, on the other end of the spectrum are those who would adopt a set of detailed and rigid regulations.”

The Chairman said he rejects “both extremes in favor of a strong and sensible framework - one that protects Internet freedom and openness and promotes robust innovation and investment."

A Little Hyperbole Goes a Long Way

Indeed, critics are vocal on both sides, with opponents comparing it to the “government takeover of the Internet,” and Net Neutrality supporters calling it “worse than nothing.”

Outspoken Senator Al Franken calls it the “most important free speech issue of our time,” and surmised that “ If corporations are allowed to prioritize content on the Internet, or they are allowed to block applications you access on your iPhone, there is nothing to prevent those same corporations from censoring political speech.”

Republican FCC Commissioner Robert McDowell, in a Wall Street Journal Op/Ed piece said that the new rules will squelch innovation and investment, and reflect more “coercion than consensus or compromise.”

He goes on to say:

“On this winter solstice, we will witness jaw-dropping interventionist chutzpah as the FCC bypasses branches of our government in the dogged pursuit of needless and harmful regulation. The darkest day of the year may end up marking the beginning of a long winter's night for Internet freedom.”

Netting Out Net Neutrality

It’s still not over

It’s not over—not even by a long shot. April’s ruling by the U.S. Court of Appeals for the District of Columbia challenged the very role of the FCC in regulating broadband. Certainly, this is yet to be scrutinized and debated in Congress, and ultimately in the courts.

Please Have Exact Change

While the rules voted on today preclude service providers from blocking “lawful content,” they apparently do little to discourage the practice of “paid prioritization. ” The rules, set to go into effect in 2011, create a “toll road” of sorts on the metaphorical information superhighway—a road that companies such Google and Netflix may be forced to take.

FUD Factor 2.0

Markets don’t like fear, uncertainty and doubt. We all know that. And while Chairman Genachowski suggest that the rules “increase certainty in the marketplace, and spur investment both at the edge and in the core of our broadband networks”, the result may be just the opposite.

Well, that’s what it smells like anyway.

Technorati Tags: Net Neutrality,Broadband,FCC,Genachowski,Google,Netflix

Cord Cutting: Cable’s #1 Yes Man Gets it Wrong, Again.

Ben Piper — Fri, 29 Oct 2010 02:17:45 GMT

With Comcast alone hemorrhaging over 600,000 subscribers since January, and the overall industry faring hardly better, cord cutting doubters have had no choice but to change their respective tunes. Cord cutting is a reality, as we have long held. And the current Cablevision-News Corp debacle sure isn’t doing much to engender any warm feelings between subscribers and their cable providers either.

What a difference five months makes

Way back in June, the Wall Street Journal quoted Sanford C. Bernstein & Co. calling cord-cutting "perhaps the most over-hyped and over-anticipated phenomenon in tech history."

Indeed, downplaying and writing off the threat of cord cutting has been de rigeur of late—a kneejerk and dismissive tendency all too prevalent in the pay TV world. But the recent numbers don’t lie, and we don’t think dissatisfied customers do either.

Cable companies were, of course, quick to explain away the recent subscriber losses--citing the overall ill economy, rather than any systemic issues. Comcast said that online video services have had "almost no impact"on their customers’ decisions to cut the cord.

Need some spin? Call in the Cable industry’s “go to” quotemeister, who wasted no time coming up with a catchy explanation.

The New York Times reported:

“Mr. Moffett said the image of the cord-cutter had been that of a ‘cutting-edge technologist’ who preferred to bypass cable to watch programming on computers and on an ever-proliferating array of devices. ‘The reality is it’s someone who’s 40 years old and poor and settling for a dog’s breakfast of Netflix and short-form video.’”

Sounds good, right? Except that it’s completely wrong.

Pithy quote notwithstanding, 100% wrong. Again.

Cord cutting is real. Sound familiar? It should, we’ve been saying it for years. And now, the numbers bear it out. In our latest report, we analyze results of our recently-fielded survey of 2,000 Americans, which shows that 13% of Americans intend to cut the cord in the next 12 months.

And it’s not “poor” forty-somethings settling for a “dog’s breakfast. “

In fact, the “typical” American cord cutter is:

It’s Not (Just) the Economy, Stupid

In our survey, the number one reason cited by intending cord cutters for dropping service was poor value for money. . And with average cable bills approaching $100/month, it’s understandable that consumers are questioning value.

More importantly, our research suggests that it doesn’t really matter what motivates a subscriber to leave. When asked to rank their five "must have" channels, Pay TV consumers chose the four "free networks" (CBS, ABC, NBC, FOX) as the top slots. ESPN rounded out the top 5.

Colorful quotes are fun, but facts do matter.

Technorati Tags: Cablevision,Cord Cutters,Cable,Survey,Strategy Analytics

Fox to Cablevision: Shot Across the Bow or Shot in the Foot?

Ben Piper — Mon, 25 Oct 2010 19:34:19 GMT

Already heated tempers reached a boiling point last week in the current mêlée between Fox's parent company, News Corporation and New York-based Cablevision. At issue is the question of "retransmission," the fees cable companies must pay networks to carry their programming in the line-up.

In the latest salvo, News Corp elected to deploy a "nuclear option" of sorts--blacking out not just Fox channels, but also Cablevision subscriber access to sites such as fox.com and hulu.com. The access blocking, while short-lived, sent a clear message-Fox holds the cards. Was this move a shot across the bow of `traditional' cable, as some have suggested, or rather a shot in the foot for News Corp?

This Whole ‘Cord Cutting’ Thing? Yeah, it’s Here to Stay

Dismissing or minimizing the severity of cord cutting has been de rigeur of late in the analyst community. Many service providers and industry pundits alike have effectively buried their heads in the sand for the past 18 months over the issue, writing it off as “over hyped phenomenon.”

Survey research we just fielded suggests that doubters might want to rethink their position. According to the survey of 2,000 Americans in late Q3’10, 13% intend to drop their pay TV subscription in the upcoming year—and not replace it with another one.

We have long held that cord cutting is a very real problem, and what we’re seeing now is likely just the tip of iceberg. What happens when today’s teenagers start controlling the pocket strings in five or ten years?

120 Channels and Nothing On

The average US household receives nearly 120 channels, though many would argue that they watch only a handful of those. Our survey found that, when asked to rank their five "must have" channels, Pay TV consumers chose the four "free networks" (CBS, ABC, NBC, FOX) as the top slots. ESPN rounded out the top 5.

This is rather astonishing, and adds further credence to the notion of cord cutting. After all, if four of the top five channels an individual watches are available for free (either online or over the air), why on earth would one pay upwards of $70/month for a subscription? Force of habit? Because the cable company told you to? To avoid having to switch an “input” button on the remote control?

Not the End for Pay TV—But Maybe Pay TV As We Know It

To be clear, we are in no way predicting the imminent demise of pay TV. There will always be a market for premium content, and that customers will continue to be receptive to paying for content relevant to them. Rather, we believe that service providers must rethink business models.

Some have already begun to do this, through initiatives like TV Everywhere.

That, however, solves only the where part of the problem. Next to tackle is the what.

A la carte?

Technorati Tags: Cablevision,Fox,News Corp,Cord Cutters,OTT,TV Everywhere,Cable

3DTV Opportunity? Look to the Cube Tubers!

Ben Piper — Tue, 12 Oct 2010 21:44:33 GMT

The excitement around 3D has been palpable over the past year, beginning with the numerous announcements, roll outs and demos at CES. The momentum continued through the spring and summer, with more service providers putting stakes in the ground, and carried over to this year’s IBC show, where Strategy Analytics hosted an analyst breakfast on the topic with Sky 3D head, Brian Lenz.

The verdict? Excitement and hype levels are skyrocketing. The question remains, though, whether or not anyone can spin this into a viable and profitable consumer offering.

Over the summer, we fielded a 4,800 respondent survey in five countries (France, Germany, Italy, UK and US), asking individuals about their understanding of, interest in, and willingness to pay for 3DTV. The results are covered in detail in report we just published last week. Here are some highlights:

Translating 3D Excitement into 3DTV Viability is Challenge

Over 70% of those who have seen 3D in the movie theater are impressed by its quality, but only 55% of those same individuals say they’re interested in watching 3DTV at home. How can Service Providers translate the cinematic excitement around 3D into a viable residential business?

We found a few barriers standing in the way, including a dearth of content in 3D, luke-warm consumer interest in paying, hardware issues (the need to wear glasses), and widespread market uncertainty.

Market Uncertainty is a Barrier

Respondents were asked a battery of questions around their perceptions of 3DTV, including availability, hardware requirements and potential health and safety issues. While overall awareness is quite high, with 94% saying they believe it’s possible to see 3D films in a movie theater, on other questions, the market uncertainty is substantial.

The most surprising, and most critical finding to both vendors and service providers alike, is the uncertainty surrounding perceived health risks. Overall, 70% of respondents said they were either unsure or believed that watching 3DTV causes damage to the eyes.

We believe that this perception issue, which proved to be common across the five countries surveyed, is a key hurdle standing in the way of widespread adoption of 3DTV. Regardless of the validity of the belief, customer perception is what matters, and such widespread uncertainty could prove disastrous if not addressed appropriately.

Perceived Health Risk by Country (“3DTV Causes Eye Damage”) N=4,803

Source: Strategy Analytics

Target: Cube Tubers

3DTV, at least in the short term, will be largely a niche application, attractive to only a subset of the general population. Through our survey work, we have isolated and identified this demographic as the “Cube Tubers,” and suggest that they should be viewed as a key target market for service providers and equipment vendors.

These individuals represent between 8%-10% of the overall population, and are unique in their intentions to purchase a 3DTV in the upcoming year, and to be active premium/HD customers. Cube Tubers, who are predominantly young, educated married males, are nearly twice as likely as the average Joe to expect to pay for 3DTV. Willingness or expectation of paying hits on an issue that many in the industry seem to be overlooking.

Few question the “wow” factor of 3D. Rather, the question is, how do you make money at it?

George Jetson, Meet Cisco’s ūmi Telepresence

Ben Piper — Wed, 06 Oct 2010 16:45:45 GMT

Cisco today unveiled its long-awaited consumer Telepresence product. A smaller and scaled-down version of the company’s enterprise-grade TelePresence system, “ūmi” (‘you-me’) comes with an HD camera, a console and a remote.

The idea of the videophone is far from new. Children of the 60s and 70s may recall George Jetson getting chewed out by his boss, Mr. Spacely, over videochat. In fact, the technology, is older than that, and was conceptualized as early as the late 1800s. The German Bundespost offered (albeit short-lived) commercially-available service the1930’s. AT&T announced its Picturephone product at the 1964 World’s Fair, though the service never quite took off, reportedly maxing out at 500 subscribers nationwide.

This time it’s different…

What makes this time different? According to Cisco’s VP of Consumer Marketing, Ken Wirt, three things are different this time.

The quality and ubiquity of HD displays, the increased average household bandwidth, and exponentially increasing processing power have converged to create a ‘perfect storm’ for telepresence.

With apologies to Elvis Costello

Writing about telepresence is like dancing about architecture

Or was that Frank Zappa?

In any case, as with HD or 3D, trying to explain telepresence to someone who hasn’t seen it is akin to trying to explain the color blue to a blindfolded person.

You kind of have to see it to understand it.

I had a chance to test drive the product last week before the official product announcement, and must say that—even as a professional skeptic--I left the demo thoroughly impressed. The so-called “immersive” effect (allowing you to ‘see what others are feeling’ ) is quite noticeable, and is what distinguishes it from a garden-variety Skype video or web-based video chat program. There is near perfect synchronization between audio/video, and people appear life sized on the screen.

Ken Wirt cited a study showing that 55% of all conversation is non-verbal. It’s no surprise that it is our body language, the nods and raised eyebrows, shaking heads, smiles and smirks, that distinguish a phone call from a ‘carbon-based’ face-to-face meeting.

The Uncomfortable Topic of Money

The price tag is steep, at $599 for the unit, plus a monthly fee of $24.99 for unlimited ūmi calls, video messaging and video storage. The system will be sold through Best Buy/Magnolia Home Theater stores, bestbuy.com and on the cisco website.

The service requires a minimum of 3.5 Mbps to work in 1080p, though it can be optimized for use at lower speeds, as low as 1.5Mbps for 720p. This means that the service will largely be limited to those with cable broadband or FTTx. Cisco believes that 34% of US households have this type of upstream capability—which is in line with Strategy Analytics’ own estimates.

The Network Effect

Back in the early days, the phone company sold “telephone pairs,” with the understanding that the value of the network lies in the number of nodes. A telephone network with one phone is not terribly valuable. Nor is a telepresence unit if there’s nobody on the other end.

Cisco has partially circumvented this problem by providing interoperability with Google video chat, though if you’re spending $600 on a unit, you probably want the “real thing.”

The real value of telepresence will be realized when there is a robust network of equipped households.

While family video-calling seems the most obvious use-case, its utility seems rather limited. How many times do we really want to videochat with Grandma each month?

Unless and until the network reaches critical mass, the appeal and draw of video calling will be very limited.

Rather than a consumer mass market play, the real opportunity might very well be in the Business to Consumer (B2C) space. If private industry can help subsidize and drive the technology more mainstream, it could hit the critical mass it needs.

Cisco talked about a number of other potential applications, three sound like potential winners in driving telepresence forward. These include

Financial Services: A $600 upfront investment and $25/month is a drop in the bucket for a company trying to prove its value to high net worth clients. For the cost of a few steak dinners, a Financial Services company could equip a client’s living room and increase the frequency of “touch points.”

Health Care: While the chatter around Telemedicine never seems to cease, this is one application where it actually could make sense. An insurance company might find it financially beneficial to subsidize a unit for a patient requiring regular and routine examinations, or for medical compliance monitoring (“Did you take your pills Mrs. Smith?”)

Distance Learning: How about tapping into the multi-billion dollar distance learning market in the US. Equip every “Phoenix” with a system? That’s what I call scale.

I want one… but not for $599 plus $24.99/month

Many who experience the technology firsthand will want one for their own living room. It’s cool. It works well, and the potential applications are only limited by the imagination. It’s light years ahead of pc-based chat.

On the flipside, the price is high. Too high. And when you add on the 24.99/month fee, it starts to feel like another cable bill.

Survey research conducted by Strategy Analytics in Q3’10 shows that 30% of Americans showed some interest in a service of this type. Importantly, though, 46% of those interested said they are often concerned about their ability to afford regular household bills, 45% said they worried about signing up to new fixed term contracts when buying new products and services.

Adoption Will be Slow But Steady

Cisco would certainly admit that the $599 price point is untenable for the long run, and as volumes slowly ramp up, we should expect to see price points will come down. If Cisco is successful in getting private industry into the game, and a subsidy model takes hold, we could see adoption speed up.

The other barrier standing in the way of rapid adoption is broadband. While today only one-third of households have the minimum required bandwidth to support the system, this will certainly increase going forward. We estimate that by 2015, over 60% of all US households will have at least 1.5 Mbps upstream capabilities.

Stay tuned…we’ll be putting out a Telepresence report in the upcoming weeks.

Global Broadband Scorecard: US Ranks 23rd

Ben Piper — Wed, 21 Jul 2010 13:47:19 GMT

“I didn’t come here to make friends.”

Any television reality show worth its weight in pork rinds will feature at least one contestant uttering those idiotic words. And while the expression has morphed into the consummate television catchphrase, it does ring true to me every year about this time, as we put together our always contentious global broadband forecast and rankings. The inbox fills up and the phone rings off the hook as regulators, operators and politicians wonder how in the world their country could somehow miss the top 10. Much like the overbearing parent calling the school principal at report card time, “There must be some mistake, junior is very advanced,” seems to be the message.

A Different Way to Look at Broadband

Over the past fifteen years, as broadband has evolved from a novelty to an accepted indicator of a country’s relative development, discussions of how best to measure and quantify broadband have grown increasingly heated.

Just last week, we launched our Broadband Composite Index (BCI). Rather than focusing solely on one measurement, this model incorporates five “metrics that matter,” applies appropriate weights, and calculates a composite score per country.

The BCI consists of 5 components:

Broadband Penetration
Speed
Affordability
Value
Urbanicity

Broadband Top 40…well, 57

We ran the model on a group of 57 countries to come up with our first BCI rankings.

Korea on top. Again

It is, perhaps, no surprise that South Korea leads in the overall BCI rankings, with a composite score of 9.14. Korea’s advanced broadband is widely recognized, and the nation claims the world’s highest household penetration. Koreans enjoy the fastest download speeds, and pay among the lowest per Mbps of any country. The Korean market is characterized by high PC penetration and strong government participation in broadband. Indeed, the Korean government’s treatment of broadband as a national priority has arguably catapulted the market into the top slot for the past several years.

More surprising to the casual observer of global broadband is the relative position of Central and Eastern European (CEE) countries. CEE nations have, on whole, been able to benefit from the so-called technology “leapfrog effect,” effectively skipping a generation of broadband development (namely DSL), and advancing directly to fiber. This is the case for Lithuania and Romania, both of which occupy slots in our BCI “top 10.” The result of rapid “fiberization” has been high penetration and speeds, although affordability (as measured in our model) remains an obstacle.

A respectable 23rd place?

Certain to spark debate and contention is the placement of the United States (23rd place) in our index, behind certain Eastern and Southern European nations. Despite great strides in penetration—more than doubling household penetration between 2004 and 2009—America still has work to do in terms of increasing download speeds and value per Mbps. We remain optimistic that the current Administration’s focus on a national broadband policy will increase the United States’ ranking in years to come.

The phone lines are open.

Technorati Tags: Broadband,Rankings,South Korea,United Kingdom,United States

AT&T’s Usage Based Billing: Love to Say I Told You So

Ben Piper — Mon, 21 Jun 2010 11:49:57 GMT

Almost by definition, the industry analyst profession puts one in the business of (modestly) saying “I told you so” on a fairly regular basis—one would hope more than 50% of the time. So, it was gratifying to see yet another broadband service provider abandon plans for so-called “Usage Based Billing” (UBB ).

AT&T has reportedly ditched its “usage based billing” trial underway in Beaumont, TX and Reno, NV. A company spokesperson says they are “reviewing data from the trial, and this feedback will guide us as we evaluate our next steps." Hmm…wonder what the feedback will be?

That customers just can’t get enough of it?

As my industry colleague from Fierce Telecom, Sean Buckley, correctly pointed out in a recent article, AT&T can expect “an earful” of feedback from customers who don’t want to be penalized for going over on their home DSL use.

Gettin’ Hosed in Texas?

Does Beaumont, TX have a target on its back?

The city of just under 50,000 households can’t seem to catch a break these days. As if sitting in the path of major Gulf hurricanes wasn’t bad enough, the city for some reason has been selected by several service providers as a prime testing ground for misguided broadband pricing experiments.

Readers might remember that Time Warner Cable chose Beaumont as the test bed for its 2008 usage-based billing experiment. Amid intense public outcry and in an attempt to avert a public relations tsunami, the company ultimately abandoned those plans. AT&T (perhaps emboldened by TWC’s success?) decided to follow suit.

I seem to recall having a word or two to say about TWC, way back in 2008. In fact, I remember that I caught some flak for calling Time Warner’s move an “operational misstep.”

Here’s an excerpt from the January 2008 report (cue harp glissando)

“As such, we expect TWC's trial to go over like a lead balloon,

resulting in a major public relations headache.”

--Usage-Based Broadband Billing: Where's the Love

Strategy Analytics, January 2008

Sounds about right.

Well, There You Go Again…

As my five year old nephew likes to say when he wants the floor, Hear my voice!

So here goes, hoping all can hear it…

Usage-based billing was, is, and will always be a dog of an idea.

It goes against the way consumers are accustomed to and prefer to pay for broadband. It angers, irks, and alienates customers. It’s a crappy idea. In a commodity business like broadband, it’s self-destructive.

The spirit of it is analogous to what’s going on in the airline industry where, apparently, we’re about to pay a fee to avoid paying a fee.

Brings Me to Tiers

There’s a solution to this problem.

By offering tiered or `package' offerings, whereby occasional users sign up for bandwidth and heavier users sign up for more, broadband service providers can arrive at the same goal-getting a handle on traffic without alienating or angering the customer base. Furthermore, a tiered offering allows the BSP to tailor the Quality of Experience (QoE)-whether it be in delivery or customer service

Continued broadband penetration depends on the BSP's ability to win customer "wallet share." Customers have grown accustomed to paying for their broadband service in a certain way, and appreciate and expect a predictable monthly bill. Dramatically altering the model, with no discernible added value, may prove to be a big mistake.

Told you so.

Technorati Tags: Usage Based Billing,AT&T,Time Warner,Tiers

Assessing the Real Threat of OTT

Ben Piper — Thu, 17 Jun 2010 16:23:51 GMT

Some say that OTT is the “most over-hyped and over-anticipated phenomenon in tech history,” others would have you believe the end is nigh for traditional pay television as we know it.

The truth? As usual, it’s somewhere in between.

A report we’ve just published, “Over-The-Top vs. TV Everywhere: How Disruptive is OTT to the Pay TV Business?” concludes that while the reaction to OTT has been perhaps overhyped, online distribution does pose a potential threat to the traditional pay television model.

The numbers to-date, however, don’t necessarily portend an imminent collapse of pay television as we know it. . In fact, US pay TV service providers added nearly 2 million additional subscribers in the first quarter of 2010, despite an increasing threat services such as Netflix, Hulu, and YouTube.

That’s not to OTT should be ignored, however. Survey research we published in early 2010 showed that US consumers perceive a relatively low “value for money” for pay television services.

OTT services can potentially capitalize on pay TV’s biggest shortcomings, namely a lack of flexibility in selecting channel packages, and a low perceived value for money.

Technorati Tags: OTT,Hulu,Netflix,Comcast,Time Warner,Cablevision,DirecTV,Dish

GoogleTV: “You Get the Idea”

Ben Piper — Mon, 24 May 2010 02:56:07 GMT

Google last week unveiled GoogleTV, heralded by Intel CEO Paul Otellini as "the biggest improvement to television since color." And hey, what fun is a huge announcement without unrestrained hype, hyperbole, and flashy demos? Right?

Whooops!

Never Work with Children, Animals, or Bluetooth

Demos often seem predestined to fail. Anyone who has been on the receiving end of a trade show demo can attest to that. Well, this isn’t working as planned, but you get the idea moments are hardly rare.

So it was not a big surprise to see the Google TV demo hampered and delayed by technical glitches. For a technology meant to harness the power of Internet, and bring the experience to the television seamlessly, this was not particularly confidence-inspiring.

But we still get the idea…

Introducing WebTV 2.0?

Some of us are old enough to remember painful previous attempts at bringing the experience of the Web to the television screen. Was WebTV simply misunderstood? Or was it ahead of its time?

Perhaps both.

What WebTV fundamentally missed was the singular and individual nature of Internet experience One could argue that it did little more than render the tv screen a monitor viewable by the whole family. The result was an experience similar to having someone read over your shoulder. Creepy and annoying.

To be sure, the technology has been there for years—it’s the business case that has been lacking.

Why it just might work this time

GoogleTV has a fighting chance this time, for several reasons…

Cord cutting is fast becoming a reality

Today things are markedly different. With a growing abundance of online video, “Cord cutting,” the notion of Cable and Satellite customers moving to unmanaged free or almost free Internet-based platforms, is fast becoming a reality. Strategy Analytics sees the number of so-called "cord cutters" exceeding 10% of US television households by the end of the year. Video will continue to dominate, accounting for over half of all of all consumer Internet traffic in the next five years.

Source: Strategy Analytics

Although the GoogleTV talking points bill the platform as “complementary” to cable, satellite and Telco TV, make no mistake—GoogleTV is a competitor to traditional “managed” pay tv.

It satisfies a demonstrated need

While it has been possible to emulate a pay tv environment with a game console, a tv and a PC, the level of sophistication required to knit these together into a seamless and enjoyable viewing experience went far beyond the aptitude or interest of the average consumer. GoogleTV may just bridge that gap.

Observational research of Connected Media Users in the US and Europe, performed under the auspices of Strategy Analytics’ Digital Home Observatory, uncovered some common missing elements consumers identified in today’s Over the Top (OTT) ecosystem

In addition to the desire for an integrated experience across devices, respondents brought up the wish for a more personalized viewing experience, and the ability to discover new relevant content based upon their existing likes and interests, and more relevant advertising and payment options.

These are all places where GoogleTV can deliver.

The Power of the Value Chain

As strange as it may seem to see Sony chief Howard Stringer sharing the stage with Google and talking about “openness,” a critical success factor for GoogleTV is the power of its value chain, and the A-list partners it has teamed up with. Along with Sony, the presence of Intel and Logitech, as well as BestBuy and Dish bring some credibility to the table.

TBD?

Pricing

Rumors are floating around about likely price points, but nothing firm as of yet. This could be critical, as a $399 Logitech “companion box” sounds like it may collect dust on the BestBuy shelves.

Content

Somewhat surprisingly absent from last week’s announcement was any real mention of the content side. Sure, there was lip service paid to “You Tube Lean Back,” but nothing of any great consequence. YouTube, which turns five this year, is starting to offer full-length movies, though it still lacks enough professional content to make it a viable alternative, and UGC (User Generated Content) is, by nature, ephemeral. How many times can you watch “David After Dentist?”

And what about Sony’s extensive library of television series and movies?

Net Neutrality

As I mentioned in an earlier blog, the goings on with the FCC are doing very little to inject any sort of confidence or certainty into the minds of investors. And even though Chairman Genachowski’s “Third Way” strategy appears to be the current path, the fight has not even started with the MSOs and Telcos.

Expect this to be tied up in court for the next few years.

And that,, we get.

Technorati Tags: Google,GoogleTV,OTT,Cord Cutters,Sony,Intel,Logitech,BestBuy,Dish

Net Neutrality at the Cable Show: Genachowski Goes Hollywood

Ben Piper — Fri, 14 May 2010 22:49:21 GMT

I write this 36,000 feet above Arizona, en route home from LA, where I spent the week at the NCTA show. Always an interesting event, the mood was slightly more reserved this year as MSOs mulled the potential ramifications of Net Neutrality, and the so-called “Title II” discussions dominating the chatter in the halls.

Downtown LA’s Nokia Theater, venue of the Season 7 and 8 finals of American Idol, played host for a highly anticipated—though somewhat poorly attended—keynote from FCC Chairman Julius Genachowsi. The interview format, moderated by NCTA president Kyle McSlarrow, was heavy on platitudes, and light on real news.

“Let’s roll up our sleeves, and get down to business!” seemed to be overarching theme.

In a very brief press conference later in the day, the Chairman did respond to some slightly tougher questions—and gave a pretty non-responsive answer to one posed by yours truly

A “Healthy and Fair” Third Way?

April’s court decision “has created a problem, and has damaged the legal foundation," according to Chairman Genachowski. The FCC’s was faced with several options, according to a statement issued by the FCC:

Do Nothing

The Commission could continue relying on Title I “ancillary” authority, and try to anchor actions like
reforming universal service and preserving an open Internet by indirectly drawing on provisions in Title II
of the Communications Act (e.g., sections 201, 202, and 254) that give the Commission direct authority
over entities providing “telecommunications services.”

Deploy the “Nuclear Option”

The Commission could fully “reclassify” Internet communications as a “telecommunications
service,” restoring the FCC’s direct authority over broadband communications networks but also
imposing on providers of broadband access services dozens of new regulatory requirements.

Third Way

With each of these deemed “too extreme,” the Commission instead has decided on a so-called “Third Way,” a “Healthy and fair option” which would:

Recognize the transmission component of broadband access service—and only this component—
as a telecommunications service;
Apply only a handful of provisions of Title II (Sections 201, 202, 208, 222, 254, and 255) that,
prior to the Comcast decision, were widely believed to be within the Commission’s purview for
broadband;
Simultaneously renounce—that is, forbear from—application of the many sections of the
Communications Act that are unnecessary and inappropriate for broadband access service; and
Put in place up-front forbearance and meaningful boundaries to guard against regulatory
overreach.

Unfortunately, the FCC's chosen path, reclassifying ISPs as common carriers and "forbearing" the majority of Title II regulations, hasn’t done much to instill confidence. Critics say it opens the door to potential pricing regulation going forward, though the Chairman insists that is “off the table.”

The key enforced provision, Section 202, prohibits carriers from making any "unjust or unreasonable discrimination" in the way it charges. Section 208, another provision on the table for enforcement, allows carriers, enterprises, and individuals to file complaints directly with the FCC for violations.

Buckle Up and Hang On

Along with many others, I have long operated under the assumption that, in principle, net neutrality was decided with the election of Barack Obama in November 2008. The latest court rulings have insinuated more fear, uncertainty and doubt into the mix. And markets don't adapt well to fear, uncertainty and doubt. I would suggest everyone buckle in tight, because this ride isn't over.

See You in Court!

The process will be slow, there will be numerous legislative challenges and speed bumps--Representative Cliff Stearns from Florida recently introduced a bill that would require the FCC to deliver a detailed cost-benefit analysis to Congress before moving forward. When I asked the Chairman yesterday about this, he only said that FCC "will work with Congress as a resource."

Not to mention the court cases…we should anticipate numerous legal challenges in the forthcoming months, and it wouldn't surprise me to see this ultimately end up in the Supreme Court. The real brunt of this will be felt by OTT ecosystem players. Over the Top, by its very nature, is predicated on an open Internet.

Twelve, eighteen, or twenty-four additional months of limbo is the last thing these guys need.

Technorati Tags: Net Neutrality,Broadband,FCC,Genachowski

Chasing the Elusive IPTV Business Case

Ben Piper — Tue, 27 Apr 2010 16:19:42 GMT

We have just published a report that addresses the lackluster performance of IPTV of late. Seems only five years ago that analysts were predicting IPTV would become the next big thing, and a threat to “traditional” pay tv platforms. Much of this has failed to materialize, and we—along with others—have downward revised our global IPTV estimates.

In short, IPTV has failed to live up to its promise.

Steep Road Ahead for IPTV

IPTV has a few hurdles ahead of it, one of which I refer to as the “interactivity gap” in the report. There has been much talk of “interactivity,” but little actual progress. Sports scores, stock tickers, and traffic widgets are all well and good, but are unlikely to compel many consumers to sign up.

People like to talk about the great things IPTV can do, but few can point to actual implementations of interactivity or examples of services that customers actually want and are willing to pay a premium for.

No More Hotspotting Demos. Deal?

Some things just won’t go away

Along with cargo pants and Dancing with the Stars, the so-called “Jennifer Aniston’s sweater” trade show demo keeps coming back season after season. The somewhat cynically-dubbed example refers to a mocked up demo that was all the rage back in, well, about 2003. In it, a fully-engaged and immersed tv viewer, ravenous for more information on the article of clothing a tv celeb is wearing can, at the push of a button, be transported to an information page and a t-commerce opportunity. Cha-ching! Right?

Not really.

As recently as 2 weeks ago, I was forced to endure another hotspotting demo at the National Association of Broadcasters (NAB show in Las Vegas. The celebs were updated (somewhat), but the hackneyed concept is the same. And so is consumer and service provider interest. And by “the same,” I mean “nonexistent." It has become a punchline in the industry.

IPTV providers need to find interactivity that consumers actually want.

Address Addressable Advertising

Another often-mentioned hallmark of IPTV is the concept of addressable advertising, a laudable idea that has yet to emerge on any scale. All hope is not lost, however.

The recent announcement that San Jose-based BlackArrow, an advanced advertising vendor, generated an additional $20 million in funding should be seen as positive for the future of IPTV. While NDS Group led in this round of financing, others backers include ecosystem heavy-hitters including Cisco, Comcast and Intel. In total, the firm has raised just shy of $60 million. In an associated announcement, the two companies said they would be going to market together with the “first truly end to end” solution in the industry.

Will barrels of cash and high-profile backing be enough?

Technorati Tags: IPTV,Addressable Advertising,BlackArrow,NDS,Cisco,Comcast,Intel

FCC’s Net Neutrality Love Affair—on hold for now

Ben Piper — Tue, 06 Apr 2010 19:35:25 GMT

"The FCC is not having a one-night stand with Net neutrality,” said FCC Commissioner Michael Copps back in 2008, “ but an affair of the heart and commitment for life.”

Today’s ruling by the U.S. Court of Appeals for the District of Columbia may amount to a trial separation for the lovely couple.

The court delivered a painful kick in the shins to the FCC today, ruling that the agency overstepped its boundaries in 2008 by imposing an enforcement action against Comcast, alleging the cable company’s broadband network management practices to be in violation of the FCC's policy principles. Today’s ruling vacates the enforcement, which had called on Comcast to be more transparent in its network management practices.

While today’s decision may raise more questions than it delivers answers, it may be useful to consider some of the short and medium term implications.

The court’s decision is more about the FCC’s authority than on “Net Neutrality” per se

My number one prediction? The mainstream media will get it wrong.

They will suggest that this is a ruling against Net Neutrality. To be clear, today’s ruling is about the role and the regulatory authority of the FCC—not necessarily a ruling against Net Neutrality or the concept of an Open Internet. The FCC in a statement said the agency remains "committed to promoting an open Internet and to policies that will bring the enormous benefits of broadband to all Americans."

This decision will be challenged, but that could take years. In the meantime, look for the service providers to begin “testing the waters.”

I’m no lawyer, but as a more than casual industry observer, I can predict with some certainty that this is not a definitive ruling. It will more than likely end up in the Supreme Court—but don’t make any plans yet.

Broadband is now classified by the FCC as a “lightly regulated information service,” and as such it skirts many the regulations imposed on traditional Telecom services with regards to open networks. Some suggest that the FCC, as a rulemaking body, can simply reclassify broadband, and impose tougher regulation.

Whatever the final disposition is, time is on the side of the service providers. The glacial speed of change in DC means that in the upcoming months (and even years), Comcast and other service providers—granted a temporary reprieve—will likely begin testing the waters, and recommence traffic prioritization and other various and sundry network management antics.

What about OTT?

An affirmative decision on Net neutrality has always been a cornerstone of the future of unmanaged over-the-top (OTT) video. Today’s ruling throws a monkey wrench in those works. Until the next challenge, Comcast (and any service provider for that matter), reserves the right to prioritize and manage traffic streams as they see fit. “Sure we’ll get your YouTube video—just not all at once.”

And oh yeah, what about the future of the US National Broadband Policy?

Here’s hoping the FCC finds its true love.

Technorati Tags: FCC,Comcast,Net Neutrality,Broadband

BLOG.MULTIPLAYCOM

Cable’s About-Face on à la carte

Are the stars aligning for Smart Home Applications? Moves by Verizon and AT&T point that way

AT&T and Xanboo

Verizon’s Moves in MDU

Is the Dumb Pipe a Smart Move for Cable?

Has Cable been in the wrong business all these years?

High Growth, High Margin

Don’t reprint those business cards quite yet

Netflix Surpasses Comcast: Does Cable Have a Charlie Sheen Problem?

It’s not me. It’s you

That’s one way of putting it

I couldn’t agree more.

Check Engine Light

Cisco’s New Strategy and the Flip Flop

Flip? Out

“Double Down” on Service Provider Space

Back to basics

How Japan’s Sun Will Rise Again

Can Comcast Put The Sizzle Back in 3DTV? Sure, But Who Will Pay?

Content and the Indelicate Topic of Money

Market for 3DTV: It’s The Cube Tubers

NBCU-Comcast Merger: Sweetheart Deal or Regulatory Shakedown?

Net Neutrality: Special Rules Unit

OTT, OVD, FCC? OMG!

The Matter of Hulu

‘Naked’ Broadband, Soviet Style

Dead Skunks, Yellow Lines, and Net Neutrality

The only thing in the middle of the road are dead skunks and yellow lines

Fair to Middling

A Little Hyperbole Goes a Long Way

Netting Out Net Neutrality

It’s still not over

Please Have Exact Change

FUD Factor 2.0

Cord Cutting: Cable’s #1 Yes Man Gets it Wrong, Again.

What a difference five months makes

Pithy quote notwithstanding, 100% wrong. Again.

It’s Not (Just) the Economy, Stupid

Fox to Cablevision: Shot Across the Bow or Shot in the Foot?

This Whole ‘Cord Cutting’ Thing? Yeah, it’s Here to Stay

120 Channels and Nothing On

Not the End for Pay TV—But Maybe Pay TV As We Know It

3DTV Opportunity? Look to the Cube Tubers!

Translating 3D Excitement into 3DTV Viability is Challenge

Market Uncertainty is a Barrier

Target: Cube Tubers

George Jetson, Meet Cisco’s ūmi Telepresence

This time it’s different…

With apologies to Elvis Costello

Writing about telepresence is like dancing about architecture

The Uncomfortable Topic of Money

The Network Effect

Distance Learning: How about tapping into the multi-billion dollar distance learning market in the US. Equip every “Phoenix” with a system? That’s what I call scale.

I want one… but not for $599 plus $24.99/month

Adoption Will be Slow But Steady

Global Broadband Scorecard: US Ranks 23rd

A Different Way to Look at Broadband

Broadband Top 40…well, 57

Korea on top. Again

A respectable 23rd place?

AT&T’s Usage Based Billing: Love to Say I Told You So

Gettin’ Hosed in Texas?

Well, There You Go Again…

Brings Me to Tiers

Assessing the Real Threat of OTT

GoogleTV: “You Get the Idea”

Never Work with Children, Animals, or Bluetooth

Introducing WebTV 2.0?

Why it just might work this time

Cord cutting is fast becoming a reality

Source: Strategy Analytics

It satisfies a demonstrated need

The Power of the Value Chain

TBD?

Pricing

Content

Net Neutrality

Net Neutrality at the Cable Show: Genachowski Goes Hollywood

Do Nothing