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Tennessee State University Students Pay for Comcast Whether They Want It Or Not

Phillip Dampier June 29, 2015 Comcast/Xfinity, Consumer News, Online Video No Comments

xfinity campus

The average student of Tennessee State University living in on-campus housing will pay between $1,780-2,900 per academic year for housing, a meal plan, and Comcast’s Xfinity on Campus, an 80-channel cable television service that students pay for as part of their room and board.

TSU is the first college in Tennessee to launch the cable television service, which permits students off campus to use their university credentials to authenticate and access online programming from TV Everywhere websites and apps, such as WatchESPN and FXNOW.

Many students do not object to the Comcast service, in fact many appreciate it. Few know exactly how much it actually costs them, however, as its price is not broken out. Students cannot opt out of paying their share of the service either.

Universities respond positively to the program because it is administered and maintained by Comcast, which reduces the workload for campus employees.

 

Xfinity on Campus is also offered at:

  • Bridgewater College
  • CSU, Chico
  • Dartmouth College
  • Drexel University
  • Emerson College
  • Goucher College
  • Lasell College
  • Loyola University, Maryland
  • Massachusetts Institute of Technology
  • Northwestern University
  • Regis College
  • Rider University
  • University of Delaware
  • University of New Hampshire

The ISP Defense Squad Attacks Guardian Story on Internet Slowdowns

Phillip "Speaking as a Customer" Dampier

Phillip “Speaking as a Customer” Dampier

Two defenders of large Internet Service Providers are coming to the defense of the broadband industry by questioning a Guardian article that reported major Internet Service Providers were intentionally allowing a degradation in performance of Content Delivery Networks and other high volume Internet traffic in a dispute over money.

Richard Bennett and Dan Rayburn today both published articles attempting to discredit Battle for the Net’s effort highlighting the impact interconnection disputes can have on consumers.

Rayburn:

On Monday The Guardian ran a story with a headline stating that major Internet providers are slowing traffic speeds for thousands of consumers in North America. While that’s a title that’s going to get a lot of people’s attention, it’s not accurate. Even worse, other news outlets like Network World picked up on the story, re-hashed everything The Guardian said, but then mentioned they could not find the “study” that The Guardian is talking about. The reason they can’t find the report is because it does not exist.

[…] Even if The Guardian article was trying to use data collected via the BattlefortheNet website, they don’t understand what data is actually being collected. That data is specific to problems at interconnection points, not inside the last mile networks. So if there isn’t enough capacity at an interconnection point, saying ISPs are “slowing traffic speeds” is not accurate. No ISP is slowing down the speed of the consumers’ connection to the Internet as that all takes place inside the last mile, which is outside of the interconnection points. Even the Free Press isn’t quoted as saying ISPs are “slowing” down access speed, but rather access to enough capacity at connection points.

Bennett:

In summary, it appears that Battle for the Net may have cooked up some dubious tests to support their predetermined conclusion that ISPs are engaging in evil, extortionate behavior.

It may well be the case that they want to, but AT&T, Verizon, Charter Cable, Time Warner Cable, Brighthouse, and several others have merger business and spectrum auction business pending before the FCC. If they were manipulating customer experience in such a malicious way during the pendency of the their critical business, that would constitute executive ineptitude on an enormous scale. The alleged behavior doesn’t make customers stick around either.

I doubt the ISPs are stupid enough to do what the Guardian says they’re doing, and a careful examination of the available test data says that Battle for the Net is actually cooking the books. There is no way a long haul bandwidth and latency test says a thing about CDN performance. Now it could be that Battle for the Net has as a secret test that actually measures CDNs, but if so it’s certainly a well-kept one. Stay tuned.

The higher line measures speeds received by Comcast customers. The lower line represents speeds endured by AT&T customers, as measured by MLab.

The higher line measures speeds received by Comcast customers connecting to websites handled by GTT in Atlanta. The lower line represents speeds endured by AT&T customers, as measured by MLab.

Stop the Cap! was peripherally mentioned in Rayburn’s piece because we originally referenced one of the affected providers as a Content Delivery Network (CDN). In fact, GTT is a Tier 1 IP Network, providing service to CDNs, among others — a point we made in a correction prompted by one of our readers yesterday.

Both Rayburn and Bennett scoff at Battle for the Net’s methodology, results, and conclusion your Internet Service Provider might care more about money than keeping customers satisfied with decent Internet speeds. Bennett alludes to the five groups backing the Battle for the Net campaign as “comrades” and Rayburn comes close to suggesting the Guardian piece represented journalistic malpractice.

Much was made of the missing “study” that the Guardian referenced in its original piece. Stop the Cap! told readers in our original story we did not have a copy to share either, but would update the story once it became available.

We published our own story because we were able to find, without much difficulty, plenty of raw data collected by MLab from consumers conducting voluntary Internet Health Tests, on which Battle for the Net drew its conclusions about network performance. A review of that data independently confirmed all the performance assertions made in the Guardian story, with or without a report. There are obvious and undeniable significant differences in performance between certain Internet Service Providers and traffic distribution networks like GTT.

So let’s take a closer look at the issues Rayburn and Bennett either dispute or attempt to explain away:

  1. MLab today confirmed there is a measurable and clear problem with ISPs serving around 75% of Americans that apparently involves under-provisioned interconnection capacity. That means the connection your ISP has with some content distributors is inadequate to handle the amount of traffic requested by customers. Some very large content distributors like Netflix increasingly use their own Content Delivery Networks, while others rely on third-party distributors to move that content for them. But the problem affects more than just high traffic video websites. If Stop the Cap! happens to reach you through one of these congested traffic networks and your ISP won’t upgrade that connection without compensation, not only will video traffic suffer slowdowns and buffering, but so will traffic from every other website, including ours, that happens to be sent through that same connection.

MLab: "Customers of Comcast, Time Warner Cable, and Verizon all saw degraded performance [in NYC] during peak use hours when connecting across transit ISPs GTT and Tata. These patterns were most dramatic for customers of Comcast and Verizon when connecting to GTT, with a low speed of near 1 Mbps during peak hours in May. None of the three experienced similar problems when connecting with other transit providers, such as Internap and Zayo, and Cablevision did not experience the same extent of problems."

MLab: “Customers of Comcast, Time Warner Cable, and Verizon all saw degraded performance [in NYC] during peak use hours when connecting across transit ISPs GTT and Tata. These patterns were most dramatic for customers of Comcast and Verizon when connecting to GTT, with a low-speed of near 1 Mbps during peak hours in May. None of the three experienced similar problems when connecting with other transit providers, such as Internap and Zayo, and Cablevision did not experience the same extent of problems.”

MLab:

Our initial findings show persistent performance degradation experienced by customers of a number of major access ISPs across the United States during the first half of 2015. While the ISPs involved differ, the symptoms and patterns of degradation are similar to those detailed in last year’s Interconnections study: decreased download throughput, increased latency and increased packet loss compared to the performance through different access ISPs in the same region. In nearly all cases degradation was worse during peak use hours. In last year’s technical report, we found that peak-hour degradation was an indicator of under-provisioned interconnection capacity whose shortcomings are only felt when traffic grows beyond a certain threshold.

Patterns of degraded performance occurred across the United States, impacting customers of various access ISPs when connecting to measurement points hosted within a number of transit ISPs in Atlanta, Chicago, Los Angeles, New York, Seattle, and Washington, D.C. Many of these access-transit ISP pairs have not previously been available for study using M-Lab data. In September, 2014, several measurement points were added in transit networks across the United States, making it possible to measure more access-transit ISP interconnection points. It is important to note that while we are able to observe and record these episodes of performance degradation, nothing in the data allows us to draw conclusions about who is responsible for the performance degradation. We leave determining the underlying cause of the degradation to others, and focus solely on the data, which tells us about consumer conditions irrespective of cause.

Rayburn attempts to go to town highlighting MLab’s statement that the data does not allow it to draw conclusions about who is responsible for the traffic jam. But any effort to extend that to a broader conclusion the Guardian article is “bogus” is folly. MLab’s findings clearly state there is a problem affecting the consumer’s Internet experience. To be fair, Rayburn’s view generally accepts there are disputes involving interconnection agreements, but he defends the current system that requires IP networks sending more traffic than they return to pay the ISP for a better connection.

Rayburn's website refers to him as "the voice of industry."

Rayburn’s website refers to him as “the voice of industry.”

  1. Rayburn comes to the debate with a different perspective than ours. Rayburn’s website highlights the fact he is the “voice of the industry.” He also helped launch the industry trade group Streaming Video Alliance, which counts Comcast as one of its members. Anyone able to afford the dues for sponsor/founding member ($25,000 annually); full member ($12,500); or supporting member ($5,500) can join.

Stop the Cap! unreservedly speaks only for consumers. In these disputes, paying customers are the undeniable collateral damage when Internet slowdowns occur and more than a few are frequently inconvenienced by congestion-related slowdowns.

It is our view that allowing paying customers to be caught in the middle of these disputes is a symptom of the monopoly/duopoly marketplace broadband providers enjoy. In any industry where competition demands a provider deliver an excellent customer experience, few would ever allow these kinds of disputes to alienate customers. In Atlanta, Los Angeles, and Chicago, for example, AT&T has evidently made a business decision to allow its connections with GTT to degrade to just a fraction of the performance achieved by other providers. Nothing else explains consistent slowdowns that have affected AT&T U-verse and DSL customers for months on end that involve GTT while Comcast customers experience none of those problems.

We also know why this is happening because AT&T and GTT have both confirmed it to Ars Technica, which covered this specific slowdown back in March. As is always the case about these disputes, it’s all about the money:

AT&T is seeking money from network operators and won’t upgrade capacity until it gets paid. Under its peering policy, AT&T demands payment when a network sends more than twice as much traffic as it receives.

“Some providers are sending significantly more than twice as much traffic as they are receiving at specific interconnection points, which violates our peering policy that has been in place for years,” AT&T told Ars. “We are engaged in commercial-agreement discussions, as is typical in such situations, with several ISPs and Internet providers regarding this imbalanced traffic and possible solutions for augmenting capacity.”

competitionMissing from this discussion are AT&T customers directly affected by slowdowns. AT&T’s attitude seems uninterested in the customer experience and the company feels safe stonewalling GTT until it gets a check in the mail. It matters less that AT&T customers have paid $40, 50, even 70 a month for high quality Internet service they are not getting.

In a more competitive marketplace, we believe no ISP would ever allow these disputes to impact paying subscribers, because a dissatisfied customer can cancel service and switch providers. That is much less likely if you are an AT&T DSL customer with no cable competition or if your only other choice cannot offer the Internet speed you need.

  1. Consolidating the telecommunications industry will only guarantee these problems will get worse. If AT&T is allowed to merge with DirecTV and expand Internet service to more customers in rural areas where cable broadband does not reach, does that not strengthen AT&T’s ability to further stonewall content providers? Of course it does. In fact, even a company the size of Netflix eventually relented and wrote a check to Comcast to clear up major congestion problems experienced by Comcast customers in 2014. Comcast could have solved the problem itself for the benefit of its paying customers, but refused. The day Netflix’s check arrived, problems with Netflix magically disappeared.

More mergers and more consolidation does not enhance competition. It entrenches big ISPs to play more aggressive hardball with content providers at the expense of consumers.

Even Rayburn concedes these disputes are “not about ‘fairness,’ it’s business,” he writes. “Some pay based on various business terms, others might not. There is no law against it, no rule that prohibits it.”

Battle for the Net’s point may be that there should be.

Premium Hulu Customers Can Buy Showtime at a Discount: $8.99/Month

Phillip Dampier June 24, 2015 Competition, Consumer News, Online Video, Video 1 Comment

showtimeCustomers paying $7.99 a month for what used to be called Hulu Plus will be able to add Showtime to their Hulu subscription for an extra $8.99 a month — two dollars less than what Showtime will charge Apple TV and other online video customers.

Showtime Networks’ online streaming service will launch in early July for $10.99 a month, $4 less than HBO Now, which charges $14.99. But Hulu customers will get an extra 18 percent discount if they bundle Showtime with Hulu’s premium option.

huluTM_355Hulu customers who subscribe to Showtime will have access to every Showtime original series ever produced along with Showtime’s full catalog of the same movies, documentaries, specials and sports programming available to cable television customers. Hulu will also carry the east and west coast feeds of Showtime’s primary channel for those who want to watch live events.

The partnership is designed to strengthen Hulu’s competitive position against Netflix and Amazon’s video services.

Showtime CEO Matt Blank doubts Showtime’s online streaming service will cannibalize its existing subscriber base, although most satellite and cable providers charge at least $5 more per month for the premium movie channel ($13.99-16.99 through most cable/telco/satellite providers).

http://www.phillipdampier.com/video/Bloomberg Showtime CEO Broadband-Only Customers Are an Opportunity 6-4-15.flv

Showtime CEO Matt Blank explains to Bloomberg News why selling Showtime online for $10.99 a month ($8.99 for premium Hulu customers) will not hurt existing distributors like cable and satellite providers. (4:22)

FCC Likely to Toss First Formal Net Neutrality Complaint Against Time Warner Cable

The nation’s first Net Neutrality complaint filed with the Federal Communications Commission accuses Time Warner Cable of refusing to provide the best possible path for its broadband customers to watch a series of high-definition webcams covering San Diego Bay.

sundiego_banner

Commercial Network Services’ CEO Barry Bahrami wrote the FCC that Time Warner Cable is degrading its ability to exercise free expression by choosing which Internet traffic providers it directly peers with and which it does not:

I am writing to initiate an informal complaint against Time Warner Cable (TWC) for violating the “No Paid Prioritization” and “No Throttling” sections of the new Net Neutrality rules for failure to fulfill their obligations to their BIAS consumers by opting to exchange Internet traffic over higher latency (and often more congested) transit routes instead of directly to the edge provider over lower latency peering routes freely available to them through their presence on public Internet exchanges, unless a payment is made to TWC by the edge provider. These violations are occurring on industry recognized public Internet peering exchanges where both autonomous systems maintain a presence to exchange Internet traffic, but are unable to due to the management policy of TWC. As you know, there is no management policy exception to the No Paid Prioritization rule.

By refusing to accept the freely available direct route to the edge-provider of the consumers’ choosing, TWC is unnecessarily increasing latency and congestion between the consumer and the edge provider by instead sending traffic through higher latency and routinely congested transit routes. This is a default on their promise to the BIAS consumer to deliver to the edge and make arrangements as necessary to do that.

The website responsible for initiating the complaint shows live webcam footage of the San Diego Bay.

The website responsible for initiating the complaint shows live webcam footage of the San Diego Bay.

Bahrami’s complaint deals with interconnection issues, which are not explicitly covered by the FCC’s Net Neutrality rules that prohibit intentional degradation or paid prioritization of network traffic. For years, ISPs have agreed to “settlement-free peering” arrangements with bandwidth providers that exchange traffic in roughly equal amounts with one another. To qualify for this kind of free interconnection arrangement, CNS’ webcams must be hosted by a company that receives about as much traffic from Time Warner Cable customers as it sends back to them — an unlikely prospect.

As bandwidth intensive content knocks traffic figures out of balance, ISPs have started demanding financial compensation from content producers if they want performance guarantees. This is what led Comcast, Verizon and AT&T to insist on paid interconnection agreements with the traffic monster Netflix.

Time Warner Cable is calling on the FCC to dismiss Bahrami’s letter on the grounds it is not a valid Net Neutrality complaint.

“[The FCC should] reject any complaint that is premised on the notion that every edge provider around the globe is entitled to enter into a settlement-free peering arrangement,” Time Warner Cable responds. That is a nice way of telling CNS it doesn’t get a premium pathway to Time Warner Cable customers for free just because of Net Neutrality rules.

CNS250X87Bahrami responds Time Warner’s attitude is based on a distinction without much difference because he is effectively being told CNS must pay extra for a suitable connection with Time Warner to guarantee his web visitors will have a good experience.

“This is not a valid complaint, and there is no way the FCC is going to side with them,” Dan Rayburn, a telecom analyst at Frost & Sullivan and the founding member of the Streaming Video Alliance told Motherboard. “The rules say you can’t block or throttle, but there’s no rule that says Time Warner Cable has to give CNS settlement-free peering. I don’t see how the FCC could possibly say there’s a violation here.”

The FCC made it clear in its Net Neutrality policy it intends “to watch, learn, and act as required, but not intervene now, especially not with prescriptive rules” with respect to interconnection matters.

That makes it likely Bahrami’s complaint will either be tossed out on grounds it is not a Net Neutrality violation or more likely dismissed but kept in what will likely be a growing file of future cases of interconnection disputes between ISPs and content producers. If that file grows too large too quickly, the FCC may be compelled to act.

AT&T, Verizon, Time Warner Cable Implicated In Content Delivery Network Slowdowns

fat cat attIf your YouTube, Netflix, or Amazon Video experience isn’t what it should be, your Internet Service Provider is likely to blame.

A consumer group today implicated several major Internet providers including Comcast, AT&T, Time Warner Cable and Verizon in an Internet slowdown scheme that prevented customers from getting the broadband performance they are paying for.

A study* of 300,000 Internet users conducted by Battleforthenet found evidence some of America’s largest providers are not adequately providing connectivity for Content Delivery Networks (CDNs) that supply high-capacity traffic coming from the Internet’s most popular websites.

Significant performance degradation was measured on the networks of the five largest American ISPs, which provide Internet connectivity for 75% of U.S. households.

“For too long, Internet access providers and their lobbyists have characterized Net Neutrality protections as a solution in search of a problem,” Tim Karr from Free Press told the Guardian newspaper, which had advance notice of the study. “Data compiled using the Internet Health Test show us otherwise – that there is widespread and systemic abuse across the network. The irony is that this trove of evidence is becoming public just as many in Congress are trying to strip away the open Internet protections that would prevent such bad behavior.”

freepressThe study revealed network performance issues that would typically be invisible to most broadband customers performing generic speed tests to measure their Internet speed. The Open Technology Institute’s M-Lab devised a more advanced speed test that would compare the performance of high traffic CDNs across several providers. CDNs were created to reduce the distance between a customer and the content provider and balance high traffic loads more evenly to reduce congestion. The shorter the distance a Netflix movie has to cross, for example, the less of a chance network problems will disrupt a customer’s viewing.

If technicians controlled the Internet, the story would end there. But it turns out money has gotten between Internet engineers with intentions of moving traffic as efficiently as possible and the executives who want to be paid something extra to carry the traffic their customers want.

That may explain why Comcast can deliver 21.4Mbps median download speeds for traffic distributed by a CDN Tier1 IP network called GTT to customers in Atlanta, while AT&T only managed to squeeze through around 200kbps — one-fifth of 1Mbps. It turns out AT&T’s connection with GTT may be maxed out and AT&T will not upgrade capacity to a network that sends AT&T customers more than twice the traffic it receives from them without direct compensation from GTT.

Internet traffic jam, at least for AT&T customers in Atlanta trying to access content delivered by GTT.

Internet traffic jam, at least for AT&T customers in Atlanta trying to reach content delivered by GTT.

An AT&T U-verse customer in Atlanta would probably not attribute the poor performance depicted in M-Lab’s performance test directly to AT&T because Internet responsiveness for other websites would likely appear normal. Customers might blame the originating website instead. But M-Lab’s performance results shows the trouble is limited to AT&T, not other providers like Comcast.

AT&T: Slow down, you move too fast.

AT&T: Slow down, you move too fast.

The issues of performance and peering agreements that provide enough capacity to meet demand are close cousins of Net Neutrality, which is supposed to prevent content producers from being forced to pay for assurances their traffic will reach end users. But that seems to be exactly what AT&T is asking for from GTT.

“It would be unprecedented and unjustified to force AT&T to provide free backbone services to other backbone carriers and edge providers, as Cogent et al seek,” AT&T wrote in response to a request from several CDNs to disallow AT&T’s merger with DirecTV. “Nor is there any basis for requiring AT&T to augment network capacity for free and without any limits. Opponents’ proposals would shift the costs of their services onto all AT&T subscribers, many of whom do not use Opponents’ services, and would harm consumers.”

* – When a copy of the study becomes publicly available, we will supply a link to it.

Correction: It is more accurate to describe GTT as a “Tier1 IP network” which supplies services to CDN’s, among others. More detail on what GTT does can be found here.

Sling TV CEO Fears Providers Will Jack Up Broadband Prices to Kill Online Video

DishLogo-RedIn the last three years, several Wall Street analysts have called on cable and telephone companies to raise the price of broadband service to make up for declining profits selling cable TV. As shareholders pressure executives to keep profits high and costs low, dramatic price changes may be coming for broadband and television service that will boost profits and likely eliminate one of their biggest potential competitors — Sling TV.

For more than 20 years, the most expensive part of the cable package has been television service. Cable One CEO Thomas Might acknowledged that in 2005, despite growing revenue from broadband, cable television still provided most the profits. That year, 64% of Cable One’s profits came from video. Three years from now, only 30% will come from selling cable TV.

While broadband prices remained generally stable from the late 1990’s into the early 2000’s, cable companies were still raising cable television prices once, sometimes twice annually to support very healthy profit margins on a service found in most American homes no matter its cost. Despite customer complaints about rate hikes, as long as they stayed connected, few providers cared to listen. With little competition, pricing power was tightly held in the industry’s hands. The only significant challenge to that power came from programmers demanding (and consistently winning) a bigger share of cable’s profit pie.

The retransmission consent wars had begun. Local broadcast stations, popular cable networks, and even the major networks all had hands out for increased subscriber fees.

Rogers

Rogers

In the past, cable companies simply passed those costs along, blaming “increased programming costs” in rate hike notifications without mentioning the amount was also designed to keep their healthy margins intact. Only the arrival of The Great Recession changed that. New housing numbers headed downwards as children delayed leaving to rent their own apartment or buy a house. Many income-challenged families decided their budgets no longer allowed for the luxury of cable television and TV service was dropped. Even companies that managed to hang on to subscribers recognized there was now a limit on the amount customers would tolerate and the pace of cable TV rate hikes has slowed.

For a company like Cable One, the impact of de facto profit-sharing on cable television service was easy to see. Ten years ago, only about $30 of a $70 video subscription was handed over to programmers. This year, a record $45.85 of each $81 cable TV subscription is paid to programmers. The $35.50 or so remaining does not count as profit. Cable One reported only $10.61 was left after indirect costs per customer were managed, and after paying for system upgrades and other expenses, it got to keep just $0.96 a month in profit.

To combat the attack on the traditional video subscription model, Cable One raised prices in lesser amounts and began playing hardball with programmers. It permanently dropped Viacom-owned cable networks to show programmers it meant business. Subscribers were livid. More than 103,000 of Cable One’s customers across the country canceled TV service, leaving the cable company with just over 421,000 video customers nationwide.

Some on Wall Street believe conducting a war to preserve video profits need not be fought.

Prices already rising even before "re-pricing" broadband.

U.S. broadband providers already deliver some of the world’s most expensive Internet access.

Analysts told cable companies that the era of fat profits selling bloated TV packages is over, but the days of selling overpriced broadband service to customers that will not cancel regardless of the price are just beginning.

Cablevision CEO James Dolan admitted the real money was already in broadband, telling investors Cablevision’s broadband profit margins now exceed its video margins by at least seven to one.

The time to raise broadband prices even higher has apparently arrived.

new street research“Our work suggests that cable companies have room to take up broadband pricing significantly and we believe regulators should not oppose the re-pricing (it is good for competition & investment),” wrote New Street Research’s Jonathan Chaplin in a recent note to investors. The Wall Street firm sells its advice to telecom companies. “The companies will undoubtedly have to take pay-TV pricing down to help ‘fund’ the price increase for broadband, but this is a good thing for the business. Post re-pricing, [online video] competition would cease to be a threat and the companies would grow revenue and free cash flow at a far faster rate than they would otherwise.”

If you are already a triple play cable television, broadband, and phone customer, you may not notice much change if this comes to pass, at least not at first. To combat cord-cutting and other threats to video revenue, some advisers are calling on cable companies like Comcast, Time Warner Cable and Charter to re-price the components of their package. Under one scenario, the cost of cable television would be cut up to $30 a month while the price of Internet access would increase by $30 or more a month above current prices. Only customers who subscribe to one service or the other, but not both, would see a major change. A cable TV-only subscriber would happily welcome a $50 monthly bill. A broadband-only customer charged $80, 90, or even 100 for basic broadband service would not.

broadband pricesNeither would Sling CEO Roger Lynch, who has a package of 23 cable channels to sell broadband-only customers for $20 a month.

“They have their dominant — in many cases monopolies — in their market for broadband, especially high-speed broadband,” Sling CEO Roger Lynch told Business Insider in an interview, adding that some cable companies already make it cheaper for people to subscribe to TV and broadband from a cable company than just subscribe to broadband.

A typical Sling customers would be confronted with paying up to $100 a month just for broadband service before paying Sling its $20 a month. Coincidentally, that customer’s broadband provider is likely already selling cable TV and will target promotions at Sling’s customers offering ten times the number of channels for as little as a few dollars more a month on top of what they currently pay for Internet access.

Such a pricing change would damage, if not destroy, Sling TV’s business model. Lynch is convinced providers are seriously contemplating it to use “their dominant position to try to thwart over the top services.”

At least 75% of the country would be held captive by any cable re-pricing tactic, because those Americans have just one choice in providers capable of meeting the FCC’s minimum definition of broadband.

Even more worrying, FCC chairman Thomas Wheeler may be responsible for leading the industry to the re-pricing road map by repeatedly reassuring providers the FCC will have nothing to do with price regulation, which opens the door to broadband pricing abuses that cannot be easily countered by market forces.

Lynch has called on the FCC to “protect consumers” and “make sure there’s innovation and competition in video.”

Unfortunately, Wheeler may have something else to prove to his critics who argued Net Neutrality and Title II oversight of broadband would lead to rampant price regulation. Wheeler has hinted repeatedly he is waiting to prove what he says — an allusion to hoping for a formal rate complaint to arrive at the FCC just so he can shoot it down.

CBS’ Idea of Choice: $5.99/Mo for CBS Library and Live Local CBS Station Streaming

broken bankThink you are already paying too much for cable television? If you thought Comcast charges too much, consider what CBS thinks is fair to charge for an on-demand library of CBS shows and a single live stream of your local CBS station – $5.99 a month.

Retransmission consent disputes are all about the money. As your local provider fights with a local station or cable network over their latest demand for more money, channels get dropped, providers get blamed and the content owners get richer when networks are restored.

One of the richest of all is CBS, which has told investors it plans to empty $2 billion from the pockets of American cable customers by the year 2020, up from $500 million in 2013. Not only will CBS demand new programming fees from its affiliates, it is also cajoling stations to demand not less than $1.75 a month from every cable subscriber for access to the local CBS over the air station.

Each time a retransmission consent contract comes up for renewal, cable operators know as certain as the sun will rise from the east that programmers will demand a healthy rate increase for the next contract period. That is why many cable companies now look to broadband for much of their future profits, because the TV business is getting very expensive when everyone has their hand out looking for more.

Some cable companies want an end to being stuck in the middle of these disputes and are supporting a plan to compel programmers like CBS, ESPN, TNT, HBO, and all the rest to publish a retail rate for their channel or network and let consumers decide whether it is worth the asking price.

cable-inflation-comparison

A proposal introduced last year called “Local Choice” would start the process with local television stations, which have demanded ever-higher carriage fees over the last 10 years, especially for network-affiliated stations.

Under the concept, customers would be given a choice of local stations by their provider. Theoretically, a customer could subscribe to CBS and ABC and tell NBC (and its local affiliate) to take a hike if they demanded too much. Another might be happy just paying for FOX and grab the rabbit ears for anything else they wanted to watch over the air for free.

Rockefeller

Rockefeller

No local station or network would voluntarily say goodbye to the golden goose that lays compulsory retransmission consent fees programmers currently collect from every cable subscriber, so last summer Congress proposed to mandate the concept in a clause of the Satellite Television Access and Viewer Rights Act (STAVRA).

Then Senate Commerce Committee Chairman Jay Rockefeller (D-W.V.) and Ranking Member John Thune (R-S.D.) beat the bipartisan drum loudly for change. But lobbyists also had drums. Rockefeller and Thune began wavering almost immediately.

“During the last month, Chairman Rockefeller and Ranking Member Thune have successfully begun a discussion on Local Choice, which would empower TV viewers, maintain our policy of broadcast localism, and ensure TV stations get fairly compensated for the retransmission of their signals,” read a joint statement issued last September. “Because it is a big and bold idea, Local Choice deserves more discussion and a full consideration by policymakers, and the committee may not have time to include it as part of STAVRA. Rockefeller and Thune are focused on passing STAVRA next week, and continuing to work with their colleagues on Local Choice.”

After the sudden insertion of Local Choice into a satellite television bill, an orange glow filled the night sky at 1771 N Street in Washington. It was Gordon Brown’s hair on fire. Brown is president and CEO of the National Association of Broadcasters (NAB), the very powerful lobby representing television stations and networks. But that night, he sounded exactly like a cable guy.

“NAB opposes this proposal because it eliminates the basic [cable] tier upon which millions rely for access to lifeline information,” Brown responded in a statement. “It proposes a broadcast a-la-carte scheme that will lead to higher prices and less program diversity. Furthermore, STAVRA appears to confer unfettered and unprecedented authority for government intervention into private marketplace negotiations.”

8679-2_NAB_logos_csThe cable industry has fought its own battle against a-la-carte on exactly the same ground Brown was now occupying.

Rockefeller later claimed he was only poking the Broadcast TV Bear to provoke a response, and he got one. The idea of Local Choice was stripped out of the bill by the fall. Rockefeller was reduced to saving face.

“What we wanted to do was introduce those ideas,” Rockefeller later told The Hill. “We made it sound like it was the focus of the bill, and K Street just went crazy, which is always good. But we knew that we’d have to take it out.”

Yes they did, after the NAB and their allies launched a major PR campaign against Local Choice, attracting over 130,000 comments against the plan.

Polka

Polka

But Rockefeller knew the idea was not going away.

“As people get a taste of being able to say ‘I only watch 10 channels so I should only pay for 10 channels,’ they’re going to love that. It’s going to spread like wildfire,” Rockefeller said.

Fast forward to this spring and it was back to business as usual. Retransmission consent disputes yanked several networks and stations off cable systems, providers mailed their annual rate increase notices, and the cable industry’s popularity and reputation with customers now rivaled ISIS.

Much of the collateral damage (apart from the collective emptying of your wallet) continues to be felt by America’s smallest cable operators that cannot negotiate for what passes as fair and reasonable programming rates from networks like ESPN and CBS. They cannot qualify for volume discounts that are so compelling, it drove AT&T (U-verse TV) into the arms of DirecTV just to get enough subscribers to knock a few more cents off the monthly price of regional sports channels. Only the biggest players in the game have the power and get the savings.

Matthew Polka, president of the American Cable Association (ACA), the other cable trade association representing the interests of small, often family owned cable systems, may not have the most power but he could have the strongest argument against the status quo. While the National Association of Broadcasters spent tens of thousands of dollars arguing today’s retransmission consent system works just fine, some of America’s smaller TV stations apparently didn’t read the NAB’s talking points.

GotchaThe “TV Station Group,” an informal collective of small market TV stations seeking a renewal of their carriage contract with DirecTV has been stonewalled by DirecTV for months. Last week, the station owners filed a complaint with the FCC asking them to stop or block AT&T’s merger with DirecTV until the satellite provider agreed to negotiate in good faith. It was clear from their filing DirecTV’s idea of negotiation is to send ‘take it or leave it’ nastygrams to the TV stations, serving markets like Spokane, Wash., and Yuma, Ariz. The only thing clear from the back and forth is that DirecTV has no doubt it can squash the stations like little bugs:

[W]e will not fall victim to your silly and obvious tactics to try to audit our retrans deals so you can see them all. We did not ask you to send to us your supposed rates, and your unilateral decision to do so doesn’t give you the right to see our other deals. But trust [us], no other station group – especially small groups such as Northwest – are paid by DIRECTV nearly what you have proposed, let alone what your sheet says.

A few weeks later, in response to another request from the broadcasters, DirecTV scolded them like a misbehaving teenager:

To repeat yet again, DIRECTV is not going to get pulled into your transparent trap to define what is ‘market’ by seeing our other deals. That is a precedent we will not set, including for NW. Please do not ask again.

“Judging from the TV stations’ complaint, it is evident that the retransmission consent market is broken and not working for these broadcasters any better than for cable operators,” Polka wrote in a press release issued today. “The time has come for these TV stations and others that have also filed good faith complaints to step out from NAB’s long shadow and join ACA in supporting efforts to update the rules and equip them with a strong referee that can help protect consumers and competition when negotiations break down.”

Polka continues to advocate letting customers decide whether they want to pay for local stations and cable networks. He argues CBS is already doing that today with its All Access program for broadband customers. In 94 markets, serving 64% of U.S. households, consumers can voluntarily subscribe to a live stream of their local CBS station and access a large 6,500 title on-demand library of CBS content for $5.99 a month.

cbs all accessNobody besides CBS knows how many have agreed to pay for All Access, but executives have told investors they are pleased with how the program is working. Still, Marc DeBevoise, executive vice president and general manager of CBS Digital Media at CBS Interactive knows he walks a very fine line promoting a product that could eventually undermine CBS’s current commitment to today’s retransmission consent system. DeBevoise told The Drum it does not market or intend to offer All Access as an alternative to the current cable model.

“At a high level, our strategy in launching CBS All Access was two-fold. First, to delivery our best fans access to the most CBS content we could on any device at any time – really delivering a service for our ‘superfans,'” DeBevoise said. “Additionally this service enables us to reach ‘cord-nevers’ that want to watch CBS content but don’t have a traditional cable package –a significant audience, with industry estimates ranging from 6.5 to 16 million households.”

But at $5.99 a month, that price may prove too steep for many casual viewers looking only for a show or two. Many viewers now rely on ad-supported Hulu, a project of the major American broadcast networks except CBS. Most Hulu customers watch their favorite network shows for free. The future possibility of paying $6 for each of four major American broadcast networks will likely be seen as out of line, especially by more casual viewers.

But for Polka and ACA member cable systems, the idea that customers will direct their All Access price shock wrath out on CBS, not the cable company, may be worth it.

Pay Television in Denial: Linear TV is on Life Support; Do You Still Watch Live Television?

Phillip Dampier June 9, 2015 Editorial & Site News, Online Video 5 Comments
acura

Ranger

While fast-forwarding through the 5,000th time I’ve briefly endured the mangling of Blondie’s “Rapture,” in those 2015 Acura RDX ads, I concluded two things:

  • I will never buy an Acura RDX, if only to deliver the message that grating ads first thing in the morning will not win you any sale from me;
  • I have not watched a commercial (on purpose) since 2011.

Ironically, the young woman behind the wheel of the aforementioned Acura is none other than Chelsea Ranger, who became a YouTube sensation after her husband recorded his wife rapping in the car to Salt-n-Pepa’s “None of Your Business,” itself an irony. Ranger’s singing was viewed by 17 million people watching a recorded YouTube video instead of cable television. Like popcorn, nobody quits after just one. YouTube is a confirmed time wormhole, where hours can disappear in what seemed like just a few minutes. This phenomena can also be experienced with Netflix, Amazon, or a myriad of other multimedia websites where on-demand entertainment is always on. How can it be 2am already? Darn, it’s too late to watch Anthony Bourdain and 18 minutes of ads on CNN now.

tv-ad-load-versus-video-ad-load-2014-augustine-fou-1-638Advertisers wondering how many viewers actually spend time watching their commercials are right to be worried. Some have tried to cover their bases by spreading ad budgets around to include online video advertising. But when the online ads become meddlesome (Hulu, anyone?), here comes ad blocking software. No more Geico ads on YouTube, but the experience is less fulfilling watching a blank screen for a few minutes on certain other services. You might actually have to talk to the person sitting next to you.

What cannot be found online can be recorded with a DVR, if only to build up enough buffered video to blow right past those ad breaks. Others collect entire seasons of favorite shows, reserved for binge viewing later. All of this after-the-fact viewing is conditioning you (like a gateway drug) for a future life without linear/live television. You started just to be rid of the advertising, but now you seriously toy with getting rid of cable TV if you can find enough to watch online.

There are exceptions, of course. News and sports junkies are often uncomfortable watching recordings of in-the-moment events. Others cannot imagine losing sports aired on ESPN or CNN for breaking news. But beyond these groups, the chains that hold us to the linear 500-channel pay television universe are rusting.

Phillip "Ad nauseum" Dampier

Phillip “Ad nauseum” Dampier

Getting off the cable television drug is easiest if you never started. That is why Millennials, often cable-nevers, are among the least likely to buy a cable television package. They don’t miss what they never watched, preferring the personalized viewing of their mobile device or tablet over the family television. For those that grew up with the cable box and have never been without it, there was always suspicion that the stories from brave souls who canceled service and never regretted it come from closeted book-reading Luddites.

But consider for a moment you may already be watching less cable television than you think. Spend a week and take note of how much time you spend with the cable box. Then compare it with how many hours you watch Roku, YouTube, Apple TV, Netflix, or any other non-linear television experience. If you can find more to watch on YouTube than on cable, ditching pay TV may not be as hard as you think.

The cable industry’s response to the challenge of online video has been to shoot itself in the foot. Despite the constant complaints that cable programming costs are rising out of control, there is always room for more networks customers did not ask to receive. Navigating cumbersome set-top box software means many customers won’t find those new channels anyway. But they will pay for them.

The higher the price of cable television, the less value many place on it.

People-skipping-the-Preroll-adsCable operator (and network) greed has effectively ruined the industry’s best chance to prove continued value in an increasingly on-demand viewing world. TV Everywhere was supposed to make the 500 channel universe accessible online and on-demand for authenticated paying customers.

Some networks want customers to watch on their websites, others deliver shows on-demand from a set-top box. Instead of envisioning a TV Everywhere model to compete with online video, most cable companies are turning it into the equivalent of a DVR viewing experience with the fast-forward button disabled.

Comcast and Time Warner Cable make enormous amounts of free video available to customers. At the beginning, programmers used an informal honor system. In return for a quick pre-show advertisement and limited commercial interruptions, viewers wouldn’t bother ad-skipping if it meant they could watch a one-hour show in less than 50 minutes. Start inserting five 30 second commercials in every ad break and viewers will start looking for the remote control.

The challenge: should cable companies side with their customers and deliver a compelling TV Everywhere experience or with their bean counters, cramming ads into every available spot. Many are choosing the money. When customers rebelled and began to fast forward through the ads, the cable company retaliated by disabling that option (sometimes, it must be admitted, at the behest of a cable or broadcast network).

But it has gotten worse. For absolutely no reason other than to torture customers, Comcast is notorious for running a very small number of ads aired over and over and over again. Nothing makes television less fun than the same car ad repeated 10-15 times in a single one-hour show. Less is more is not a concept known to the cable industry. As a result, they will now have fewer television customers.

There is nothing about this quest for cash that has not been repeated in other forms of entertainment. Corporate commercial radio with 10 minute ad breaks drove listeners to Sirius XM or MP3 players. Running three minutes of ads to a captive movie theater audience that just paid $10 for a seat will not bring a theater chain any fans. The traditional 30-second ad is increasingly dead in the online world and advertisers and the companies that show them should adopt to the new reality instead of trying to force compliance to the “old ways.”

The cable industry earned its bad reputation by not listening to customers. Now that those customers have a choice to watch something else, the $80 cable TV bill is increasingly expendable as viewers cut the cord and never look back.

Is your linear TV experience not what it used to be? How often are you watching non-news/sports shows live? When the commercials start, do you reflexively reach for the remote control? Are you spending time with cable’s TV Everywhere on demand services? Share your thoughts in the comment section.

Charter CEO: Net Neutrality No Deterrent to System Upgrades, Investment

Rutledge

Rutledge

Despite claims from Net Neutrality critics that increased oversight of the broadband business would lead to reduced investment and upgrades, Charter Communications CEO Thomas Rutledge said the new rules would have no effect on Charter’s investment plans.

Last week Rutledge sat down with FCC chairman Thomas Wheeler to discuss Charter’s proposed merger with Bright House Networks and Time Warner Cable. He was joined by Catherine Bohigian, Charter’s executive vice president for governmental affairs and FCC general counsel Jonathan Sallet and senior counselor Phil Verveer.

“Mr. Rutledge explained that the transactions will bring substantial consumer benefits, including providing a better Internet experience for watching on-line video, gaming, and using other data-hungry apps at more competitive prices, and that the mergers will not harm competition,” according to a one page filing with the FCC disclosing the meeting.

Despite repeated claims from pro-industry policy wonks that Net Neutrality and Title II oversight of cable broadband would cause operators to reconsider their investment plans, Rutledge made it clear Charter’s spending plans are unaffected.

“Mr. Rutledge agreed that the Commission’s decision to reclassify broadband Internet access under Title II has not altered Charter’s approach of investing significantly in its network to deliver cutting edge services including: the fastest entry-level broadband service (60 Mbps) with unlimited usage; out-of-home Wi-Fi hotspots; a state-of-the art, cloud-based user guide, allowing search and discovery across linear, video on demand and online content; open, non-proprietary downloadable security; and an innovative video app with hundreds of live and downloadable channels and the ability to display over-the-top content seamlessly on the television,” the disclosure continues.

Charter’s chief executive said the company supports Open Internet rules, including no throttles or blocks on lawful content and no paid prioritization. But he does worry about regulatory uncertainty while the FCC explores its expanded powers of oversight.

CBS Introducing a Showtime Broadband-Only Streaming Video Subscription Service

showtimeFollowing the footsteps of HBO Now, CBS Corporation is preparing to offer a broadband-only streaming video version of Showtime.

Variety reports a formal announcement is due this week for the service and just like HBO Now, it will initially launch as an Apple TV exclusive, with other platforms added later.

No information about the depth of the online Showtime on-demand catalog is available yet, but the pricing for the service is: $10.99 a month. It will launch July 12. HBO Now costs $15 a month.

CBS has gotten experience in the streaming video market with its $6/mo CBS All Access service, which offers on-demand viewing of decades of CBS programming and all episodes of current CBS series. In markets where CBS owns its local affiliate, live streaming is also available.

Showtime will also be expanding into Canada for the first time in January, to be made available on Bell Media platforms including Fibe TV and its direct to home satellite service.

This article updated to reflect pricing and launch date of the service.

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