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NY’s Broadband Future Is Better With Time Warner Cable: Comcast’s Coming Usage Caps Kill Innovation

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Broadband will be critically impacted by any merger of Comcast and Time Warner Cable in New York. The two companies could not be more different in their philosophies regarding access, pricing, and speeds.

say noThis merger will have an especially profound impact on broadband service in upstate New York, largely left behind out from getting Verizon’s fiber upgrades. New York’s digital economy critically needs modern, fast, and affordable Internet access to succeed. Verizon has not only ceased expansion of its FiOS fiber to the home network in New York, it has virtually capitulated competing for cable customers in non-FiOS areas by agreeing to sell Time Warner Cable service in its wireless stores.[1]  In cities like Rochester, served by Frontier Communications’ DSL, Time Warner Cable is the only provider in town that can consistently deliver broadband speeds in excess of 10Mbps.

Time Warner Cable has never been the fastest Internet provider and had a history of being slower than others to roll out speed increases. But it is also the only cable provider in the country that experimented with usage caps and consumption billing and shelved both after subscribers bitterly complained in market tests in cities including Rochester.[2]

Then CEO Glenn Britt announced the end of the usage cap trial just two weeks after it became public.[3] Britt would later emphasize that he now believed there should always be an unlimited use plan available for Time Warner Cable customers who do not want their Internet use metered.[4] In study after study, the overwhelming majority of customers have shown intense dislike of limitations on their Internet usage, whether from strict usage caps Comcast maintained for several years or usage allowances that, when exceeded, would result in overlimit fees.[5] Just this month, the Government Accounting Office confirmed these findings in a new study that reported near-universal revulsion for usage caps on home wired broadband service:[6]

In only two groups did any participants report experience with wireline UBP [usage-based pricing].

However, in all eight groups, participants expressed strong negative reactions to UBP, including concerns about:

  • The importance of the Internet in their lives and the potential effects of data allowances.
  • Having to worry about data usage at home, where they are used to having unlimited access.
  • Concerns that ISPs would use UBP as a way of increasing the amount they charge for Internet service.

Time Warner Cable has learned an important lesson regarding consumer perception of usage-based billing and usage caps on Internet service. In 2012, the company introduced optional usage caps for customers interested in a discount on their broadband service. Out of 11 million Time Warner Cable broadband customers, only a few thousand have been convinced in enroll such programs.[7]

Despite results like that, Comcast has not learned that lesson and has twice imposed unilateral, compulsory usage limits on their broadband customers, starting with a nationwide hard usage cap of 250GB per month introduced in 2008. Violators risked having their broadband service terminated by Comcast.[8] Today, for some that would be comparable to losing electricity or telephone service. The threat has profound implications in areas where Comcast is the only broadband provider.

Comcast temporarily rescinded its cap in May 2012, but has gradually reintroduced various forms of usage-related billing and caps with market trials in several Comcast service areas[9]:

Nashville, Tennessee: 300 GB per month with $10/50GB overlimit fee;

Tucson, Arizona: Economy Plus through Performance XFINITY Internet tiers: 300 GB. Blast! Internet tier: 350 GB; Extreme 50 customers: 450 GB; Extreme 105: 600 GB. $10 per 50GB overlimit fee;

Huntsville and Mobile, Alabama; Atlanta, Augusta and Savannah, Georgia; Central Kentucky; Maine; Jackson, Mississippi; Knoxville and Memphis, Tennessee and Charleston, South Carolina: 300 GB per month with $10/50GB; XFINITY Internet Economy Plus customers can choose to enroll in the Flexible-Data Option to receive a $5.00 credit on their monthly bill and reduce their data usage plan from 300 GB to 5 GB. If customers choose this option and use more than 5 GB of data in any given month, they will not receive the $5.00 credit and will be charged an additional $1.00 for each gigabyte of data used over the 5 GB included in the Flexible-Data Option;

Fresno, California, Economy Plus customers also have the option of enrolling in the Flexible-Data Option.

courtesy-noticeComcast customers in these areas do not have the option of keeping their unlimited-use broadband accounts. Despite the fact Comcast executive vice president David Cohen refers to these as “data thresholds,” they are in fact de facto limits that carry penalty fees when exceeded.[10]

Cohen predicts these usage limits will be imposed on all Comcast customers nationwide within the next five years.[11] Time Warner Cable has committed not to impose compulsory limits on its broadband customers. Verizon has never attempted to place limits on its home broadband customers. Frontier shelved a usage limit plan of 5GB per month attempted in 2008 and currently provides unlimited service.

Comcast CEO Brian Roberts sat for an interview with CNBC in June in which he implied usage growth was impinging on the viability of its broadband business, justifying usage caps. At the end of the interview, Time Warner Cable ran advertising emphasizing it has no usage caps.[12] Both companies have highly profitable broadband services, as do other providers across the country.[13]

As our group has found, usage caps and consumption billing on cable Internet and DSL are little more than a transparent rate increase and anti-competitive maneuver to restrict the growth of the industry’s biggest potential competitor: online video. If a consumer can stream all of their video programming over a broadband account, there is no reason to retain a cable TV package. Comcast’s usage cap provides a built-in deterrent for customers contemplating such a move.

While a Comcast representative offered (without any independent verification) that the average Comcast broadband user consumes fewer than 20GB of data per month, Sandvine released evidence in its Global Internet Phenomena Report 1H2014 study that cord-cutters in the U.S. – at least those whose usage indicates the use of streaming as a primary form of entertainment – now consume about 212GB of data per month (with 153GB of that going toward “real-time entertainment usage”).[14]

That would put many customers perilously close to Comcast’s current market tested usage allowance.

Approving the transfer of franchises from Time Warner Cable to Comcast has the potential of saddling the majority of New York residents with usage caps and/or consumption billing with little or no savings or benefit to the consumer while introducing a major impediment to potential online video competition to help curtail cable television pricing.

[1]http://www.verizonwireless.com/wcms/consumer/home-services/tv-internet-homephone/twc.html
[2]http://www.reuters.com/article/2009/04/16/us-timewarnercable-idUSTRE53F6EQ20090416
[3]http://stopthecap.com/2009/04/16/we-won-time-warner-killing-usage-caps-in-all-markets/
[4]http://www.twcableuntangled.com/2012/02/launching-an-optional-usage-based-pricing-plan-in-southern-texas-2/
[5]http://www.dailytech.com/Microsoft+Study+Bandwidth+Caps+Change+Internet+Users+Behavior/article24639.htm
[6]http://eshoo.house.gov/uploads/7.29.14%20Preliminary%20GAO%20Report%20Findings%20from%20Data%20Cap%20Study.pdf
[7]http://stopthecap.com/2014/03/13/time-warner-cable-admits-usage-based-pricing-is-a-big-failure-only-thousands-enrolled/
[8]http://arstechnica.com/uncategorized/2008/08/its-official-comcast-starts-250gb-bandwidth-caps-october-1/
[9] http://customer.comcast.com/help-and-support/internet/data-usage-trials-what-are-the-different-plans-launching
[10] http://customer.comcast.com/help-and-support/internet/data-usage-trials-what-are-the-different-plans-launching
[11]http://techcrunch.com/2014/05/14/comcast-wants-to-put-data-caps-on-all-customers-within-5-years/
[12]http://stopthecap.com/wp-content/uploads/2014/04/nocaps.png
[13]http://gigaom.com/2014/02/12/comcast-and-time-warner-cable-forget-tv-it-is-all-about-broadband/
[14]http://www.multichannel.com/news/technology/cord-cutters-gobble-down-bits-sandvine-study/374551#sthash.JYFP7o69.dpuf

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Comcast: ‘We Were Against Net Neutrality Before We Clamed to Be For It’

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Should this merger be approved, Comcast will control 40-50 percent of all broadband access nationwide.[1] That offers Comcast market power that can be used to discriminate against others.

Comcast paid homeless people to "hold their seats" at an FCC hearing in 2008. (Image: Free Press)

Comcast paid homeless people to “hold their seats” at an FCC hearing in 2008. (Image: Free Press)

Comcast’s recent past contains several disturbing incidents that came as a result of its market power and its vast resources to influence telecommunications public policy debates:

  • In 2008, Comcast admitted to paying homeless people in Boston to pack an FCC meeting on Net Neutrality, keeping company critics out of the room.[2]
  • The company that now promises to abide voluntarily to Net Neutrality regulations is also one of the few found culpable for violating the principle. In mid-2008, the FCC ruled that Comcast’s policy of interfering with peer-to-peer file traffic was a violation of Net Neutrality rules. When customers found out, the company voluntarily ended the speed throttling, imposing usage caps instead.[3]
  • This month, Comcast reportedly stepped in and ordered the removal of news content critical of its Net Neutrality policies from a publication in which it has an ownership interest.[4]
  • In May 2011, a Comcast manager threatened to pull funding from a Seattle-based media advocacy group that criticized the company for hiring a former Republican FCC official, Meredith Attwell Baker, just after she supported the NBC Universal deal.[5]
  • Comcast has aggressively pursued agreements with over-the-top (online video) competitors that effectively force them to sign special connection agreements that mitigate the deteriorating quality of streamed video Comcast customers receive from services like Netflix.[6] Comcast’s size gives it de facto control over its customers’ online experiences.

While we note Comcast has agreed to temporarily abide by Net Neutrality principles, the Commission should know Comcast has a long record lobbying against Net Neutrality on philosophical grounds.[7]

Comcast agreed to abide by Net Neutrality principles as a condition to win approval of its acquisition of NBCUniversal, approved by the FCC in 2011. But as Brian Fung from the Washington Post noted, its agreement with the government will expire just four years from now[8]:

But what Comcast doesn’t say is that its commitment to “full” net neutrality expires in 2018. After that, it will no longer be legally bound to follow the 2010 rules, and it’ll be free to abandon that commitment literally overnight.

Just one year earlier, Comcast was before the United States Court of Appeals – D.C. Circuit suing the FCC over its authority to enforce Net Neutrality policies. Comcast won its suit.[9]

If Comcast now feels favorable towards Net Neutrality, it should voluntarily agree to abide by its guiding principles in perpetuity.

[1]http://broadcastingcable.com/news/washington/judiciary-raises-programming-broadband-control-issues-comcasttwc/130396
[2]http://www.mediabistro.com/fishbowlny/homeless-comcast-will-pay-to-attend-fcc-hearings_b7915
[3]http://www.dailydot.com/politics/net-neutrality-violations-history/
[4]http://www.republicreport.org/2014/comcast-affiliated-newsite-censored-my-article-about-net-neutrality-lobbying/
[5]http://www.washingtonpost.com/blogs/post-tech/post/comcast-yanks-funds-for-nonprofit-after-tweet-about-fcc-bakers-jump/2011/05/19/AF7aGG7G_blog.html
[6]http://online.wsj.com/news/articles/SB10001424052702304899704579391223249896550
[7]http://online.wsj.com/news/articles/SB125354032776727741
[8]https://www.techdirt.com/articles/20140724/13525627992/comcast-ramps-up-ad-campaign-claiming-to-support-net-neutrality-even-as-it-really-supports-killing-it.shtml
[9]http://www.cadc.uscourts.gov/internet/opinions.nsf/EA10373FA9C20DEA85257807005BD63F/$file/08-1291-1238302.pdf
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Friday is the Deadline for Net Neutrality Comments With the FCC; Here’s How to Get Yours Submitted

netneutralityFriday is the last day to submit your views on Net Neutrality with the Federal Communications Commission. Although there may be some future opportunities to comment, it’s important to make your voice heard with the FCC today. Almost 650,000 Americans have done so to date, and we need to see this number rise even higher to combat the influence and power of Big Telecom companies looking to turn the Internet into a corporate toll booth.

If you recall, FCC chairman Tom Wheeler is promoting a scheme where big ISPs like Verizon, AT&T and Comcast can divide up the Internet and introduce toll lanes allowing preferred paid traffic to travel on the Internet at faster speeds, usually at the expense of unpaid traffic that will get relegated to an Internet slow lane. It’s pay to play, and customers of these ISPs are already getting a preview of the new corporate road map for the net. Netflix viewers on ISPs that don’t have a paid agreement to handle video traffic suffer from rebuffering and lower quality video. But ISPs collecting tolls from Netflix don’t subject their customers to a degraded online video experience. Of course, before ISPs realized they could make money selling fast lanes, Netflix worked fine on virtually all of these providers.

Wheeler’s proposal would extend the two-tiered Internet to other websites and service providers, allowing big telecom companies to hand-pick winners and losers and discriminate in favor of their own Internet traffic. Comcast does that today with online video on certain game consoles. If that video comes from Comcast, it doesn’t count against any usage caps. If it doesn’t, it could get rough sticking to Comcast’s arbitrary usage allowance.

The FCC is in way over its head, unaware of the creative ways ISPs can find loopholes large enough to drive through any well-intentioned consumer protections. There is only once certain way to keep ISPs honest — reclassify them as what they should have been all along – a telecommunications service subject to common carrier rules. That would guarantee ISPs could not meddle with your Internet service for financial gain, could not artificially slow down “non-preferred” traffic to make room for paid traffic, and would guarantee that Internet applications of the future will succeed or fail on their merits, not on how much money they are willing to spend.

Since the FCC website is jammed today, we recommend e-mailing the Commission by this Friday at: [email protected]

Our friends at Free Press have published some sample comments they are getting, which may help you formulate yours. Here is ours as well:

Dear Chairman Wheeler,

Although we believe your intentions are good, your proposed Net Neutrality rules simply do not afford enough protection to preserve a free and open Internet. Troubling signs are already clear as providers test how much they can get away with meddling with Internet traffic. The wireless experience is replete with examples of selective speed throttling, usage caps, and traffic discrimination that allows some content to escape the usage meter and throttle while competitors cannot.

The Internet is a transformative experience for many Americans because for the first time in a long time, entrepreneurs can build online businesses that are judged on their merit, not on how much money they have to spend to achieve and maintain prominence. Anything that allows an ISP to collect additional funds for a “preferred” traffic lane will come at the detriment of others who have to share the same broadband pipe. This is especially evident in the wireless world, which escaped even the light touch regulatory framework of your predecessor. Providers promptly began creating new schemes to further monetize growing data traffic, bandwidth shortage or not. Almost none of these changes really benefit customers — they are simply new revenue-making schemes.

A foreshadowing of what is likely to happen under your proposal is also apparent with Comcast and Netflix. For several years subscribers had no trouble accessing online video. But when the issue of traffic compensation was reintroduced by Internet Service Providers, the upgrades to manage natural Internet growth largely stopped and the Netflix viewing experience on these ISPs deteriorated. Verizon, AT&T and Comcast all argue that a paid traffic deal would adequately compensate them to enhance the viewing experience customers already pay good money to receive with or without a paid peering arrangement with Netflix.

Money drives these debates. If an ISP properly managed their broadband infrastructure, there would be no incentive for any company to contract for a better online experience on a so-called “fast lane” because existing service would perform more than adequately. When a company cuts back on those upgrades, a market for paid prioritization appears. Customers will ultimately pay the price, primarily to ISPs that already enjoy an enormous margin selling broadband service at inflated prices.

A rising tide floats all boats, so your focus should not be as short-sighted as allowing ISPs to divide up the limited broadband highway. The FCC should instead focus on setting the conditions to hasten new competition and force existing providers to upgrade and maintain their networks for the benefit of all subscribers and content producers. The FCC must also move swiftly to cancel state bans on community broadband networks, eliminate regulations that deter broadband start-ups, and maintain enough oversight to guarantee a level playing field on which all can compete.

There is only one way to effectively accomplish all that. Reclassify broadband service the way it should have been classified all along: as a telecommunications service subject to common carrier regulations. Canada has been very successful requiring ISPs to open their last mile networks to competitors, which have allowed people to avoid compulsory usage caps. Customers have a choice of multiple providers from their local phone or cable company, giving rise to much-needed competition.

With strong Net Neutrality, consumers can reach the websites they want without interference. Ignore nonsense suggesting Net Neutrality is a government takeover or censors the Internet — two provably false assertions. In fact, Net Neutrality is the opposite.

I urge you to move with all speed towards reclassification, if only to prevent the inevitable legal challenges to any future policies built on the shakier ground of the current framework, which has not held up well under court scrutiny. I hope the voices of more than a half-million Americans contacting you on this issue will be more than enough to overcome industry objections. We are not asking for 1950s-style telephone regulations. We just want a legally affirmed platform that allows the Internet of today to continue being successful tomorrow.

Yours very truly,

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Comcast: Usage-Based Billing for All Customers Within 5 Years; ‘We’re Also Allowed to Do Fast Lanes’

comcast highwayComcast will introduce usage-based billing on all of its broadband customers nationwide within five years, whether they like it or not.

Comcast’s executive vice president David Cohen told Variety he predicts the new usage limit will likely be 350GB a month but could increase to 500GB in 2019. Cohen claims consumers in usage-capped test markets prefer a preset usage limit and an overlimit fee of $10 for each additional 50GB of usage.

But Stop the Cap! has learned at no time has Comcast surveyed customers about whether they want their Internet usage metered or capped. That question is evidently not an option.

If Time Warner Cable territories are merged under the Comcast brand, usage billing would likely immediately follow.

Usage caps will go a long way to protect Comcast’s cable television package from online video, which if viewed in significant amounts could put customers over their monthly usage limit and subject them to higher fees.

“We’re trying to go slowly, not out of a regulatory concern (but because) we have no desire to blow up our high-speed data business,” he said.

cohenIf the merger is approved, Comcast will face significantly less competition in many Verizon service areas also served by Time Warner Cable. Verizon FiOS expansion has ended and the company continues to de-emphasize its DSL service, which is the only broadband competition Time Warner Cable faces in many upstate New York and western Massachusetts communities.

An unrepentant Cohen also doubled down on paid prioritization — Internet fast lanes — declaring regardless of what the FCC decides on Net Neutrality, Comcast still has the right to offer paid prioritization to customers.

“Whatever it is, we are allowed to do it,” said Cohen, speaking at the MoffettNathanson Media & Communications Summit in New York. “We are not sure we know what paid prioritization, or what a fast lane, is. Fast lane sounds bad… (but) I believe that whatever it is, it has been completely legal for 15 or 20 years.”

The way Comcast’s lawyers read “Title II,” even if the FCC declares broadband ISPs to be common carriers, Cohen says Comcast will go right on selling prioritized access, claiming Title II doesn’t prohibit paid prioritization — indeed, he said, “the whole history” of Title II is that carriers are allowed to provide different levels of service at different prices, reports Variety.

Cohen said he expects Washington regulators will promptly approve the company’s buyout of Time Warner Cable with no delays, insisting the deal is “not that difficult” in terms of antitrust implications.

 

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Cable Industry Mulls Its Options: Usage-Based Billing or Content Provider-Pays Pricing Models

cable showCable industry executives on hand at this year’s Cable Show in Los Angeles are debating whether Netflix has taught the cable industry some important lessons about how to treat its online video competition.

Phil Lind, executive vice president of regulatory affairs at Rogers Communications called Comcast’s peering deal with Netflix a groundbreaking breakthrough on how the Internet will be treated in the future.

Netflix has been forced to compensate the cable and telephone companies for its reliance on their broadband pipes to reach customers.

Mike Fries, president and CEO of Liberty Global said the issue of Net Neutrality relates primarily to online video and the discussion will inevitably come down to choosing between providing a broadband fast lane for content producers willing to pay or adopting usage-based billing that compensates the industry for the growth of streaming video.

Several on the panel disagreed with the contention that Netflix has outmaneuvered the cable industry with a superior on-screen interface and better on-demand content. But Fries said Netflix has achieved more success than the industry’s own TV Everywhere initiative, which unlocks online content for authenticated, paying cable TV subscribers. In addition to unwieldy authentication systems that pester subscribers with frequent log-in demands, content rights issues still dramatically limit the amount of streamed video available from TV Everywhere platforms.

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FCC’s Net Neutrality Trial Balloon Floats Like the Hindenburg; Wheeler Blames ‘Misinformation’

the-strip-slide-5GWG-jumbo

Oh the humanity!

Last week, advocates for an Open Internet were up in arms over a report in the Wall Street Journal indicating FCC chairman Thomas Wheeler was about to solve his Net Neutrality problem by redefining it to mean the exact opposite of its intended goal to keep Internet traffic out of provider-established toll lanes.

Former FCC chairman Michael Powell created the current definition of the Internet as "an information service" that has been repeatedly invalidated by the courts. Today he is the president of the national cable lobbying firm NCTA.

Former FCC chairman Michael Powell created the current definition of the Internet as “an information service” that has been repeatedly invalidated by the courts. Today he is the president of the nation’s largest cable industry lobbying group, the NCTA. (Image: Mark Fiore)

“Regulators are proposing new rules on Internet traffic that would allow broadband providers to charge companies a premium for access to their fastest lanes,” said the report, quoting an unnamed source.

Wheeler’s proposal follows the agency’s latest defeat in the courts in its latest effort to define net policy. The D.C. Court of Appeals objects to the FCC’s rule-making powers under the current “light touch” regulatory framework introduced by former FCC chairman Michael Powell. Since the first term of the Bush Administration, the FCC has avoided reclassifying broadband as a “telecommunication service,” which would place it firmly under its regulatory authority. Instead, it has continued to define the Internet as “an information service,” under which there is little precedent to support Net Neutrality rules.

The Wall Street Journal reported Wheeler was planning to introduce a new Net Neutrality policy that would ban blatant attempts to censor or block access to Internet websites, but would allow providers to monetize access to its broadband pipes by giving preferential treatment to traffic from certain content providers. Wheeler’s proposal would allow any company to pay for faster access to customers, so long as providers charged an undefined fair price to all-comers.

Wheeler said the FCC would have the authority to deal with providers unwilling to maintain a level playing field for content companies willing to pay extra, but was much more vague about how the regulator would protect websites unwilling to pay extra for traffic guarantees.

Net Neutrality proponents contend Wheeler’s proposal is exactly what Net Neutrality was supposed to prevent – an Internet toll lane only affordable to deep-pocketed giant corporations. For everyone else, including startups and smaller companies, customers could experience the type of slowdowns Netflix users experienced earlier this year — congestion-related buffering that disappeared almost instantly once Netflix signed a paid contract with Comcast for a more direct connection.

“With this proposal, the FCC is aiding and abetting the largest ISPs in their efforts to destroy the open Internet,” said Free Press CEO Craig Aaron. “Giving ISPs the green light to implement pay-for-priority schemes will be a disaster for startups, nonprofits and everyday Internet users who cannot afford these unnecessary tolls. These users will all be pushed onto the Internet dirt road, while deep-pocketed Internet companies enjoy the benefits of the newly created fast lanes.”

“For technologists and entrepreneurs alike this is a worst-case scenario,” Eric Klinker, chief executive of BitTorrent Inc., a popular Internet technology for people to swap digital movies or other content, told the Wall Street Journal. “Creating a fast lane for those that can afford it is by its very definition discrimination.”

It’s even worse than that for consumer groups like Free Press.

Charging another fee to get content on your broadband connection represents a massive business opportunity for broadband companies. But Free Press’ Craig Aaron says it would be a bad deal for Web companies, especially those that can’t afford to pay more for premium service. National Public Radio’s Morning Edition reports. Apr. 24, 2014 (1:58)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Providers love the idea of monetizing the use of their Internet pipes. (Image: Mark Fiore)

Providers love the idea of monetizing the use of their Internet pipes. (Image: Mark Fiore)

“This is not Net Neutrality. It’s an insult to those who care about preserving the open Internet to pretend otherwise,” said Aaron. “The FCC had an opportunity to reverse its failures and pursue real Net Neutrality by reclassifying broadband under the law. Instead, in a moment of political cowardice and extreme shortsightedness, it has chosen this convoluted path that won’t protect Internet users.”

Wheeler, a former industry insider that presided over both the wireless and cable industry’s largest lobbying groups had a friendlier reception from his former colleagues.

One top cable executive admitted, “I have to say, I’m pleased.”

The cable industry claims they need to attract more investment to manage upgrades of their broadband networks now coming under strain from the online video revolution.

“Somebody has to pay for this, and if they weren’t going to let companies pay for enhanced transport and delivery…it just seemed like this was going to come back to the consumer,” said the cable executive.

So far neither Wheeler or the FCC has released the draft proposal for Net Neutrality 2.0 and won’t until just before it votes on it next month.

A day after the story leaked, Wheeler wrote a damage control blog post to correct what he called “misinformation” about the proposed rules:

Wheeler is keeping the exact language of his Net Neutrality proposal to himself until just before holding a vote on it.

Wheeler is keeping the exact language of his Net Neutrality proposal to himself until just before holding a vote on it.

To be very direct, the proposal would establish that behavior harmful to consumers or competition by limiting the openness of the Internet will not be permitted.

Incorrect accounts have reported that the earlier policies of the Commission have been abandoned. Two points are relevant here:

  1. The Court of Appeals made it clear that the FCC could stop harmful conduct if it were found to not be “commercially reasonable.” Acting within the constraints of the Court’s decision, the Notice will propose rules that establish a high bar for what is “commercially reasonable.” In addition, the Notice will seek ideas on other approaches to achieve this important goal consistent with the Court’s decision. The Notice will also observe that the Commission believes it has the authority under Supreme Court precedent to identify behavior that is flatly illegal.
  2. It should be noted that even Title II regulation (which many have sought and which remains a clear alternative) only bans “unjust and unreasonable discrimination.”

The allegation that it will result in anti-competitive price increases for consumers is also unfounded. That is exactly what the “commercially unreasonable” test will protect against: harm to competition and consumers stemming from abusive market activity.

But Wheeler ignored one glaring change his proposal would make – permitting providers to monetize the performance of select Internet traffic. Currently, customers choose from a menu of available Internet speeds. Under Wheeler’s definition of Net Neutrality, a provider selling “up to” a certain amount of speed is under no obligation to actually deliver that speed. But that same provider could sell “insurance” to content producers promising certain network packets will have a better chance of reaching the customer on a timely basis, while non-paying content might not. That could make all the difference between a watchable streaming movie and one constantly pausing to “buffer.”

As long as everyone is free to pay Comcast, Time Warner Cable, Verizon and AT&T the same (more or less) for preferred treatment, all is well in Wheeler’s world.

Tim Wu, a law professor at Columbia University, coined the phrase “Net Neutrality.” He discusses how the Federal Communications Commission’s proposed changes could affect the average consumer and it’s not good news. From NPR’s All Things Considered. Apr. 24, 2014 (3:51)
You must remain on this page to hear the clip, or you can download the clip and listen later.

The New York Times editorial page wasn’t fooled:

Dividing traffic on the Internet into fast and slow lanes is exactly what the Federal Communications Commission would do with its proposed regulations, unveiled this week. And no amount of reassurances about keeping competition alive will change that fact.

[...] In this new world, smaller content providers and start-ups that could not pay for preferential treatment might not be able to compete because their delivery speeds would be much slower. And consumers would have to pay more because any company that agrees to strike deals with phone and cable companies would undoubtedly pass on those costs to their users.

The F.C.C. proposal claims to protect competition by requiring that any deal between a broadband company and a content provider be “commercially reasonable.” But figuring out what is reasonable will be very difficult, and the commission will struggle to enforce that standard. The rules would also prohibit broadband companies from blocking content by, for example, making it impossible for users to access a service like Skype that competes with their own products.

[...] Mr. Wheeler is seeking public comment on this option, but he is not in favor of it. Even though the appeals court has said the F.C.C. has authority to reclassify broadband, the agency has not done so because phone and cable companies, along with their mostly Republican supporters in Congress, strongly oppose it.

Michael J. Copps, a former FCC commissioner confirmed big telecommunications companies are spending millions to lobby for rules that would allow them to tilt the scales in their favor.

Wheeler’s “is a lot closer to what they wanted than what we wanted,” Copps told the New York Times. “It reflects a lot more input from them. The courts did not tell Wheeler to take the road that he is reportedly taking.”

That Wheeler would take an approach that coincidentally follows a model heavily favored by the telecommunications companies he used to represent should come as no surprise. Stop the Cap! repeatedly warned Wheeler’s appointment as FCC chairman would likely lead to disaster for consumers. A lifelong industry lobbyist (and investor) is unlikely to develop a world view that strays too far beyond the industry’s groupthink on telecom policy.

Wheeler may actually believe his policies represent the best way forward for the telecommunications industry he now oversees. A lot of supporters of Zeppelin Luftschiffbau used to believe blimps were the future of aviation, until May 6, 1937 when the Hindenburg burst into flames and crashed in Lakehurst, N.J.

http://www.phillipdampier.com/video/Fiore Goodbye Net Neutrality Hello Gilded Age Internet 2-14.flv

Mark Fiore uses animation in his editorial cartoon explaining the demise of Net Neutrality and the beginning of the Internet’s Gilded Age. (1:53)

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TWC TV App Gets Two Dozen New Channels You Probably Won’t Watch; 300+ Total Now Streaming

Phillip Dampier April 22, 2014 Consumer News, Online Video, Time Warner Cable No Comments

Time Warner Cable TV subscribers with a set-top box can now access more than two dozen new channels on the company’s TWC TV App, now offering more than 300 channels for in-home streaming.

The newly available channels may vary depending on your local lineup, but generally include a large number of subscription international channels, home shopping, and religion. (Note: ITV Gold is not part of the United Kingdom’s ITV network. It is a network targeting the South Asian diaspora with Bollywood musicals, soap operas, and movies. C1R should probably be listed as Channel One Russia (Первый Канал), so it isn’t confused with C1R.com, an adult video site. Oops.)

  1. America’s Auction Net SD
  2. BlueHighways TV HD
  3. C1R
  4. CCTV 4 America (Mandarin)
  5. CCTV News English
  6. Daystar TV Net (National)
  7. Filmy
  8. Gem Shopping Network
  9. GMA DWLS Radio
  10. GMA DZBB Radio
  11. GMA Life TV
  12. GMA Pinoy TV
  13. Infinito
  14. ITV Gold
  15. Liquidation Channel
  16. NASA TV
  17. Phoenix North America Satellite TV
  18. RAI Italia
  19. RLTV
  20. Sundance HD
  21. TV Asia
  22. TV5 Monde
  23. TVB1
  24. UTV Movies SD
  25. YouToo
  26. Zee TV
Now you can watch Law & Order reruns in HD on Sundance TV.

Now you can watch Law & Order reruns in HD on Sundance TV.

The TWC TV App is available for iOS, Android, PC & Mac, Roku, Samsung Smart TV’s, Kindle and the Xbox 360 — you can find out more about it at the TWC apps page.

The only mass interest channel in the list is Sundance HD, although NASA TV is also a welcome addition.

Viewing is free for current cable subscribers, but many of these channels may not be available for viewing outside of the home.

 

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Aereo Faces the Supreme Court Next Week in All-or-Nothing Appeal

aereo_logoAereo will face off with broadcasters next week in the U.S. Supreme Court over the legality of the online video provider’s business plan — using dime-sized individual antennas to receive over-the-air local stations and stream them to paying subscribers over the Internet.

On April 22, Aereo will appeal for its future as it presents its case to the high court in defense of a consumer’s right to access local stations over the air, even if a third-party installs an antenna on their behalf.

Broadcasters consider Aereo just another end run around copyright law, arguing the online service has no right to profit off the resale of their signals to consumers without permission and compensation.

Today Aereo launched a website, ProtectMyAntenna.org that frames its legal case as a basic viewing rights issue. Aereo says the broadcasters’ intransigence is nothing new — they also fought cable television and the videocassette recorder in the courts in the past, suggesting both technologies were stealing their signals.

protect my antenna“What is at stake in this case is much bigger than Aereo,” says the website. “We believe that consumers are entitled to use a modern, cloud-based, version of an antenna and DVR and that consumers should not be constrained to 1950’s era technology to watch free-to-air broadcast television. The broadcasters’ positions in this case, if sustained, would impair cloud innovation and threaten the myriad benefits to individuals, companies, and the economy at large of the advances in cloud computing and cloud storage.”

The Obama Administration has sided with the broadcasters and is seeking time to speak before the Court on the broadcasters’ behalf. Consumer groups are largely lined up behind Aereo, claiming online video competition is something worth protecting.

The crux of the case is likely to be which side is correct in their interpretation of what defines a “public performance,” which makes all the difference in determining whether Aereo must pay broadcasters or not. Private viewing at home is protected by earlier case-law and if Aereo is found to simply be facilitating home viewing, it will likely be deemed legal. Aereo assigns a single antenna to each customer, a fact they hope will strengthen its argument they are not redistributing programming to the masses. How the signal gets to the customer, over an antenna cable or the Internet, should not make any difference.

Broadcasters are hoping for a different interpretation — one popular in California courts, that would find any redistribution of programming over the Internet to be a public performance. Several other ventures have tried to launch virtual cable systems that streamed over the air stations and all were quickly shut down by west coast courts. Aereo has better lawyers, deeper pockets, and apparently a better argument that won favor in several eastern U.S. courts last year.

The Supreme Court will ultimately decide Aereo’s fate. If it loses, expect it to close down operations immediately. If Aereo wins, the company expects to continue expanding into other television markets across the country.

Aereo currently provides service in 11 U.S. cities.

http://www.phillipdampier.com/video/Yahoo Aereo CEO Chet Kanojia on the Future of TV 4-17-14.flv

Katie Couric from Yahoo! News sat down for an extensive interview about Aereo with its CEO Chet Kanojia. Kanojia argues broadcasters were already well-compensated when they received free spectrum for their stations. (20:20)

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Comcast’s Festival of Nonsense Performed for Senate Judiciary Committee

Phillip "The circus is in town" Dampier

Phillip “The circus is in town” Dampier

Yesterday afternoon I got to experience both the pain of having a tooth pulled and watch Comcast and Time Warner Cable defend its merger for more than three hours before the Senate Judiciary Committee. The Festival of Nonsense from Comcast’s top lobbyist David Cohen and Time Warner Cable’s chief financial officer Arthur Minson hurt more.

Despite the $45 billion dollar deal, the real powers that be couldn’t be bothered to turn up at the hearing. Comcast’s chief executive was nowhere to be found — perhaps he was playing golf with President Obama again. Comcast’s top lobbyist David Cohen showed up instead, wearing an outfit that looked like it was stuffed with cash waiting to fall from his pockets into the hands of his “friends” on Capitol Hill. Cohen is a well-known Democratic money bundler who raised $1.44 million for the president’s reelection campaign in 2011 and 2012, and $2.22 million since 2007. (Obama spent time in Cohen’s Philadelphia home as well, part of a DNC fundraising party.)

Perhaps Time Warner Cable CEO Robert Marcus was unavailable because he was too busy counting the $8.52 million he was paid before agreeing to sell the company. Don’t expect him at the next hearing either, because he is shopping for a bigger safe to hold the $80 million he will receive for agreeing to change Time Warner Cable’s name to Comcast.

The other usual suspects were also missing in action. Not a peep from the major networks or cable programmers at the hearing. Instead, the Senate endured a guy with a golf channel nobody ever heard of using the hearing to try to get his calls returned by Time Warner and a wireless provider who believes his technology is faster than fiber. Sure it is.

Brought to you in part by America's cable industry.

Brought to you in part by America’s cable industry.

I suppose it’s also worth mentioning Christopher Yoo – Comcast’s intellectual sock puppet straight out of the cable company’s home town of Philadelphia. He serves at the pleasure of the “Center for Technology, Innovation & Competition” (cough) at the University of Pennsylvania. The “center” is financially supported by the cable industry. David Cohen just happens (by sheer coincidence) to chair the university’s Board of Trustees. Yoo’s testimony could be boiled down to a nod in Cohen’s direction with an affirming, “whatever he said.”

The Cohen and Minson Comedy Hour began with opening statements extolling the virtues of supersizing Comzilla, with dubious claims about its benefits for consumers.

Without laughing, read the following out loud:

“We welcome this opportunity to discuss the proposed transaction between Comcast Corporation (“Comcast”) and Time Warner Cable Inc. (“TWC”), and the substantial and multiple pro-consumer, pro-competitive, and public interest benefits that it will generate, including through competitive entry in segments neither company today can meaningfully serve on its own,” the two companies wrote in their joint opening statement.

Cohen

Cohen

“Comcast and TWC do not compete for customers in any market – either for broadband, video, or voice services. The transaction will not reduce competition or consumer choice at all. Comcast and TWC serve separate and distinct geographic areas. This simple but critically important fact has been lost on many who would criticize our transaction, but it cannot be ignored – competition simply will not be reduced. Rather, the transaction will enhance competition in key market segments, including advanced business services and advertising.”

To emphasize just how little this merger will impact the current state of non-competition in the broadband marketplace, Comcast repeatedly emphasized you can’t subscribe to a competing cable company today and still won’t tomorrow:

“Consumers in Comcast’s territories cannot subscribe to TWC for broadband, video, or phone services. And TWC customers cannot switch to Comcast. For that reason, this is not a horizontal transaction under merger review standards, and there will be no reduction in competition or consumer choice,” said the written statement.

In other words, since there was no competition between cable companies before, making sure consumers still don’t have a choice is not anti-competitive.

Watch the entire hearing on the Senate Judiciary Committee website.

(The hearing begins at the 24 minute mark.)

Here are some other “benefits” promised by Cohen and Minson:

Post-transaction, Comcast intends to make substantial incremental upgrades to TWC’s systems to migrate them to all-digital, freeing up bandwidth to deliver greater speeds. For example, Comcast typically bonds 8 QAM channels together in its systems, and Comcast’s most popular broadband service tier offers speeds of 25/5Mbps upstream across its footprint. In comparison, TWC bonds 4 QAM channels in nearly half of its systems, and its most commonly purchased service tier offers speeds of 15/1Mbps. Comcast’s fastest residential broadband tier offers speeds of 505/100Mbps; TWC’s current top speeds are 100/5Mbps. Comcast’s investments in the TWC systems will also improve network reliability, network security, and convenience to TWC customers.

Minson

Minson

Of course, nothing prevented either company from boosting speeds without a $45 billion merger deal. In fact, Comcast is doing exactly that this week. Marcus’ own revival plan for TWC, dubbed TWC Maxx, promised Time Warner Cable customers would get even faster speeds than Comcast offers most of its customers.

Time Warner Cable now advertises it does not have usage caps on broadband. Comcast cannot say the same, although it tries very hard to tapdance around the matter by calling the 300GB monthly cap spreading into more and more Comcast territories a “data threshold.”

Comcast’s speed upgrades for TWC customers are likely to come with a big catch — an arbitrary usage allowance that limits their usefulness. By the way, that 505Mbps service is available only from Comcast’s extremely limited fiber network that the overwhelming majority of customers cannot get.

The transaction will similarly speed the availability of advanced Wi-Fi equipment in consumers’ homes. The quality of broadband service depends not only on the “last-mile” infrastructure but also the delivery of the signal over the last few yards. Comcast has led the entire broadband industry in rolling out advanced gateway Wi-Fi routers to approximately 8 million households and small businesses, giving these customers faster speeds (up to 270 Mbps downstream as compared to 85 Mbps downstream from the prior generation devices) and better performance over their home and business wireless networks. In contrast, TWC only recently began deploying advanced in-home Wi-Fi routers. With the greater purchasing power and economies of scale resulting from the transaction, Comcast can not only offer TWC customers access to today’s best routers, but also invest in and deploy next-generation router technologies for all of the combined company’s customers.

comcast twcComcast doesn’t like to mention that “advanced Wi-Fi” equipment costs customers $8 a month… forever. Comcast is also using it to boost its own Wi-Fi service by sharing it with the neighbors. This merger “benefit” will cost customers almost $100 a year. Customers can do better buying their own equipment and don’t need a merger to make that decision.

The transaction will give Comcast the geographic reach, economies of scale, customer density, and return on investment needed to massively expand Wi-Fi hotspots across the combined company’s footprint, including in the Midwest, South, and West, particularly in areas like Cleveland/Pittsburgh, the Carolinas, Texas, and California, where there will be greater density and clustering of systems. Our goal is to provide greater Wi-Fi availability that allows the combined company’s customers to access the Internet in more places, more conveniently, and at no additional charge.

Your usage allowance will likely apply to this “free Wi-Fi” that most customers cannot access because they live in an area where neither company offers it now and likely won’t anytime soon.

The transaction will also enable Comcast to invest in network expansions and last-mile improvements that provide an even stronger foundation for innovative applications, including education, healthcare, the delivery of government services, and home security and energy management. And with greater coverage and density of systems, Comcast will also have the ability and incentive to build out and make available interconnection points in more geographic regions. This will be especially beneficial to companies like Google, Netflix, and Amazon, which aggregate massive data traffic when they deliver their own and others’ services to consumers.

internet essentialsFor the right price. Nothing precluded Comcast or Time Warner Cable from investing some of their lush profits into improvements for customers. But why bother when your only serious competitor is usually DSL. Investment in broadband networks has declined for years in favor of profit-taking. Making Comcast bigger introduces no new market forces that would provoke it to improve service. In fact, Comcast’s massive size and reach would likely deter would-be competitors from entering a market where Comcast can use predatory pricing and retention offers to keep customers from switching.

Helping people successfully cross the digital divide requires ongoing outreach. To increase awareness of the Internet Essentials program, Comcast has made significant and sustained efforts within local communities. To date, those outreach efforts have included:

  • Distributing over 33 million free brochures to school districts and community partners for (available in 14 different languages).
  • Broadcasting more than 3.6 million public service announcements with a combined value of nearly $48 million.
  • Forging more than 8,000 partnerships with community-based organizations, government agencies, and elected officials at all levels of government.

Cohen does not mention the company planned to offer Internet Essentials earlier than it did, but held it back for political reasons.

“I held back because I knew it may be the type of voluntary commitment that would be attractive to the chairman” of the Federal Communications Commission, Cohen said in a 2012 interview. Comcast’s generosity was limited. It specifically designed its discount Internet program to make it difficult to qualify and protect its regular-priced broadband offerings. The goodwill from handing out Comcast sales brochures and getting free exposure in the media offers little to customers. Comcast also has a way of getting the community-based organizations it “partners” with to advocate for Comcast’s business interests.

"Sometimes we need a kick in the butt." -- Cohen

“Sometimes we need a kick in the butt.” — Cohen

If only the government got out of the way and approve the merger, Comcast will improve on its already amazing customer service:

Improving the customer experience is a top priority at Comcast. We are investing billions of dollars in our network infrastructure and are developing innovative products and features to make it easier and more convenient for our customers to interact with us. While our satisfaction results are beginning to rise, we know we still have work to do and are laser-focused on continuing to improve our customers’ experiences in a number of ways.  Comcast has improved its customer satisfaction ratings significantly. Since 2010, Comcast has increased its J.D. Power’s Overall Satisfaction score by nearly 100 points as a video provider, and close to 80 points in High Speed Data – more than any other provider in our industry during the same period.

Twice nothing is still nothing. Cohen even admitted at the hearing Comcast’s progress at improving customer service is not as rosy as his written testimony might suggest.

“It bothers us we have so much trouble delivering high quality of service to customers on a regular basis,” Cohen said. “Sometimes, we need a kick in the butt.”

That has never worked before. Comcast has kicked its customers around since at least 2007 when it also promised major customer service improvements that turned out to be figments of a press release. Comcast’s “laser-focused” efforts to improve instead won it the 2014 Consumerist Worst Company in America award this week and more than 100,000 consumers signing petitions vehemently opposing the merger.

Comcast has a long record of improving consumers’ online experiences and working cooperatively with other companies on interconnection, peering and transit.

bufferingJust ask any Comcast customer about their Netflix viewing experience lately and how it took a checkbook to improve matters. Ask any online video competitor whether Comcast is a good neighbor when it exempts its own video traffic from its “usage threshold” while making sure to count competitors’ traffic against it.

Comcast also likes to suggest Americans are awash in competitive options for broadband service. Why there is DSL, satellite broadband, fiber, wireless Internet, public libraries, and books.

In fact, Comcast’s filing points to various “competitors” that don’t even exist yet, if they ever will. Comcast suggests Google Fiber is popping up everywhere, despite the fact Google announced it was delaying its fiber rollout in Austin, and most of its latest expansion plans lack firm commitments to deploy and are framed only in the context of opening a dialogue with targeted communities.

Satellite Internet speeds are severely limited and usage-capped. The same is true for exorbitantly expensive mobile broadband. Comparing a $40 unlimited broadband offering from Time Warner Cable to Verizon Wireless’ 4GB for $50 mobile wireless Internet package is silly.

Comcast characterizes the competitive telecom marketplace as a veritable dogfight, but it looks a lot more like a well-executed dog and pony show. Just how rabid are these dogs?

  • Verizon’s pit bull zeal to compete has more bark than bite. Verizon Wireless customers can sign up for Comcast or Time Warner Cable service in Verizon stores (woof);
  • Comcast’s rottweiler isn’t supposed to get along well with others, but it manages pretty well pitching Verizon Wireless service (grrr).

An hour into the hearing, it was clear there was some bipartisan discomfort with the merger, with Sen. Al Franken (D-Minn.) leading the charge with pointed questions cutting through Comcast’s government relations fluff.

“I’m against this deal,” Franken concluded. “My concern is that as Comcast continues to get bigger, you’ll have even more power to exercise that leverage — to squeeze consumers.”

Like an orange.

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Amazon Introduces Fire TV: $99 for Voice Searchable Set-Top Box

Phillip Dampier April 2, 2014 Consumer News, Online Video, Video No Comments

amazonAmazon.com today introduced Fire TV, its entry in the increasingly crowded online video set-top box marketplace.

Fire TV is among the first boxes that supports voice search. The old way of dealing with scroll-and-click searching from an on-screen keyboard is replaced with a microphone on the remote that allows users to speak the title, actor, or genre and quickly find results.

Amazon.com is selling Fire TV for $99 — the same price as Apple TV — but considerably more expensive than Google’s Chromecast or entry-level Roku boxes.

Amazon’s box supports Certified Dolby Digital Plus surround sound and up to 1080p HDMI video. It offers access to Netflix, Prime Instant Video, Hulu Plus, WatchESPN, and many other TV Everywhere services (but not HBO Go). Fire TV is also a game console, with access to an online store selling more than 100 games at prices averaging $1.85 each.

“It has a powerful quad-core processor, dedicated GPU, 2 GB of memory, and dual-band, dual-antenna Wi-Fi,” says Amazon. “With a fast, fluid interface, high definition 1080p video, and Dolby Digital Plus surround sound, Fire TV looks—and sounds—amazing. We also added an exclusive new feature called ASAP that predicts what movies and TV episodes you’ll want to watch and gets them ready to stream instantly. No one likes waiting for videos to buffer.”

feature-techspecs._V340337968_

amazon fire

http://www.phillipdampier.com/video/Amazon Fire TV 4-2-14.flv

Gary Busey is featured in this humorous introductory advertisement for Amazon Fire TV. (1:00)

http://www.phillipdampier.com/video/Amazon Fire TV Voice Search 4-2-14.flv

Amazon elaborates further on its voice search feature for Fire TV in this video. (0:27)

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