Netflix accounts for 20 percent of all broadband activity in the United States during prime time evening hours.  As expected, “Internet experts” that are really little more than paid lobbyists for the broadband industry have started to feed the media scare stories about the great Internet traffic crisis soon to befall the Internet.

Just a few years ago, it was peer-to-peer traffic responsible for Internet “brownouts,” but now Netflix offers an even better, more convenient scapegoat — especially for the broadband providers that compete with it.

Fortune magazine provides a handy dandy needle to pop the balloon of BS from the broadband industry bully boys:

Just for fun, try to guess the year in which the following warnings about the Internet’s impending meltdown were issued:

No. 1: “Over the coming six to 12 months, computer users around the planet are likely to experience the Internet equivalent of the Great Blackout, or at least frequent brownouts, as our information infrastructure staggers and struggles under the heavy onslaught of new users and new demands.”

No. 2: “Internet access infrastructure, specifically in North America, will likely cease to be adequate for supporting demand within the next three to five years.”

No. 3: “Will Netflix Destroy the Internet?  American broadband capacity might not be able to keep up.”

The answers: 1997, 2007 and this week—and that’s just a small sampling from the past 20 years. Such predictions of the Internet’s breakdown are always premised on  the arrival of a scary new device or application that will send lots of digital bits over the Net.  Back in 1995, when Internet sage Bob Metcalfe tried to explain why he foresaw “the Internet’s catastrophic collapse,” he cited a wave of new “Internet appliances,” in particular the dangerous Sony Playstation, which for the first time had Internet access!

[…]What the chicken littles often miss are the clever ways in which Netflix movies and other content get delivered.  Like most major companies that move lots of Internet traffic, Netflix contracts with companies whose job it is to deliver lots of bits, fast and cheap.  Netflix relies mainly on industry giant Akamai, which runs 77,000 servers with big hard drives that it has placed in every nook and cranny of the Internet.  When a college student downloads “Dexter Season 1” from Netflix there’s a good chance the show is already stored on campus on an Akamai box.

“That video is growing rapidly and going to be huge is true,”  says Akamai co-founder Tom Leighton. “But there’s tons of capacity out at the edges of the network….plenty of capacity in the last mile to your house.”  That capacity, he says, combined with smart delivery of Netflix content from nearby servers, means the Internet can handle Netflix just fine.  If all that traffic had to travel closer to the center of the Internet then many larger peering points would be overwhelmed, Leighton adds. (There’s reason to trust Leighton’s numbers on both counts: he’s also a professor of applied mathematics at MIT.)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KOCO Oklahoma City Netflix Crashing The Internet 11-4-10.flv[/flv]

Check out KOCO-TV Oklahoma City’s “Internet Panic” story, delivering the broadband industry’s talking points about Internet traffic jams in just 30 seconds.  (1 minute)

AT&T's "Fair Deal" website claims the company is fighting for lower programming costs.

Programmers trying to play hardball over fees paid by cable, satellite, and phone company providers occasionally get the ball thrown back at them, which is precisely what happened Friday when Scripps-Howard found their popular networks thrown off of AT&T’s U-verse, even though the companies had agreed on financial terms.

At issue — AT&T wants to distribute programming it pays for over new mediums, ranging from video on demand, online viewing, and even wireless watching through smartphone applications.  If programmers want more money, AT&T argues, they’d better also be willing to deal on how that programming gets watched.

When Scripps’ officials demurred Friday morning, AT&T simply pulled the plug on Food TV, HGTV, the Cooking Channel, as well as lesser-watched Great American Country and DIY Networks.

Scripps’ officials hurried out a statement:

“Let me start by saying this impasse is not about money,” said John Lansing, president of Scripps Networks. “We reached an agreement in principle with AT&T U-verse on the distribution fees we would receive for these networks well in advance of last month’s contract deadline.”

“AT&T U-verse demanded unreasonably broad video rights for emerging media where business models have not even been established,” Lansing said. “Accepting their demands would have restrained our ability to deliver our content to our viewers in new and innovative ways.”

Food Network President Brooke Johnson threw a HissyFit, claiming AT&T yanked the channels while the two sides were still at the negotiating table.

As Friday wore on, both sides defended their respective positions.  Scripps’ saw AT&T’s actions as nothing short of a Pearl Harbor sneak attack.  AT&T claimed Scripps was pulling a flim-flam — trying to stick the phone company with an inferior deal that restricted how they can use the basic cable networks, all at prices higher than their cable competitors were paying.

But when Lansing claimed the dispute was not about money, reality was also yanked from the lineup.  When a cable company or programmer tells you it is not about the money, it is all about the money.

Scripps reactivated their "Keepmynetworks.com" website to fight another programming fee battle

Johnson told the Chicago Tribune AT&T was trying to negotiate for broad usage rights of their programming for services that don’t even exist yet.

“They are asking for broad, unlimited distribution on non-linear platforms that go well beyond emerging media technologies. It’s anticipatory and it’s without a business model,” Johnson said.

Such agreements could end up haunting Scripps if a new money-making distribution scheme evolves that AT&T can use -and- get to keep all of the profits.

Cable companies might also be unhappy if AT&T won concessions they themselves don’t have.

Re-purposing video content into on-demand or portable viewing could evolve into a multi-million dollar business, especially if consumers begin deserting cable TV packages that include dozens of unwatched channels.  Cable cord-cutters could end up watching Food TV shows online, and who benefits financially from that is ultimately the issue here.

A weekend without the networks on U-verse was apparently enough for both sides, who pounded out an agreement announced yesterday evening, restoring the networks.

It was all-smiles for both sides:

Brian Shay, senior vice president of AT&T U-verse, said, “It was important to us on behalf of our customers to come to a positive resolution as quickly as possible. We appreciate everyone’s willingness to make that happen, working diligently over the weekend, so the situation wasn’t prolonged, and we thank our customers for their support and patience while we reached a fair deal.”

From Scripps:

“AT&T U-verse customers, we have been overwhelmed by your loyalty and support of HGTV and our other networks – DIY, Food Network, Cooking Channel and GAC. Your voice has been heard and we are very close to getting our networks back on AT&T U-verse.  We hope to have more good news for you soon.”

Terms of the new agreement were not disclosed, but you can be certain it includes a higher price tag for the bouquet of Scripps’ networks that will eventually appear on future AT&T U-verse bills.  But at least the cable networks avoided the fate of the Hallmark Channel, kicked off U-verse Sept. 1st and is still off as of today.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WDAF Kansas City Cable Customers Lose Channels 11-8-10.flv[/flv]

WDAF-TV in Kansas City covers the weekend loss of Food TV and other cable networks on AT&T U-verse over another programming fee dispute.  (2 minutes)

Peer to peer traffic no longer represents the largest single source (by application) of broadband traffic on the Internet.  Cisco’s Visual Networking Study now finds online video streamed from websites like Hulu and Netflix to account for more than one-quarter of all broadband traffic, displacing file swapping from the number one position.

File sharing activity has routinely been used by providers dreaming of Internet Overcharging as an excuse to introduce usage limits and throttled speeds for their broadband customers.  Peer to peer software allows customers to exchange pieces of files back and forth until everyone manages to secure their own copy.  Cable operators, in particular, have complained this network traffic saturates their shared broadband lines because customers upload far more data than they would without this software.  Up to 44 percent of all upstream traffic from residential accounts comes from peer to peer traffic, according to Cisco.

Providers and their friends have started to give up on their scare stories of peer-to-peer “exafloods” and data tsunamis triggered from too many online users engaged in file swapping.  As we’ve argued for two years now, the glory days of growth in peer to peer are behind us for a variety of reasons:

1. Downloading copies of TV shows and movies, always popular on file sharing networks, has declined now that content producers are finally serving the growing market for on-demand video programming;
2. The growing popularity of downstream delivery direct to consumers has reduced wait times for downloading to near nothing — to the point where some users are abandoning peer-to-peer altogether;
3. An increasing amount of fake files filled with viruses and spyware has made peer to peer-sourced files from underground websites more risky;
4. Copyright enforcement and other legal actions have made file trading less palatable for some.

While peer-to-peer traffic is still growing along with other online usage, online video is growing far faster.

Now some want to move the goal post — blaming online video for “forcing their hand” to implement overcharging schemes.

Broadband Traffic by Application Category, 3rd Quarter – 2010

• The marked categories contain video.

Karl Bode at Broadband Reports writes that he found Sanford Bernstein analyst and cable stock fluffer Craig Moffett telling CNET that if customers cut the cord, cable broadband companies will simply turn around and begin metering broadband customers’ bandwidth. In fact, Karl adds, Moffett goes so far as to insist ISPs will have “no choice” in the matter as streaming services like Netflix gain popularity.

Instead of simply raising prices on cable broadband, Moffett said it’s more likely that cable operators would move toward usage-based pricing. That way consumers who use more bandwidth to stream movies and TV shows end up paying more per month for service than people who may be getting their video from the traditional cable TV network. Time Warner has tested usage-based billing, but the company faced a huge backlash from consumers. Still, Moffett said that broadband service providers may have no choice as bandwidth-intensive video streaming services like Netflix become more popular.

CNET’s Marguerite Reardon calls that scenario a “heads we win; tails we win” situation, especially for cable companies.

Would you tell this man you are dropping your Comcast video package to watch everything online for free? (Neil Smit, president - Comcast's cable division)

Last quarter, some companies saw the number of subscribers actually drop for the first time ever.  Now Comcast reports in its latest earnings call the same thing is happening to them — losing 56,000 TV package subscribers during the third quarter.  Comcast surveyed some of their customers calling to fire their cable company.  Most of them are not switching to a pay TV competitor, said Neil Smit, president of Comcast’s cable division.  Comcast characterized them as “going to over the air free TV,” but would you tell your cable company you are dropping their video package to watch everything on their broadband service for free?  For a lot of cable customers, that would be tantamount to calling them up and saying you are now getting free HBO on your TV.

Both companies are still denying online video is cutting into their cable TV package business, but it’s an argument some stock analysts have begun to make as they watch cable profits struggling to hit targets.  Watching extra fat profits bleed away because “broadband piggies are watching all of their TV online for free” just won’t do for folks like Mr. Moffett, who will be among those leading the call to slap limits on broadband usage to protect industry profits.  Why leave good money on the table?

But before Moffett encourages cable companies to install coin slots and credit card readers on cable modems, he has another idea: jack up the prices of broadband higher than ever while cutting video pricing, making it pointless for customers to jump ship:

“Cable’s broadband dominance opens the door for renewed share gains in the adjacent video market,” Moffett said in his report. “Cable companies could simply increase their a la carte broadband prices (since in most markets, households have no other choice for sufficiently fast broadband) and simultaneously drop their video pricing, leaving the price of the bundle unchanged, to recapture video share.”

He pointed to an example of this in Albany, N.Y., where Time Warner Cable raised its broadband price by 10 percent for its Internet-only customers to a rate just $2 below its promotional bundled rate for both services. The Internet-only price increased to $54.95 from $49.95. The 12-month promotional rate for video and data was $56.95.

Of course, Albany has Verizon FiOS breathing down Time Warner’s neck.  In late October, Verizon announced it was launching its video FiOS service in Scotia, just outside of nearby Schenectady. Bethlehem, Colonie, Schenectady and Guilderland already have FiOS phone and Internet services available, so getting a TV franchise to deliver competition to Time Warner Cable isn’t a big leap.

In Rochester (where Frontier Communications idea of video is a satellite dish), a similar promotional package from Time Warner runs $84.90 a month.

Highlights of the Cisco Report

• The average broadband connection generates 14.9 GB of Internet traffic per month, up from 11.4 GB per month last year, an increase of 31 percent;
• “Busy hour” traffic grew at a faster pace than average traffic, growing 41 percent since last year. Peak-hour Internet traffic is 72 percent higher than Internet traffic during an average hour. The ratio of the busy hour to the average hour increased from 1.59 to 1.72, globally;
• Peer-to-peer (P2P) file sharing is now 25 percent of global broadband traffic, down from 38 percent last year, a decrease of 34 percent. While still growing in absolute terms, P2P is growing more slowly than visual networking and other advanced applications;
• Peer-to-peer has been surpassed by online video as the largest category. The subset of video that includes streaming video, flash, and Internet TV represents 26 percent, compared to 25 percent for P2P;
• Over one-third of the top 50 sites by volume are video sites. There is a high degree of diversity among the video sites in the top 50, including video viewed on gaming consoles, Internet TV, short-form user-generated video, commercial video downloads, and video distributed via content delivery networks (CDNs). Video sites appeared more frequently than any other type of site in the top 50.

While ivi enjoys the fruits of the Cablevision-Fox dispute which drew suburban New Yorkers to sign up for service, another “online cable system” with an even more obscure reputation in North America has launched live “HD-quality” streams of British television, most of the major television stations in Los Angeles, and hardcore porn.

FilmOn, the brainchild of British billionaire Alki David, has been in beta for at least a year — until ivi stole a lot of its potential thunder by selling access to network stations from Seattle and New York City for $4.95 a month.  Since ivi’s arrival, FilmOn has taken off the “beta” label and opened their service to all-comers.

We’ve been playing with FilmOn for about a month ourselves here at Stop the Cap!, but have not written about it until now because the service operates like a moving target.  Yesterday’s channel lineup may be quite different the next day, and pricing has changed at least twice for the service in a matter of weeks.  While the service says it’s not in beta, it sure feels like it.  So, with this in mind, we present a brief review of the service as it exists today, the 2nd of November.  Don’t blame us if the channel lineup has changed since.

Alki David is the founder of FilmOn

FilmOn has a bigger reputation in Europe, especially in the United Kingdom where British viewers hunger for access to America’s latest series and specials.  Getting access to FilmOn’s beta test was a badge of honor for many English speaking European beta testers craving direct feeds from CBS, NBC, and ABC stations in the United States.  Now Anglophiles on the other side of the pond looking for direct access to British television can now watch it live.

FilmOn uses its own free HDi player, which incorporates a viewing window, channel lineup, programming guide, and facilities to schedule recording shows for later viewing.  The player also includes authentication to protect the streams from unauthorized viewing, a bit of irony for many of the channels on the lineup which gave no authorization to be there in the first place.

The player software and layout is more advanced than ivi, and FilmOn’s picture quality is far superior to what we saw when viewing ivi’s streamed content.  However, FilmOn’s streams are far more likely to suffer from interruptions and buffering problems, and higher picture quality does not mean much if your favorite show sputters to a halt every 10 seconds or so.  That happened a lot with Los Angeles area signals on the channel lineup, especially in the evening.

The software allows users to increase the video buffer size, presumably to reduce re-buffering video pauses, but we found little difference in video quality regardless of how we configured it.  FilmOn either needs more robust American servers or allow the player to adapt to real world Internet connection quality by temporarily reducing the video encoding rate to deliver a stable signal.

FilmOn’s channel lineup changes regularly — way too regularly.  Since we started testing, entire groups and segments of channels have disappeared, returned, disappeared again, and many are back once more.  This is the biggest flaw FilmOn delivers to its paying subscribers, who simply cannot count on channels sticking around for long.  This is an issue FilmOn must address.  Paying customers don’t mind new channels being added to the service, but sudden removals will alienate them very quickly.

Like ivi, the centerpiece of FilmOn is delivering network broadcast station feeds.  Unlike ivi’s reliance on New York and Seattle-area stations, FilmOn prefers Los Angeles for its lineup.  That’s a definite improvement over Seattle area stations for Pacific time zone viewers.  But keep in mind Los Angeles stations are notorious for breaking away from regular programming to cover tragedies that regularly seem to impact southern California, from crazy car chases with Hollywood celebutards to the region’s various natural disasters.  While that is a plus for news junkies, someone seeking out a network show may find it interrupted by breathless reporters covering the latest wildfire, flood, earthquake, civil disturbance, or… killer bee attacks.

FilmOn Channel Lineup

KCAL-TV Los Angeles: KCAL is an “independent” station in Los Angeles delivering huge blocks of news programming to southern California audiences.  KCAL’s original reputation was its strong news coverage beyond Los Angeles, especially in Ventura County, the Inland Empire, and Orange County.  Although coverage of major breaking Los Angeles news events remains a hallmark of KCAL, the station is today owned by CBS, and is secondary to KCBS-TV.

KTLA-TV Los Angeles: KTLA was Los Angeles’ only true superstation, although it was seen mostly on cable systems in the western half of the country.  It used to be an independent station, but today is affiliated with the CW television network, which almost seems beneath it.  KTLA has an exceptional evening newscast and is well known for its coverage of major breaking news, but with the CW’s youth focus, the station’s news coverage has been dumbed down, especially in the morning.

KCBS-TV Los Angeles: The area’s CBS affiliate, KCBS partners with KCAL-TV in newsgathering.  Since the station is owned outright by the network, unless breaking news occurs you are certain to get all of the CBS lineup from KCBS.  The station has a lot of resources to cover breaking news stories, even after budget cuts reduced the news staff.

KVCR-TV San Bernardino: The Inland Empire’s PBS affiliate.  In large cities like Los Angeles, multiple PBS stations are not uncommon, typically sharing some major programming while different stations specialize in different programming at other times (educational, current affairs, nature, etc.)

KPXN-TV San Bernardino: The area’s Ion-TV affiliate, delivering religious and family-oriented programming.  Ion stations generally do not produce locally originated programming.

KTTV-TV Los Angeles: Fox’s Los Angeles affiliate delivers all of the Fox lineup and classic laid-back Los Angeles-style news coverage, especially in the morning.

KCOP-TV Los Angeles: KCOP used to be an independent station, but today serves as Los Angeles’ MyNetworkTV affiliate.  The station’s strongest years are now well behind it.  Today, it’s a dumping ground for a lot of shows other stations won’t take.  Fox owns the station, which means Fox shows occasionally air on KCOP during breaking news events being covered live on KTTV.

KNBC-TV Los Angeles: The area’s NBC station delivering the full lineup of NBC shows.

KOCE-TV Huntington Beach: Orange County’s local PBS station used to be considered a secondary PBS affiliate for Los Angeles, airing only about a quarter of the PBS lineup.  But on January 1st, KOCE will become LA’s most important PBS station as KCET-TV goes “independent.”

KABC-TV Los Angeles: The ABC station for Los Angeles, which includes a strong local newsgathering operation.

Universal Sports: The digital sub-channel network usually found on NBC stations carries an all sports format.

4 Music: An on-demand music video channel broadcast from the UK.

Scuzz: A British music video channel covering hardcore and metalcore genres.

Flaunt: Originally a dance music video channel targeting a LGBT audience, today the network delivers electronic dance music to all audiences.

Bloomberg: The well-known business news channel comparable to CNBC or Fox Business.

RAI Sport: RAI is Radiotelevisione Italiana, Italy’s public broadcasting network.  RAI Sport delivers Italian-language sports news and live coverage of soccer, motor-racing, and a range of other sports from southern Europe.

Dubai Sports: Emanating from the United Arab Emirates, Dubai Sports carries Arabic language coverage of sports ranging from extensive soccer coverage to camel racing.

Viva: is a music and entertainment channel serving the UK and the Republic of Ireland, owned and operated by MTV Europe.

Russia Today: Russia Today is the video equivalent of the Voice of Russia World Service on shortwave, delivering programming in English, Russian, Arabic and Spanish.  Funded primarily by the Russian government, the channel broadcasts a news-heavy diet of shows that speak to respective target areas.  For example, the network carried an extended interview with Ralph Nader commenting on today’s elections in the United States.  The channel tries to avoid blatant propaganda in their broadcasts, but has no problem celebrating Russia’s accomplishments and its importance in world affairs.

Sky News: The British news channel from the company that brought America Fox News Channel.  Less overtly biased than its American counterpart, its investment in international newsgathering and need to keep up with competition from the BBC has garnered the news channel considerable respect for the depth and breadth of its coverage, especially of live events.  But its political coverage definitely swings to the right.

BBC News 24:  The domestic 24/7 news channel from the BBC.  Similar to CNN, this news channel targets news of interest to domestic British audiences.  Very highly respected for its sober news coverage and unflappable anchors, many of whom are well-known to any BBC viewer.

TVE Spain: Spain’s state-owned public broadcaster delivers current affairs and entertainment programming from Madrid to a global Castilian Spanish-speaking audience.

CNN International: The external service of CNN, targeting global audiences outside of the United States with a heavy diet of international news typically delivered by anchors without American accents.

Clubland TV: A unique British music channel entirely devoted to on demand viewing of video tracks from the Clubland series.  It’s almost entirely dance music oriented and beats the pants off MTV Europe’s dance music channel in the ratings.

E4: This channel is like the British version of the CW, targeting youth audiences with shows aimed at teen viewers.  It airs a heavy diet of shows acquired from American networks, some in current runs (Glee) and others in reruns (Friends, Beverly Hills 90210).

CBBC/BBC Three: The BBC’s children’s programming network delivering shows of interest to viewers 16 and under.  (Also see BBC Three.)

JSC Sport Global: Also known as Al Jazeera Sports, this network delivers Arabic speaking audiences some of the most popular sporting events, having acquired the rights to major soccer league coverage.  Operated from studios near Doha in Qatar, most of the anchors are dressed in traditional thawbs.

Film 4: A British channel devoted to movies — traditional and current, without editing them to pieces or slapping on-air graphics and logos all over the screen.

ITV: FilmOn delivers the three network suite of channels from the commercial ITV network.  ITV1 is the original ITV network delivering the network’s most popular British shows.  ITV2 depends on mostly on series and shows imported from the United States.  ITV3 targets over-35 audiences with repeats of classic ITV series and American reruns like Quincy, M.E.

BBC: FilmOn also carries all four BBC entertainment channels, which include:

• BBC One: The flagship channel of BBC television, bringing the hallmark of BBC produced programming to audiences.
• BBC Two: More edgy than BBC One, new untested British series often turn up first on BBC Two.  Two also more closely represents today’s multicultural Britain, and major segments of airtime are turned over to locally-produced broadcasts from the BBC’s regional TV broadcast centers in Northern Ireland, Scotland, and Wales.
• BBC Three: Shares time with youth-focused CBBC, BBC Three starts programming in the evening hours targeting audiences from 16-34 years old.  Almost all of its content is produced domestically or from Europe.
• BBC Four: This BBC network targets highly educated viewers with intelligent documentaries, highbrow entertainment, current affairs, art and science programming, and international foreign language imports.  Although respected for the depth of programming, critics occasionally make fun of BBC Four’s interest in obscure or narrowly targeted programming.

Channel Five: Britain’s lowest rated channel delivers lots of American reruns and shows that others have rejected.  The network has garnered about as much respect as MyNetworkTV has in the United States, and is derided as an economic mess.  The network has been sold several times, and is now owned by tabloid newspaper publisher Richard Desmond, who is pouring money into the venture.

One genre of programming FilmOn airs that ivi doesn’t touch is adult entertainment.  FilmOn currently has two hardcore porn channels — Adult XXX and Filthon XXX Latina.

Pricing for FilmOn services runs $9.95 per month (or $99 a year) with adult channels priced $5.00 per month extra.  FilmOn promises to beef up its Spanish language programming shortly with the addition of Los Angeles stations Azteca América (KAZA), Telemundo (KVEA)
 and Univision (KMEX).

A company spokesman said FilmOn is also available through mobile smartphones and will work on 3G networks without an app download.

In the coming weeks, FilmOn plans to add local stations from New York, Chicago, Miami, Dallas, Houston, and Seattle, which may give ivi some serious competition.

Still missing from the lineup are digital mini-networks like Retro TV which air classic TV shows.  Also missing, but perhaps not relevant to FilmOn’s marketing are Canadian networks like the CBC, Radio Canada, Global and CTV.

Something else missing is permission from any of these stations and networks to be included on FilmOn’s lineup, something it shares in common with ivi.

All of the major networks filed suit in September against FilmOn.com in the US District Court for Southern New York demanding a restraining order to stop the streaming as well as demanding damages.

Remarkably, FilmOn’s parent company is publicly traded on the German stock exchange and has been operating in Europe for over a year with few problems.  But running into a brick wall of entertainment conglomerates in the United States may require FilmOn founder Alki David to spend some of his billions to fight his way through a torrent of litigation.  Even if the courts see David’s company clear, the next step will be fighting the inevitable, well-financed lobbying campaign to get Congress to enact legislation to ban such enterprises (unless those doing the lobbying own and control them).

For now, FilmOn’s player provides extensive free previews of their content so feel free to explore.  But don’t get too hooked on any of FilmOn’s channels.  What you see today may not be around tomorrow.

A Cablevision ad against Fox

Cablevision and Fox finally settled their two week programming dispute Saturday when two local Fox-owned broadcasters and an assortment of cable channels returned to suburban New York area-television screens.  Cablevision ultimately capitulated to Fox’s increased programming fees and grumbled it was stuck paying an “unfair price” for the programming.

“In the absence of any meaningful action from the FCC, Cablevision has agreed to pay Fox an unfair price for multiple channels of its programming including many in which our customers have little or no interest,” Cablevision said, adding that it “conceded because it does not think its customers should any longer be denied the Fox programs they wish to see.”

But in reality, Cablevision subscribers who suffered through the two week outage will ultimately pay the price for Fox-owned programming in the next round of cable company rate increases.

While Cablevision subscribers can now watch the remaining games of the World Series from home, the cable-broadband industry post-game wrap-up show is now underway, surveying the winners and losers.

Let’s take a look:

WINNER: Fox Networks

Fox got everything it wanted, and then some, from Cablevision.  Consumers never take the side of the cable companies that have overcharged them for years. All most know is that when their favorite channels are not on the cable system that charges them more than $50 a month for service, it’s the cable company’s fault. While the terms of the final deal were not disclosed, it’s a safe bet Cablevision is paying rates even higher than those charged to New York’s other cable company Time Warner Cable.  The cave-in by Cablevision means Time Warner and other cable systems will likely also see higher rates for Fox programming now set as a precedent by Cablevision.  So will telco and satellite TV providers.  That’s money Fox will take to the bank.

LOSER: Cablevision

Not only did they alienate their customers, at one point telling them to watch Fox programming on third party websites, they are now facing a $450 million class action lawsuit from subscribers (filed by an attorney with prior connections to Fox parent company News Corporation.)  It is difficult to feel sympathy for a cable company deprived of Fox programming that still charged subscribers full price for channels they could not watch.  One industry executive praised Cablevision for “taking one for the team,” a phrase consumers have heard before to defend corporate pickpocketing.

Cablevision was actively promoting ivi last week through their customer service representatives

WINNER: ivi Networks

Stop the Cap! reported on upstart ivi several weeks back.  The service carries all of metropolitan New York’s broadcast stations and Cablevision ended up recommending its blacked-out subscribers buy an ivi subscription to watch Fox-owned broadcast channels no longer on the cable lineup.  The new online cable system, which started in September, added New York subscribers in droves, annoying Fox to the point of sending a cease-and-desist letter to Cablevision CEO James Dolan to get cable company representatives to stop recommending the service, which Fox claims is “illegal, and perhaps criminal.”

WINNER: Verizon & Satellite Dish Companies

Many subscribers fleeing Cablevision for competitors have probably left for good, especially if they scored substantial discounts and promotions during their first year or two of service.  Verizon FiOS always faced resistance from customers not wanting to devote the time needed to install the service, and when customers have been with a cable company for 20 or more years, change does not come easy.  But die-hard sports fans already inconvenienced by earlier channel interruptions pulled the trigger just to get away from the endless programming disputes.

Verizon scored new customers over the dispute.

LOSER: Comcast-NBC Merger

Lawmakers set to either applaud or introduce roadblocks to the proposed merger between Comcast and NBC saw first hand what can happen when big media companies duel it out over money — millions of customers can be left in the middle with nothing to show for it.  Bloomberg reports the dispute could force significant concessions to prevent or limit such disputes in the future.  U.S. Representative Maxine Waters, a California Democrat, said the Fox-Cablevision spat made her “increasingly concerned with the potential harm” if a dispute arose between an enlarged Comcast and competing video provider. In a letter to FCC Chairman Julius Genachowski last week, she called for “substantive and enforceable conditions” to preserve competition.

WINNER: NFL Networks – Where is Our Binding Arbitration?

Cablevision’s demands for binding arbitration to settle their disputes with Fox rang hollow, if not hypocritical, for NFL Network officials, who have been calling on Cablevision for the same binding arbitration the cable operator demanded of Fox.  The NY Post quoted an unnamed executive at the cable network: “Cablevision has been urging Fox to agree to binding arbitration — the same strategy we’ve been offering Cablevision — but we continue to get sacked.”

LOSER: The Federal Communications Commission

Despite demands from most consumer groups and Cablevision to intervene in the programming disputes, the FCC delivered a rebuke telling all sides to stop with the stunts and start with serious negotiations.  Beyond that, the agency did what it has done best under the Obama Administration: sit on its hands.

THE BIGGEST LOSER: You

With the grandstanding by both sides finally over Saturday — the shouting and expensive publicity campaigns wrapped up and put away for next time (KeepFoxOn.com now renders a blank page) — the person left standing with the bill in hand was you.  Fox wrapped the costs of its expensive publicity campaign into the rate increase Cablevision finally conceded to paying.  The bags of money to be handed from the Dolan family that owns Cablevision over to Rupert Murdoch will be filled from your pockets.  And there is no end in sight to future disputes raising programming costs even higher than ever.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Bloomberg Cablevision Fox Dispute 11-1-10.flv[/flv]

Bloomberg News delivers three reports detailing the impact of increased programming costs on cable bills, inaction by the FCC, and whether Americans are fleeing cable TV for online video instead.  (10 minutes)