America's Broadband Emergency Plan Allows Up to Three Cat-Chasing-Laser-Pointer videos per day

The mainstream media loves a scare story.  Suggestions that a national H1N1 pandemic could bring the Internet as we know it to its knees is a surefire way to get plenty of attention.

The Chicago Tribune, among others, reports that a nationwide outbreak of virus forcing 40% of American workers to remain housebound could result in too many people sitting at home watching Hulu, bringing the entire Internet to a screeching halt.

The answer? Shut down video streaming sites and throttle users during national emergencies.

Of course, even more interesting is what never turns up in these kinds of stories — the news behind the sensationalist headlines.

The report on which this story is based comes courtesy of the General Accounting Office.  The GAO doesn’t simply issue reports willy-nilly.  A member or members of Congress specifically request the government office to research and report back on the issues that concern them.  In this instance, the report comes at the request of:

• Rep. Henry Waxman
• Rep. John D. Dingell
• Rep. Joe Barton
• Rep. Barney Frank
• Rep. Bennie G. Thompson
• Rep. Rick Boucher
• Rep. Cliff Stearns
• Rep. Edward J. Markey

The congressmen weren’t worrying exclusively about your broadband interests.  The GAO notes the study came from concern that such a pandemic could impact the financial services sector (the people that brought you the near-Depression of 2008-09).  The Wall Street crowd could be left without broadband while recovering from flu, and that simply wouldn’t do.

“Concerns exist that a more severe pandemic outbreak than 2009’s could cause large numbers of people staying home to increase their Internet use and overwhelm Internet providers’ network capacities. Such network congestion could prevent staff from broker-dealers and other securities market participants from teleworking during a pandemic. The Department of Homeland Security (DHS) is responsible for ensuring that critical telecommunications infrastructure is protected. GAO was asked to examine a pandemic’s impact on Internet congestion and what actions can be and are being taken to address it, the adequacy of securities market organizations’ pandemic plans, and the Securities and Exchange Commission’s (SEC) oversight of these efforts,” the report states.

Putting aside my personal desire that a little less broadband for deal-making, bailout-demanding “kings of the world” might not be a bad idea, the GAO’s report concludes what we already know — the business model of residential broadband is based on sharing connections and when too many people stay home and use them, it’s slow and doesn’t work well.

Providers do not build networks to handle 100 percent of the total traffic that could be generated because users are neither active on the network all at the same time, nor are they sending maximum traffic at all times. Instead, providers use statistical models based upon past users’ patterns and projected growth to estimate the likely peak load of traffic that could occur and then design and build networks based on the results of the statistical model to accommodate at least this level. According to one provider, this engineering method serves to optimize available capacity for all users. For example, under a cable architecture, 200 to 500 individual cable modems may be connected to a provider’s CMTS, depending on average usage in an area. Although each of these individual modems may be capable of receiving up to 7 or 8 megabits per second (Mbps) of incoming information, the CMTS can transmit a maximum of only about 38 Mbps. Providers’ staff told us that building the residential parts of networks to be capable of handling 100 percent of the traffic that all users could potentially generate would be prohibitively expensive.

In other words, guess your customer demand correctly and 200-500 homes can all share one 38Mbps connection.  Guess incorrectly, or put off expanding that network to meet the anticipated demands because your company wants to collect “cost savings” from reduced investment, and everyone’s connection slows down, especially at peak times.

One way to dramatically boost capacity for cable operators is to bond multiple channels of broadband service together, using the latest DOCSIS 3 standard.  It provides cable operators with increased flexibility to meet growing demands on their network without spending top dollar on wholesale infrastructure upgrades.  Many operators are already reaping the rewards this upgrade provides, by charging customers higher prices for higher speed service.  But it also makes network management easier without inconveniencing existing customers with slowdowns during peak usage.

The GAO didn’t need 77 pages to produce a report that concludes broadband usage skyrockets when people are at home.  Just watching holiday shopping traffic online spike during deal days like “Cyber Monday,” after Thanksgiving would illustrate that.  Should 40 percent of Americans stay home from work, instead of browsing the Internet from their work machines, they’ll be doing it from home.  That moves the bottleneck from commercial broadband accounts to residential broadband networks.

The GAO says such congestion could create all sorts of problems for the financial services sector, slowing down their broadband access.

Providers’ options for addressing expected pandemic-related Internet congestion include providing extra capacity, using network management controls, installing direct lines to organizations, temporarily reducing the maximum transmission rate, and shutting down some Internet sites. Each of these methods is limited either by technical difficulties or questions of authority. In the normal course of business, providers attempt to address congestion in particular neighborhoods by building out additional infrastructure—for example, by adding new or expanding lines and cables. Internet provider staff told us that providers determine how much to invest in expanding network infrastructure based on business expectations. If they determine that a demand for increased capacity exists that can profitably be met, they may choose to invest to increase network capacity in large increments using a variety of methods such as replacing old equipment and increasing the number of devices serving particular neighborhoods. Providers will not attempt to increase network capacity to meet the increased demand resulting from a pandemic, as no one knows when a pandemic outbreak is likely to occur or which neighborhoods would experience congestion. Staff at Internet providers whom we interviewed said they monitor capacity usage constantly and try to run their networks between 40 and 80 percent capacity at peak hours. They added that in the normal course of business, their companies begin the process to expand capacity when a certain utilization threshold is reached, generally 70 to 80 percent of full capacity over a sustained period of time at peak hours.

However, during a pandemic, providers are not likely to be able to address congestion by physically expanding capacity in residential neighborhoods for several reasons. First, building out infrastructure can be very costly and takes time to complete. For example, one provider we spoke with said that it had spent billions of dollars building out infrastructure across the nation over time, and adding capacity to large areas quickly is likely not possible. Second, another provider told us that increasing network capacity requires the physical presence of technicians and advance planning, including preordering the necessary equipment from suppliers or manufacturers. The process can take anywhere from 6 to 8 weeks from the time the order is placed to actual installation. According to this provider, a major constraint to increasing capacity is the number of technicians the firm has available to install the equipment. In addition to the cost and time associated with expanding capacity, during a pandemic outbreak providers may also experience high absenteeism due to staff illnesses, and thus might not have enough staff to upgrade network capacities. Providers said they would, out of necessity, refrain from provisioning new residential services if their staff were reduced significantly during a pandemic. Instead, they would focus on ensuring services for the federal government priority communication programs and performing network management techniques to re-route traffic around congested areas in regional networks or the national backbone. However, these activities would likely not relieve congestion in the residential Internet access networks.

It’s clear some broadband providers are not willing to change their business models to redefine congestion from measurements taken during peak usage when speeds slow, to those that anticipate and tolerate traffic spikes.  That means making due with what broadband providers are delivering today and developing technical and legal means to ration, traffic shape, or simply cut access to high bandwidth traffic during ‘appropriate emergencies.’  Right on cue, the high bandwidth barrage of self-serving provider talking points are on display in the report:

Providers identified one technically feasible alternative that has the potential to reduce Internet congestion during a pandemic, but raised concerns that it could violate customer service agreements and thus would require a directive from the government to implement. Although providers cannot identify users at the computer level to manage traffic from that point, two providers stated that if the residential Internet access network in a particular neighborhood was experiencing congestion, a provider could attempt to reduce congestion by reducing the amount of traffic that each user could send to and receive from his or her network. Such a reduction would require adjusting the configuration file within each customer’s modem to temporarily reduce the maximum transmission speed that that modem was capable of performing—for example, by reducing its incoming capability from 7 Mbps to 1 Mbps. However, according to providers we spoke with, such reductions could violate the agreed-upon levels of services for which customers have paid. Therefore, under current agreements, two providers indicated they would need a directive from the government to take such actions.

Shutting down specific Internet sites would also reduce congestion, although many we spoke with expressed concerns about the feasibility of such an approach. Overall Internet congestion could be reduced if Web sites that accounted for significant amounts of traffic—such as those with video streaming—were shut down during a pandemic. According to one recently issued study, the number of adults who watch videos on video-sharing sites has nearly doubled since 2006, far outpacing the growth of many other Internet activities. However, most providers’ staff told us that blocking users from accessing such sites, while technically possible, would be very difficult and, in their view, would not address the congestion problem and would require a directive from the government.

Enjoy up to one Hogan's Heroes episode per day during the H1N1 flu pandemic

You have to love some of the players in the broadband industry who trot out their most-favored “network management” talking points to handle a national emergency.  It’s interesting to note providers told the GAO they were concerned with violating customer agreements regarding speed guarantees, when most providers never guarantee residential service speeds.  Their first solution is the Net Neutrality-busting traffic throttle, to slow everyone down to ration the “good enough for you” network in your neighborhood.  Shutting down too-popular, high bandwidth websites like Hulu (no worries – you can watch your favorite shows on our cable TV package) is apparently someone’s good idea, but considering providers admit it wouldn’t actually solve the congestion problem, one’s imagination can ponder what other problems such a shutdown might solve.

One provider indicated that such blocking would be difficult because determining which sites should be blocked would be a very subjective process. Additionally, this provider noted that technologically savvy site operators could change their Internet protocol addresses, allowing users to access the site regardless. Another provider told us that some of these large bandwidth sites stream critical news information. Furthermore, some state, local, and federal government offices and agencies, including DHS, currently use or have plans to increase their use of social media Web sites and to use video streaming as a means to communicate with the public. Shutting down such sites without affecting pertinent information would be a challenge for providers and could create more Internet congestion as users would repeatedly try to access these sites. According to one provider, two added complications are the potential liability resulting from lawsuits filed by businesses that lose revenue when their sites are shutdown or restricted and potential claims of anticompetitive practices, denial of free speech, or both. Some providers said that the operators of specific Internet sites could shut down their respective sites with less disruption and more effectively than Internet providers, and suggested that a better course of action would be for the government to work directly with the site operators.

A very subjective process indeed, but one many providers have sought to keep within their “network management” control as they battle Net Neutrality.  One would think “potential claims of anti-competitive practices” would represent an understatement, particularly if cable industry-operated TV Everywhere theoretically kept right on running even while Hulu could not.  As long time net users already know, outright censorship or content blockades almost always meet resistance from enterprising net users who make it their personal mission to get around such limits.

Expanding broadband networks to provide a better safety cushion during periods of peak usage is looking better and better.

Providers could help reduce the potential for a pandemic to cause Internet congestion by ongoing expansions of their networks’ capacities. Some providers are upgrading their networks by moving to higher capacity modems or fiber-to-the-home systems. For example, some cable providers are introducing a network specification that will increase the download capacity of residential networks from the 38 Mbps to about 152 to 155 Mbps. In addition to cable network upgrades, at least one telecommunications provider is offering fiber-to-the home, which is a broadband service operating over a fiber-optic communications network. Specifically, fiber-to-the-home Internet service is designed to provide Internet access with connection speeds ranging from 10 Mbps to 50 Mbps.

Hello.

Sounds like a plan to me, and not just for the benefit of the Wall Street crowd sick at home with the flu.  Such network upgrades can be economical and profitable when leveraged to upsell the broadband enthusiast to higher speed service tiers.  During periods of peak usage, such networks will withstand considerably more demand and provide a better answer to that nagging congestion problem.

The alternative is Comcast or Time Warner Cable, in association with the Department of Homeland Security, having to appear on Wolf Blitzer’s Situation Room telling Americans they have a broadband rationing plan that will give you six options of usage per day.  Choose any one:

• Up to three videos of cats chasing laser pointers on YouTube
• One episode of Hogan’s Heroes
• Up to six videos of your friends playing Guitar Hero on Dailymotion
• Unlimited access to Drugstore.com to browse remedies
• Five MySpace videos of your favorite bands
• Up to 500 “tweets” boring your followers with every possible detail of your stuck-at-home-sick routine

Auburn, Alabama

Residents of Auburn, Alabama will one day have a choice for cable television service.  Incumbent cable company, Charter Cable, which has been in bankruptcy, will eventually face competition from Knology, a cable “overbuilder” servicing more than a dozen cities in the southeastern U.S.

The Auburn City Council unanimously agreed Tuesday night to begin a non-exclusive cable franchise agreement with Knology, based in West Point, Georgia.  The cable company already serves several other Alabama communities including Dothan, Huntsville, Lanett, Montgomery, and Valley, and expects approval to construct a system in nearby Opelika shortly.

The decision to bring competition to the city of 56,000 was an easy one because residents demanded more choice:

“Thank goodness this has finally happened.  It is time that people in this area had a choice regarding their cable.  Charter has provided poor customer service as well as poor cable and internet service for years.  I am surprised that my internet has stayed up long enough for me to type this!” — psych1

“This makes my day, now all we need is for satellite to have rights to the local channels and we’ll truly have the competition and choice we deserve…this is a huge step though!” — Matt

“I will dump Charter the second Knology is here.” — lp95

“Now we just need this in Opelika. I hate Charter with all my being.” — jackburnt

“Thank Goodness!  Charter is surely the worst cable company in history. I hope nobody reading this fell for their BS “contract” pricing lately.  They knew this was coming and tried to tie folks down for at least another year. This is truly a victory for the people of Auburn.” — tboone

“I am glad to see competition is coming in,” Ward 1 council member Arthur L. Dowdell told the Opelika-Auburn News. “I wish there was more coming in.”

One question remains on the table — When will Knology commence service in the area?

Chad S. Wachter, general counsel for Knology, said he didn’t know when Knology will be available for city residents.

“We’ll provide those answers with the city when we get them,” he said.

Ward 7 council member Gene Dulaney, the News noted, encouraged Wachter to build as fast as possible.

Charter Cable representatives followed the usual playbook cable operators use when competition is imminent.

Skip James, Charter’s director of government relations, addressed the council during citizens’ communications to express the company’s support for competition.

“We competed with Knology in the past and we will continue to in the future,” he said.

Knology provides customers with cable television, telephone and broadband services.  Most of their systems offer broadband at around 8Mbps and there doesn’t appear to be a limit.  Knology is quietly upgrading their systems to DOCSIS 3 to provide “wideband” service, cable’s designated turn of phrase for next generation broadband speeds.  But the company is also following a familiar pattern of not spending the money to upgrade where competitive pressure doesn’t exist.

Knology chairman and CEO Rodger Johnson told investors during a 1st quarter 2009 earnings call that the company was prepared to upgrade, but isn’t going to jump the gun.

“We are enabling our markets to deliver Docsis 3.0 when we decide the time is right to push the trigger,” Johnson said. “A very expensive piece of that proposition is the transition of the cable modems to 3.0 cable modems. We will make that move at the time that we’re feeling competitive pressures to move to a 3.0 environment, but not until that time.”

Johnson should be careful about waiting too long.  Pinellas County is one of Knology’s service areas in Florida, and it has Verizon FiOS and Bright House Networks fighting for customers in an upgrade war Knology cannot win with slower broadband.

[flv]http://www.phillipdampier.com/video/Knology – Choices Ad.mp4[/flv]

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p style=”text-align: center;”>Knology “Choices” Ad (30 seconds)

Sol Trujillo, the former head of Telstra, was routinely depicted in the Aussie cartoon press in a sombrero reflecting his Mexican heritage

Yesterday’s Wall Street Journal Opinion page features a piece of nonsense from Holman Jenkins, Jr., one of the editorial writers for the paper, decrying Australia’s “Broadband Blunder” by not allowing Telstra, the dominant provider, free market means to define problems and create solutions in broadband.  The editorial carries a clear subtext for American policymakers — let the free market do it all and keep government out of it (unless they want to cut some checks with taxpayer money or other subsidies, of course).

Australia lacks America’s bottomless think-tank and K Street resources for publicizing policy differences. Its parliamentary government puts all the policy levers, including a ready resort to secrecy, in the ruling party’s hands. Australia is a small nation, with a small elite that tends to place limits on burn-the-bridges debate.

This may sound ideal to Americans, but the results aren’t always good, says Mr. Burgess. Australia, like America, has its “wingnuts,” he says, but they don’t get a hearing. “There’s no sharpening of issues. Policy ideas aren’t fully vetted.”

The [National Broadband Network] NBN, a tremendously awful idea, is a case in point. The government wants to spend $39 billion to deliver 100 megabits to every household in the next decade, without the slightest idea how it might be done commercially or whether customers, who already can get 21 megabits through wireless in most of the country, would be willing to support NBN’s huge costs.

Trujillo was reviled for increasing his own compensation package while presiding over massive cost-cutting layoffs

That’s a remarkable bit of news, for both Americans and Australians.  Jenkins comes right out and tells all of corporate America’s best K Street secrets.  Australia doesn’t have the corporate money-astroturf PR-influence machine that frames debates with a corporate point of view.  ‘Burn-the-bridges debate’ is the way Jenkins might characterize it, but burning actual facts and reality for astroturf fiction is more in keeping with reality.  On just about any issue, from energy deregulation to banking reform to last summer’s often-ridiculous health care debate melodrama filled with death panels, hiring a PR firm that can launder corporate-string-pulling-connections guarantees you can lie, distort, and obfuscate anything into something it’s not, in hopes of dispensing with it.  The Net Neutrality as Marxist Plot nonsense emanating from Americans for Prosperity and Glenn Beck is just the latest example of the broadband policy Distact-O-Matic in use.

American wingnuts not only get a hearing, they often get all of the attention, particularly in the television media.  The more outlandish and dramatic the video, the better.  Policy issues are never vetted at all when you start “sharpening of the issues” with accusations Mao Tse-tung is the founding father of Net Neutrality.

Australia’s NBN is hardly an example of government trying to compete with private industry.  In fact, it was the private industry which built the slow, incrementally upgraded, usage capped, and expensive network that misses large portions of the country which drove the government to consider doing what private industry simply refused to do – provide Australians a state of the art broadband platform.  It’s obvious the government doesn’t need to “do it commercially” with large profits and leveraging higher prices in non-competitive markets — they just need to see it gets done and paid for, recognizing Telstra and other providers will not spend the money to build it themselves because they don’t like the long term wait for that investment to be paid back.

Most Australians will also be surprised to learn they can obtain 21Mbps through wireless “in most of the country.”  In fact, reasonably priced broadband in Australia is much slower, and carries a small usage allowance.

Of course, it takes an unwonted faith in government to believe it will deliver the promised digital nirvana on-time, on-budget or at all. In the meantime, Telstra would have no incentive to invest in its own network, so Australia could end up with the worst of possible outcomes: neither a shiny new functioning government network nor an existing Telstra network that keeps pace with technology and customer demand.

Ah, the elusive “incentive to upgrade” reasoning.  The moving target of what represents appropriate incentive (extra fat profits, no competition, keeping costs low by rationing service) may work very nicely for interested shareholders but do little to advance the broadband platform either in Australia or the United States.  This debate is not new.  Decades earlier, power companies argued that rural areas didn’t need electrification because farmers wouldn’t use it (or afford it), or it was simply too expensive to wire for too few customers.  Citizens in both countries will have to impress on their government whether they consider broadband service a nice luxury to have or an essential utility that must be provided, even if it means bypassing the ‘100% free market’ approach that turns up their noses at rural residents or those deemed too poor to afford it.

Just because Jenkins claims Telstra keeps pace with technology and customer demand doesn’t make that reality.  Australians would argue both points, particularly comparing what they get for their money versus what we get in the United States for ours.

The rest of the piece is a glorification of Sol Trujillo, the controversial former head of Telstra, who has been compared with George W. Bush and Karl Rove for his combination of “I am the decider” confidence and Rove’s “take no prisoners” style of defending those decisions.  Jenkins suggests the source of the active dislike of Trujillo was his willingness to go personal in attacking Australian officials in speeches and press accounts.  But many more Australians would find fault with Trujillo’s very generous compensation package and benefits he and his associates earned even while the stock underperformed under his leadership, and with the sluggish, expensive, and capped state of Telstra’s broadband as he left.

The Great Wall of Pay

Newspaper, broadcasting, and cable magnates have had enough of online web visitors accessing all of their content for free.  Free is naughty.  Free must be stopped.  Free threatens to devalue everything.

For the last few years, content producers have been looking for ways to recoup investments in online publishing.  Newspapers publish articles online and fear that causes people to stop paying for the printed edition.  Studios and networks make their shows available on Hulu, and people find on-demand viewing more convenient than watching ad-packed live television.  Cable magnates worry about people dropping cable subscriptions and watching all of their video online.

Broadcasting & Cable generated a firestorm late last week when it quoted one of Hulu’s partners — News Corporation’s Deputy Chairman Chase Carey telling the B&C OnScreen Summit “it’s time to start getting paid for broadcast content online.”

“I think a free model is a very difficult way to capture the value of our content. I think what we need to do is deliver that content to consumers in a way where they will appreciate the value,” Carey said. “Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business.”

CNN picked up the story in one of their news blogs, and promptly generated more than 700 responses, most hostile to paying for anything on Hulu, and that included the blog’s author:

“I certainly won’t be pulling out my credit card if the service puts up a subscription pay wall. And I doubt many other customers will be happy to start paying money for a service they previously received for free.”

Most comments indicated they’ll go back watching online TV shows and movies the old fashion way – downloading them from peer to peer torrent networks or newsgroups.

“The Internet abhors a content vacuum, especially one created artificially by a subscription wall,” Stop the Cap! reader Jake writes.  “Just like what happened with digital rights management schemes and viewing rights blockades, enterprising net users will always find a way around them and distribute the content a few don’t want us to have.”

The quest for control is increasingly becoming more contentious among super-sized corporate entities that create and distribute content.  Comcast seeks ownership of NBC-Universal, a content creator and partner in Hulu, which currently gives away content for free Comcast charges customers to watch.  A newly constructed Great Wall of Pay could help stop these business model challenges.

When online content was successfully monetized by advertising, few cared about handing it out for free.  In fact, providers like AOL abandoned many of its ‘subscriber-only’ walls to “go free” and attract a larger audience, and corresponding increased ad revenue.  In a post-bailout recession era, ad dollars have become scarce and no longer pay all of the bills Hulu’s owners want paid.  Advertising industry consultants say Hulu cannot simply increase the number of advertisements to make up the difference.  Even though Hulu users confront far less advertising than traditional broadcast television, research has shown online TV watchers resent a lot of the advertising they see now.  Many Hulu viewers actively develop a form of ad blindness based, in part, on the resentment those ads bring to the experience.  Hulu occasionally offers viewers one extended ad at the start of a show, instead of having them seeded throughout the program.  Many take Hulu up on the offer and use that 90 seconds to grab a snack.

Interestingly, the shorter a web ad, the more viewers retain information contained within it.  Some web ads run only 10 seconds, and are sold to clients with this in mind, and at a budget price to boot.

For web-ad haters, the worst of all worlds would be a Hulu that retains its limited commercial interruptions -and- charges a subscription fee.  For many, that would be the equivalent of “basic cable on the web.”  Many will drop Hulu “like a rock” should this happen.

A day after the hue and cry was raised by the Broadcasting & Cable article, skeptics said it was unlikely Hulu would entirely abandon free programming.  It may provide a premium pay service offering extra episodes, or perhaps remove commercials entirely for premium customers, a proposition at least some were willing to entertain, depending on the price.

“I would consider paying a very small (less than $3.00) monthly fee to watch Hulu if, and only if, they removed the commercials. Otherwise there are other alternatives,” one commenter wrote on CNN’s blog.

Newspapers are also feeling the bite, even more than online video sites.  The printed “dead tree format” of the daily paper has become anathema to the under-30 crowd, despite valiant efforts by some publishers to appeal to younger audiences with feature stories and even free weeklies that mix light news with entertainment features.  The only answer has been to take the paper online.  For years, concepts like online subscriptions, micropayments (paying a few cents per story), free access only for print subscribers, and charging per story for access to week-old and beyond news archives have been considered, tried, abandoned or ignored when web visitors flee or simply skip the pay content.  The daily local newspaper is not what it used to be, and when the “pay here” box pops up, many web visitors simply take their news reading business elsewhere, thanks to the near-universal access to wire service reports and competing media covering stories of interest for free.

Newsday, the Long Island newspaper owned by Cablevision, abandoned its “freeloading” audience yesterday with a new Great Wall of Pay charging a steep $5 a week for those who do not subscribe to either the newspaper or have a broadband account with Cablevision.

The newspaper’s Wednesday edition teased non-subscribers with stories that suddenly drifted off into ellipsis… with an invitation to open your wallet to read more.

Sports media blogger Neil Best, who writes for Newsday, seemed resigned to the fact he was losing a lot of his audience in his farewell-to-free column published Tuesday:

The inevitable decline in my national visibility (and page views) mostly is an ego thing. More to the point, Long Island advertisers understandably have little interest in readers in Dubuque.

For those readers who won’t be coming along for the ride – especially those outside Cablevision territory who in many ways are innocent bystanders in all this – thank you for your readership, input and support.

You will be missed.

Best realistically assessed the number of web visitors he’d see post-Wall, particularly from outside of the immediate area.  Best and his readership seemed to collectively sense this project was destined to fail, another bad experiment from aloof and out of touch management to the realities of the web world.  One commenter lamented the real victim would probably be Best himself:

What’s most frustrating of all, though, is that everyone knows this venture will fail. It’s never succeeded before and there’s truly no reason it will now. Pay for blogs? Are you kidding me? Even the pay-for-columns model is a one-in-a-million risk. But blogs? We all know this is not just you and I missing Neil, it’s Newsday destroying a commodity that could have helped it promote its other products. So Newsday loses– this has no chance– none– to succeed. And Neil loses –immediately– the majority of his followers. He will suffer the most immediate and quantifiable of harms. His readers, his fans, the people who support him and have helped him grow. Now his bosses shut us out and help him dwindle. And we lose. We lose our beloved journalists– we lose their thoughts and every day muses– things that dont even belong in a newspaper.

The use of the word “commodity” would no doubt cause much consternation among Newsday’s management and Wall Street types.  It is the “commoditization” of the news business, with endless debt-laden mergers and acquisitions and the cost-cutting that followed, that trained readers to realize that with the decrease in unique, local content in many newspapers, and their increasing reliance on partnerships with broadcast news operations, wire services, and syndicated feature content, why pay when you can get nearly the same (if not the same) content for free on the next website in the Google results list?

The big believers in the Great Wall of Pay fear what happened to newspapers could happen to their cable, broadcasting, or video rental operations.  The commoditization “crisis” is largely self-made: cable and phone companies with their “dumb pipes,” the cost-cutting local broadcaster that dispensed with nightly news, or the alienating video rental chain store made obsolete by Netflix or the Redbox ‘Tardis’ positioned in the entrance to your local supermarket.  When companies extract maximum revenue through minimal devotion to quality, uniqueness, and integrity, and either overcharge or irritate customers, why be surprised when consumers rebel when being asked to pay or pay more?

One of the rare success stories in pay content has come from Consumer Reports, which charges an annual fee for access to its online reviews.  Consumers notice the dramatic difference between a publication that accepts no advertising and keeps its integrity because of it, and other news sites contemplating pay schemes that are so cluttered with online advertising, autoplaying loud video ads, pop-ups and unders, they can barely find the content they are now being asked to pay for.

Consumers can and will pay for quality content, but many will not be forced into doing so with a corporate blockade on content from “walled gardens” and other “pay me to watch this, right after this ad” schemes.  Online, there is more than one way around the Great Wall of Pay.

Mountain Cablevision becomes part of the Shaw Cable family with the approval of the CRTC

The Canadian Radio-television and Telecommunications Commission has given approval to Shaw Communications for its acquisition of Hamilton-based Mountain Cablevision, Ltd., a small independent cable operator in southern Ontario.  The $300 million dollar transaction brings 41,000 cable customers, 29,000 Internet subscribers, 30,000 digital phone lines, and 135 Mountain Cablevision employees into the Shaw family, making the Calgary-based cable company Canada’s largest.

“This is a great move for us to come in there and be able to start being around that market. We always said that […] we want to be in Alberta, British Columbia, and Ontario,” Shaw chief executive Jim Shaw said Friday.

“Rogers had passed on the acquisition so we decided to go in there,” Shaw told analysts. “This is a great move for us, being around that market.”

Mountain Cablevision serves a small part of Hamilton and surrounding communities in southern Ontario

Shaw’s entry into Ontario upset Rogers Communications, eastern Canada’s dominant cable provider.  Rogers sued Shaw in an Ontario court, claiming the purchase violated a near-decade long agreement made personally between Ted Rogers and Jim Shaw to stay out of each other’s territories — Shaw stays out of eastern Canada if Rogers moves no further west than Ontario.

Canadian courts aren’t compelled to recognize handshake deals made over dinner, and the court ruled against Rogers.

With the agreement swept away, some analysts predict Rogers will investigate acquisition opportunities in western Canada, probably in the more populated regions.

Shaw claims it will upgrade Mountain Cablevision’s small cable footprint, which serves only a portion of greater Hamilton – Hamilton Mountain and East Hamilton, as well as the communities of Mount Hope, Caledonia, Hagersville, Jarvis, Dunnville/Byng, Cayuga and Binbrook, all in Ontario.  The company promises better broadband, cable, and telephone service after the upgrades are complete.  Shaw also says it will expand the Mountain Cablevision system into several unserved neighborhoods and townships.  That’s an important distinction, because it indicates Shaw has no intention of competing head to head with Rogers or Ontario’s other dominant cable company Cogeco.

The deal comes during challenging times for Shaw, who announced a 6% decline in profits in the fourth quarter, with gains only from new digital cable additions.  More than 110,000 Shaw customers signed up for digital cable in the third quarter, up from 23,000 in the third quarter a year ago.

In other areas, Shaw lost customers — 5,000 canceling broadband, 4,500 dropping Shaw’s direct to home satellite service, and nearly 9,000 disconnecting their Shaw digital phone line.

Shaw’s next product introduction will likely be its new cell phone service.  The company spent $190 million dollars last year acquiring 18 airwave licenses in northern Ontario, Manitoba, Saskatchewan, Alberta, and British Columbia.

Mountain Cablevision's concentrated service area in the city of Hamilton (click to enlarge)

But Shaw is taking a “very cautious approach” to wireless mobile services, according to the company.  It has refused to set a timetable when service would begin.  Shaw faces a growing number of wireless competitors introducing service in Canada late this year and into early 2010.  DAVE Wireless, Wind Mobile, and Public Mobile are all poised to launch in major Canadian cities, expecting to put competitive pressure on pricing and bring about lower priced, more generous service plans.

Shaw claims it’s not concerned, telling The Financial Post, “If they’re in there, we don’t really care. We already have a relationship with customers and they have zero,” Shaw said. “We have 3.4 million customers we have a relationship every month with.”

Telecommunications companies are increasingly concerned with offering customers “bundles” of telecommunications services from video, broadband, wired phone lines, and now increasingly wireless data and mobile phone services.  Customers purchasing bundles tend to remain loyal to the companies offering them.