Comcast blocks C-SPAN programming for those who are not Comcast customers

Public interest groups today began an offensive against the cable industry’s attempts to stave off potential online video competition with an industry dominated and controlled online video platform that guarantees consumers won’t cut cable’s cord.

Free Press, Media Access Project, Public Knowledge and Consumers Union are sending letters to the Justice Department and the Federal Trade Commission calling for a probe into the industry’s “TV Everywhere” project, designed to weed out non-cable subscribers from accessing online video programming.

The undertaking, which the industry claims will eventually rival Hulu in size and scope, seeks to provide their broadband customers with on-demand access to as much programming as possible, as long as they subscribe to a corresponding video programming and broadband service package.

Known in the industry as a “pay wall,” the system would assure pay television companies affiliated with the project that they will not lose subscribers from customers cutting the cord to watch programming online for free.  Consumer groups call that collusion, and accuse the industry of secretly meeting to outline the TV Everywhere concept and may be violating anti-trust laws in the process.

“The old media giants are working together to kill off innovative online competitors and carve up the market for themselves,” said Marvin Ammori, a law professor at the University of Nebraska and senior adviser to Free Press. Ammori’s report: TV Competition Nowhere: How the Cable Industry Is Colluding to Kill Online TV, is included in the mailing to the federal agencies.

Ammori says the industry has a long history of controlling behavior.

“Over the past decade, they have locked down and controlled TV set-top boxes to limit competing programming sources; they have considered imposing fees for high-capacity Internet use in ways that would discourage online TV viewing; and they have pressured programmers to keep their best content off the Internet,” Ammori writes.

In addition, these companies, which already dominate the Internet access market, have threatened to discriminate against certain online applications or have already been caught violating Network Neutrality. Indeed, the FCC issued an order in 2008 against Comcast for blocking technologies used to deliver online TV, noting the anti-competitive effect of this blocking. While it may be economically rational for cable, phone and satellite companies to squash online competitors, the use of anti-competitive tactics is bad for American consumers and the future of a competitive media industry.

The latest method of attack aimed at online TV, however, may be the most threatening — and is also likely illegal. Competition laws aim to ensure that incumbent companies fight to prevail by providing better services and changing with the times, not by using their existing dominant position and agreements to prevent new competitors from emerging.

TV Everywhere has a simple business plan, under which TV programmers like TNT, TBS and CBS will not make content available to a user via the Internet unless the user is also a pay TV subscriber through a cable, satellite or phone company. The obvious goal is to ensure that consumers do not cancel their cable TV subscriptions. But this plan also eliminates potential competition among existing distributors. Instead of being offered to all Americans, including those living in Cox, Cablevision and Time Warner Cable regions, Fancast Xfinity is only available in Comcast regions. The other distributors will follow Comcast’s lead, meaning that the incumbent distributors will not compete with one another outside of their “traditional” regions.

In addition, new online-only TV distributors are excluded from TV Everywhere. The “principles” of the plan, which were published by Comcast and Time Warner (a content company distinct from Time Warner Cable), clearly state that TV Everywhere is meant only for cable operators, satellite companies and phone companies. By design, this plan will exclude disruptive new entrants and result in fewer choices and higher prices for consumers.

This business plan, which transposes the existing cable TV model onto the online TV market, can only exist with collusion among competitors. As a result, TV Everywhere appears to violate several serious antitrust laws. Stripped of slick marketing, TV Everywhere consists of agreements among competitors to divide markets, raise prices, exclude new competitors, and tie products. According to published reports and the evident circumstances, TV Everywhere appears to be a textbook example of collusion. Only an immediate investigation by federal antitrust authorities and Congress can prevent incumbents from smothering nascent new competitors while giving consumers sham “benefits” that are a poor substitute for the fruits of real competition.

Ammori

The benefits of controlling the marketplace of video and online entertainment is a lucrative one, earning players billions in profits each year.  Losing control of the business model risks the industry repeating the mistakes of the music industry, which overpriced its product and alienated consumers with annoying digital rights management technology and lawsuits.  It also risks a repeat of the newspaper industry which many in the cable industry believe made the critical mistake of giving away all of their content for free.

With online video services like Hulu generating enormous online traffic from its free video programming, the cable industry fears they might already be headed down the road newspapers paved.  TV Everywhere is part of a multi-pronged defense plan according to Ammori.

Indeed, what the industry cannot control themselves, Internet Overcharging schemes like usage caps and “consumption billing” can handily manage.

Ammoni notes:

Cable and phone companies have proposed cap-and-metered pricing for Internet service that appears to target online TV. Unlike the current all-you-can-eat monthly fee-plans, cap-and-metered pricing would charge users based on the capacity used. As a result, downloading or streaming large files will be more expensive than smaller files. In March 2009, Time Warner Cable announced metered pricing trials in four cities that would have made watching online TV cost prohibitive.

AT&T is testing a metering plan on its wireline U-verse service with hopes for national expansion. Even under generous allowances for bandwidth, users could not watch high-definition programming for many hours a day.

In response to trials by Time Warner Cable, a House bill was introduced in Congress, and Time Warner Cable dropped its immediate plans under consumer pressure. The company stated the plans would be reintroduced following a “customer education process.”

“Online TV is this nation’s best shot at breaking up the cable TV industry oligopolies and cartels. Permitting online distributors to compete vigorously on the merits for computer screens and TV screens will result in increased user choice, more rapid innovation, lower prices and a more robust digital democracy,” Ammoni concludes.

The tradition some have of firing off weapons at the stoke of midnight on New Year’s Day managed to go awry when a stray bullet severed a Comcast fiber optic cable serving 300 subscribers with cable and broadband service in southwest Albuquerque.  Service was out for approximately 12 hours while the cable was repaired.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KRQE Albuquerque Bullet cuts cable services for 300 1-1-10.flv[/flv]

KRQE-TV Albuquerque reports on the impact of stray bullets on your Comcast broadband service.  (1 minute)

Comcast has agreed to settle a $16 million dollar class action lawsuit filed on behalf of broadband customers who experienced slowed speeds while using peer to peer applications.  The original lawsuit, Hart v. Comcast, accused the company of advertising broadband speeds that were unavailable to customers when using certain applications the company allegedly impaired from April 1, 2006 to December 31, 2008.  As part of the proposed settlement, Comcast denies any wrongdoing but has agreed to modify its “network management” policies and feels further litigation over the matter would not be in the company’s best interests.

Customers are eligible for a settlement up to $16:

If you live in the United States or its Territories, have a current or former Comcast High-Speed Internet account, and either used or attempted to use Comcast service to use:

• The Ares, BitTorrent, eDonkey, FastTrack or Gnutella P2P protocols at any time from April 1, 2006 to December 31, 2008; and/or
• Lotus Notes to send e-mail any time from March 26, 2007 to October 3, 2007.

Starting January 5, 2010 affected customers can file a claim online or by mail for their share of the settlement.  Additional information is available on the settlement website P2PCongestionSettlement.com.

BitTorrent's peer to peer protocol was impacted by Comcast's speed throttle

The Comcast throttling incident helped make the case for Net Neutrality proponents that broadband providers would, in certain instances, be willing to impede traffic it deemed undesirable or burdensome.  Peer to peer traffic has been blamed by several providers for creating congestion problems on their broadband networks, particularly those that share a limited amount of bandwidth among hundreds of customers.  Unlike typical file transfers, which originate in one location and deliver content to consumers, peer-to-peer relies on groups of people sharing individual pieces of files with one another until everyone obtains the complete file.  Because many peer to peer networks consider it good etiquette to share as much as one receives, upstream bandwidth is consumed at a much higher than average rate.

For consumers who leave file sharing applications running 24/7, the amount of traffic can build to considerable levels.  Many providers consider such traffic a nuisance that clogs their networks, and some have sought to artificially reduce the speed of such traffic.

Comcast has formally announced their version of TV Everywhere is now online.  Fancast XFINITY TV “is available to any Comcast customer with a digital cable and Internet subscription.”  There is no additional charge for the service.

Comcast customers can access the service after logging in through Comcast.net or Fancast.com with their account username and password.  Once “authenticated” as a confirmed Comcast cable subscriber, customers can watch approximately 2,000 hours of programming from more than 30 cable networks, including premium channels HBO, Cinemax, and Starz.  A demonstration showed Comcast had complete seasons of series like The Sopranos and Big Love.

Some programmers are exploring whether Nielsen can count online viewing as part of its ratings measurements.

Initially, Comcast will restrict access to customers who are confirmed digital cable and broadband customers, but will extend the service to those who only subscribe to Comcast cable programming in approximately six months once security and authentication issues have been resolved, according to company officials.

The service should be accessible by subscribers on-the-go through mobile broadband or other connections, as long as customers log in.  Access is not allowed outside of the United States for copyright clearance reasons.

Customers should be aware any video accessed by the service counts against Comcast’s 250GB monthly usage limit.  Advertising on the service also counts.  Unlike Hulu which typically provides just one advertisement for every break, Comcast’s program partners have tested full commercial loads, up to seven minutes worth in a 30-minute program.  That’s 14 ads to sit through, each eating into your usage allowance.  Comcast says programmers are individually testing different amounts of advertising to learn how viewers react.  The prevailing view is that online viewers are less tolerant of advertising than typical television viewers.

One service the usage cap-happy broadband industry will be certain to threaten is online file backup.  Consumers who don’t know any better can easily configure software to back up entire hard drives to a remote hard drive, blowing through an online usage allowance in a matter of days.  Even usage allowances as large as Comcast’s 250GB per month are no match for today’s super-sized hard drives.

So it comes with a bit of irony that Comcast has quietly launched its new Secure Backup & Share service, “powered by” Mozy.

Every Comcast broadband customer will soon be pelted with promotions for the new free add-on, which will initially provide 2GB of storage space.  The free version is enough to backup small collections of music, photos, and documents, and probably won’t hurt your allowance too much.  But Mozy gets to up-sell customers to their much-larger capacity plans right from the home page.  A year’s worth of 50GB of storage costs $50.  Get 200GB of storage space for $100 a year.

Exceeding 250GB of usage per month, with or without the service, will potentially get you a warning letter and then an account suspension.

Bonus points to you if you can find the 250GB usage limit disclosed on the home page for the service.

For providers who try for far lower usage allowances, or charge up to $2 per gigabyte after exceeding them, an online file backup service could make your provider’s day once they send you the bill.