Suvi Lindén, Finland's Minister of Communications

Yleisradio Oy, the public broadcasting service in Finland, today reported starting next July, every person in Finland will have the right to a one-megabit broadband connection.

The announcement from the Ministry of Transport and Communications makes Finland the second European nation to consider broadband service more than just a modern day convenience.

Minister of Communications Suvi Lindén said broadband service must be universal, and at equitable speeds throughout Finland.  Private providers have been unable or unwilling to bring universal service to the country, so the Finnish government is compelled to do the job they won’t.

“No-one can be left outside the day-to-day functioning of the information society. As the telecommunications network needed cannot be provided on market terms in all respects, its construction must be supported by public funds,” she said.

Permanent Secretary Harri Pursiainen confirmed Lindén’s views about universal access in a study concluding it is impossible to expect commercial providers to provide regionally equal service throughout the country.

Finland intends to construct an advanced broadband network, starting with the guarantee of 1Mbps minimum speeds for virtually every citizen.  The plan recognizes that reaching the most remote parts of the country will require a mobile broadband network, and have made provisions to tolerate lower speeds on those networks, for now.

But the Finnish government does not consider 1Mbps anywhere near adequate to provide 21st century connectivity.  It has declared that anything less than 100Mbps service is simply unacceptable in the new “information economy.”

The 100Mbps minimum service standard would be mandatory, and targeted to be achieved no later than 2015, if the recommendations are approved by the Finnish Parliament.

“Citizens and businesses need increasingly effective data transfer. This is necessary, among other things, for teleworking, business, e-commerce, and access to social and health services,” Lindén states.

Harri Pursiainen

Television broadcasting also faces a turning point in the next few years, as channels become more diverse and high-definition transmission enters the picture. Here, high-speed broadband is an essential factor,” Lindén stresses.

The report proposes that the state, regions and municipalities share in the costs of improving the telecommunications network in those areas where the target level for 2015 cannot be reached by commercial means. The purpose is for the Regional Councils to organize competitive bidding among the telecommunications operators.

Where public funds are needed to construct networks, money will be raised by auctioning off certain radio frequencies for commercial use, as well as a telecommunications tax levied on providers in the country, somewhat equivalent to the United States’ Universal Service Fund, which helps subsidize rural telephone service.

Finnish consumers can still elect not to purchase broadband service, and can still select among several providers, choosing the speed and technology they want for the connection.  The Finnish government will offer a “domestic help credit,” akin to a tax credit or subsidy, to help disadvantaged Finns purchase computers and other equipment to use broadband service.

Finland joins Switzerland in providing universal access to broadband.  The Swiss government was the first in Europe to mandate broadband service availability throughout the country as of January 1, 2008.  But the Swiss definition of broadband is much more limited, setting minimum acceptable speeds at just 600kbps downstream and 100kbps upstream.

Both the United States and the United Kingdom have universal service goals as well.  The UK government targets 2Mbps speed to “virtually all” homes by 2012, funded by a telephone line tax.

Thanks to Stop the Cap! reader Greg for the news tip.

Glenn Britt, CEO of Time Warner Cable

I spent the morning dealing with the dentist and some significant tooth pain, which could end up leading to another delightful root canal.  It’s times like these when I like to share the pain.  Back on April 2nd, Time Warner CEO Glenn Britt spoke with CNBC reporter Julia Boorstin about Britt’s thoughts on Internet Overcharging, the state of the cable industry, the growing reliance Time Warner Cable has on its broadband products, and where online video fits into the picture.  Although Time Warner Cable shelved the consumption billing experiment, the belief in such billing experiments has not changed.

Virtually everything else in the interview remains largely the same for the company, including the all-important topic of TV Everywhere and online video content, which is back in the news.

If you want to understand the challenges facing big cable, this is must-see-online-TV. (Check out the unintentionally ominous background music which appropriately turns up around four minutes in.)

[flv width=”400″ height=”300″]http://www.phillipdampier.com/video/CNBC Glenn Britt 4-6-09.flv[/flv]

CNBC’s Julia Boorstin talked with Time Warner Cable CEO Glenn Britt on April 2nd about the cable company and the state of the industry these days. (15 minutes)

The reported deal between Comcast, the nation’s largest cable operator and NBC-Universal, part owner of Hulu, could have serious consequences for the Internet’s most popular destination for online television shows and movies.

In just a year, Hulu has enjoyed a quadrupling of visits well into the millions, streaming dozens of network television series, specials, and movies, all supported by commercial advertising.  Devised to help combat online video piracy and earn additional advertising revenue from web watchers, Hulu partners NBC, Fox and Walt Disney Co., have been successful at drawing scores of Americans to the video website.  Program distributors have also been pleased, earning money from shows like Lou Grant that haven’t been on network television in decades.  But after the economic crash of 2008, the venture has proven costly for the partnership, challenged by an advertising marketplace on life support and outright hostility by broadband providers, cable operators, and Wall Street investors, upset that the service is giving it all away for free.

Among the loudest to complain is Comcast, which is now angling to acquire NBC, and its 30% ownership stake in Hulu.

Comcast CEO Brian Roberts has repeatedly complained about the implications of giving away online video, which for some have begun to replace cable television subscriptions.

“If I am any one of these programmers, not just ESPN but the Food Network and I have a business in that 50 percent, 60 percent, 70 percent of my business comes from subscriptions, I want to think long and hard before I just put that content out there for free and not think through what it is going to mean to my business,” Roberts said at an investors conference in May.

Roberts view was shared by the CEO of the nation’s second largest cable operator, Glenn Britt of Time Warner Cable.

“If you give it away for free, you’re going to forego that subscription revenue,” Britt said. “And if you actually think the ad revenue can make up for that, then God bless you and go on your way. But I don’t think that’s the case, and (networks) don’t really think that’s the case either.”

The difference between Comcast and Time Warner Cable is that the former could gain part ownership in the largest service now giving it all away for free, and that has major implications for Hulu’s future.

“Would Comcast put an end to the Hulu model of using the Web to distribute free TV content?” asked Michael Nathanson, senior media analyst at Sanford C. Bernstein & Co. “Will Comcast continue to support Hulu?”

The Los Angeles Times reports there is already a precedent for Hulu limiting content for online viewers in response to complaints:

Hulu already has limited users’ access to certain cable programs, including FX’s “It’s Always Sunny in Philadelphia,” in response to an outcry from the TV producers and cable companies that object to paying TV programmers hundreds of millions of dollars each year for shows that are offered free online.

“Arguably, their ability to shape online content distribution, and to recast windows for video on demand, would be an important attribute of any deal,” wrote Craig Moffett, a cable industry analyst at Sanford C. Bernstein.

Comcast’s interest in NBC Universal would dramatically expand its entertainment portfolio with such attractive cable channels as USA Network, MSNBC and CNBC as well as the Universal Pictures movie studio. The proposed Comcast-NBC Universal venture also would give the cable operator a greater role in deciding how and when TV shows and movies are distributed online and at what price to consumers.

Comcast’s influence would primarily be felt in cable network programming streamed online, as Comcast has a vested interest from the millions it currently pays those programmers to carry their networks on Comcast cable systems nationwide.  Comcast could advocate Hulu become a partner in the TV Everywhere cartel, providing video content only to “authenticated” pay television subscribers, or it could limit the number of episodes available for free, or when those episodes appear on the service.

Soleil Securities media analyst Laura Martin thinks an even more likely possibility would be charging a fee for some of its more popular content.  Martin points to Hulu’s own financial problems, a consequence of the crash in the advertising market.  Soleil estimates that the three partners subsidize $33 million of the losses at Hulu even after earning $123 million this year from advertising.  Even worse, Martin says, is the cannibalizing of the networks’ own advertising earnings from broadcast runs of those shows now available online.  She told the Times that for every viewer who migrates to the Internet, the companies forfeit $920 a year in ad revenue.

But not everyone believes the Comcast-NBC deal is such a great idea.

Time Warner CEO Jeff Bewkes today told an industry conference in Manhattan that large media mergers have had a lousy track record.  Still, he said the merger would probably benefit the cable industry as a whole, because broadcast networks content with giving away content for free online will now be a part of the very industry hurt by that formula and will be more friendly towards arguments to stop it.

“We love to see our competitors taking risks,” Bewkes said.

[flv width=”400″ height=”300″]http://www.phillipdampier.com/video/CNBC Hulu 9-7-09.flv[/flv]

CNBC’s Julia Boorstin talked with Hulu CEO Jason Kilar in September about the desire for the company to partner with the cable industry’s TV Everywhere project.

Phillip "I Also Told You So" Dampier

This past spring Stop the Cap! started relentlessly documenting the tragic phone and broadband service that came as a result of a lousy phone deal for New Englanders.  Verizon, busily wiring its larger service areas for FiOS fiber to the home service, wanted out of Maine, New Hampshire, and Vermont.  In a uniquely wonderful deal (for them), they not only managed a clean break from too much regulatory red tape, but also sold off the entire operation down to the last cable, phone jack, and building absolutely tax-free to FairPoint Communications, a tiny independent phone company headquartered in North Carolina.

Since the sale, it has been one catastrophe after another:  broken phone and broadband service up to weeks at a time, incorrect billing amounting to hundreds of dollars and collection calls pestering customers for money they don’t owe, investigation after investigation, broken promise after broken promise.  Since we broke from the story back in June to cover some of the nonsense and ripoffs going on in Canada, things have not gotten that much better.  In fact, the company’s stock has since lost 95% of its value, is defending against accusations it manipulated a “test run” of a conversion program to guarantee success (right under the noses of independent observers), a major management shakeup, and now the very real chance the entire mess is headed to Bankruptcy Court.

One member of the International Brotherhood of Electrical Workers, who loudly and, it turns out, very accurately predicted the results of this ill-conceived venture, said FairPoint is now swirling in the bowl, flushing itself, and three states’ telecommunications needs, right down the toilet.

So at the same time Frontier Communications is trying to pick up what Verizon is throwing away this year, it’s very illustrative to continue this story, to educate our readers about what happens when consumers’ needs are totally ignored.  Just as much to blame are the state regulators who are now ironically among the loudest complainers.  As we’ve shown documenting this entire story, they’ve changed their tune dramatically.  Back in 2007, they couldn’t say enough wonderful things about how confident they were in FairPoint, and were certain everything would work out just fine.

It did for them because they are still there, conducting the investigation about how this whole mess got started.

The Nashua Telegraph has followed this sorry story since day one:

Unable to make its massive debt payments, FairPoint will have to file for bankruptcy by month’s end unless it can strike a deal with creditors.

The company is losing land-line customers – and thus, revenue – faster than anticipated. And the celebrated launch of a TV service to compete with cable – a move FairPoint said would bring in the extra income to compensate for the decline in land-line customers – has been put on hold.

“There’s no satisfaction in saying I told you so,” said Rand Wilson, communications coordinator for the two unions that represent most FairPoint workers, which organized a major public campaign in an effort to stop the sale.

“We have to try to provide the best possible service under the circumstances and work with regulators and states to find a way to create a viable company.”

So far, that means trying to fix FairPoint from within, or hope the rumors of a buyout by Windstream, another owner of formerly independent phone companies, turns out to be real. But like FairPoint and Frontier, Windstream itself has a business model running phone service in the areas the big boys don’t want. How much of an improvement that company would provide remains an open question.  Regardless, unless FairPoint works the kind of magic it has never performed for its New England customers, it’s probably only a matter of weeks before bankruptcy:

P.J. Louis, a telecom industry expert and author of 11 books on the various topics within the industry, recently wrote that he thinks it’s a realistic option for the company.

“The more and more I think about it, the more I am convinced that FairPoint needs to file,” Louis wrote in an analysis on the Gerson Lehman Group Web site. “Every horror story you hear just scares the heck out of me. Frankly, I am questioning management’s ability to see the company through this rough time.”

Rochester, NY - New York's second largest economy on the shores of a broadband backwater

Broadband Reports this morning received word from an “insider” that Time Warner Cable is laying the groundwork to introduce “wideband” broadband service up to 50Mbps throughout New York State’s Verizon FiOS-wired communities.  According to the report, Time Warner Cable plans to launch faster DOCSIS 3.0 service in Buffalo in mid-November, Syracuse in December, and Albany in January.  The company introduced “wideband” service in metropolitan New York City a few weeks ago.

Omitted from the upgrade list is New York’s second largest economy and high tech capital of upstate New York — Rochester.  The city was in the news in April when Time Warner designated Rochester as one of the “test cities” for an Internet Overcharging experiment.  The plan was shelved when customers organized a mass revolt against the plan and two federal legislators intervened.

From a logical standpoint, it wouldn’t seem to make sense for a broadband provider to omit a region with more than one million residents, many who have been highly educated and work for the community’s largest employers – the University of Rochester/Strong Health, Eastman Kodak, Xerox, ViaHealth/Rochester General Hospital, Rochester Institute of Technology, Paychex, and ITT.

But from the all-important business standpoint, Time Warner Cable enjoys extraordinarily limited competition in the area, and the gap only widens in the coming future.  The area’s telephone provider, Frontier Communications, is known mostly for providing service in rural communities, and has so far offered lackluster plans for a 21st century broadband platform, preferring to rely on now-aging DSL technology while Verizon wires most comparably-sized cities in the rest of the state for advanced fiber-to-the-home FiOS service.

While Frontier can live comfortably in rural communities where cable television is not an option, customers who live and work in their largest service area continue to find disadvantages from a company business plan that these days seems more focused on mergers and acquisitions, and is content with language that defines an appropriate amount of monthly broadband usage at a ridiculously small 5 gigabytes per month.

Against a competitor like that, why would Time Warner Cable bother?