Argentina's largest cable operator wants to get even larger

The Argentine government recognizes market concentration when it sees it, and has overturned a decision by the Argentine Supreme Court to approve the merger of two giant cable conglomerates in Argentina — Cablevisión and Multichannel, both owned by Grupo Clarín.  Combined, they would control more than half of the nation’s cable television marketplace.  The decision to block the merger, announced by Federal Broadcasting Committee Chairman Gabriel Mariotto  in testimony before the Argentine Congress, came out of concerns that a combined company would abuse its market position.  But Mariotto also expressed concern that the single company would have a stranglehold over soccer coverage, something Argentina’s citizens could never accept.

Mariotto said Argentina’s new media law to combat market concentration would  “do away with the status of dominant market position.”

“With the control these two companies would have over popular television programming like football, which would likely only be available on their cable systems, competitors could never get off the ground,” argued Mariotto.

Gabriel Mariotto, Chairman of the Federal Broadcasting Committee - Argentina

Cablevisión executives immediately condemned the decision by the government of President Cristina Fernandez de Kirchner, and questioned why the transaction, approved by the former government run by President Kirchner’s husband, Nestor, was now suddenly off the table.

“Cablevisión is at 47% market share nationally, far from the telephone companies as they reach over 95%,” according to Cablevisión officials.

Cablevisión’s statement added: “It is very striking that Chairman Mariotto made the decision without ever notifying Cablevisión of the reasons, and never gave the company a chance to respond.  Cablevisión strictly complies with all Argentine laws, in regards to our franchise agreements, programming contracts and corporate governance.”

The company accused Mariotto of playing politics, accusing him of “misleading” lawmakers and the public, and grandstanding through his very visible public announcement.

Ironically, Argentina’s challenge of big cable operator mergers comes just one week after a federal judge in Washington threw out an FCC-mandated maximum limit of 30% market control for America’s cable operators.  A legal challenge, brought by Comcast, resulted in the cap being tossed.  Comcast, the nation’s largest cable operator, is already nearing the former 30% limit and is now free to exceed it with additional mergers and acquisitions.

When Verizon FiOS is moving in on your turf, one way to preserve customers is to hand out free Wi-Fi service for your customers on-the-go.  Cablevision’s Optimum Wi-Fi service aims to do just that, with thousands of Wi-Fi hotspots installed across metropolitan New York, Connecticut and New Jersey.  Many hotspots can be found at shopping centers, on main streets and train platforms, in parks, marinas, and at sports fields.  The company claims Optimum WiFi, running for a year now, is already available at nearly 96% of commuter rail platforms and station parking lots serving Long Island and Westchester County.

Now the company wants to extend access into the trains commuters across the area ride every day and evening.  The New York Metropolitan Transportation Authority has been seeking proposals to provide Wi-Fi to customers.  Cablevision has filed a proposal to provide the service in partnership with the MTA, providing access to Cablevision customers at no charge, and perhaps sharing revenue with the MTA for non-Cablevision customers signing up for temporary access.

“As one of the nation’s leading telecommunications providers and a well-established local company that has already made a significant commitment to deploying Optimum WiFi across the New York metropolitan area, Cablevision is uniquely positioned to quickly and seamlessly deliver a high-quality WiFi network across the LIRR and Metro North railroad system,” said Kevin Curran, Cablevision’s senior vice president of wireless product development. “We have delivered a proposal that would provide significant benefits to all parties, and are excited and encouraged by the prospect of providing Optimum WiFi service to the MTA and its ridership. We look forward to participating in a process that will result in the availability of fast and reliable WiFi service on the railroads.”

[flv width=”438″ height=”360″]http://www.phillipdampier.com/video/Intro to Optimum WiFi.flv[/flv]

<

p style=”text-align: center;”>Cablevision’s Introduction to Optimum WiFi

Opponents of Net Neutrality regularly dismiss concerns about providers blocking, interfering with, or rejecting content as little more than scare-mongering.  Even in the case of competitors, they assure us, no provider would ever consider getting between the customer and the services they choose to use.  Therefore, we don’t need Net Neutrality provisions enacted into law.

Wouldn’t you know, Cablevision-owned Newsday, a newspaper on Long Island, just unknowingly illustrated what happens when a company puts its own competitive and ownership interests ahead of not only the customer, but also newspaper common sense.

As any newspaper reader knows, the local cable and phone companies are not shy about advertising their products.  For years, Verizon has been spending several hundred thousand dollars a year to run full page ads touting its FiOS service on Long Island.  Such regular advertisers are hard to find these days in the ailing newspaper industry.  Last year, Newsday itself was put up for sale, acquired by Cablevision for $650 million dollars.

Now that the local cable company owns Newsday, they’ve decided to reject advertising from Verizon for its FiOS service. Verizon is now Cablevision’s biggest competitor, providing fiber optic service for television, broadband, and telephone service across Long Island.

The New York Times reports that Newsday has basically told Verizon “don’t call us, we’ll call you” when the phone company inquired about advertising space.

Newsday won’t comment about the reasons why Verizon’s ads were rejected, other than issuing a generic statement:

“We do not comment on specific ads except to say that Newsday, like every other media company, including The New York Times, accepts or rejects advertising at its own discretion,” said Deidra Parrish Williams, a Newsday spokeswoman.

Eric Rabe, a senior vice president of Verizon, told the Times that was fine with him, noting that’s money from Verizon’s pockets not going to feed Cablevision’s pervasive presence across Long Island.

The Dolan family, which runs Cablevision, dominates Long Island, running the cable system, a popular news channel – News 12, and is still the primary place consumers go to acquire broadband service.  Now they also own the biggest newspaper on Long Island as well.

This hasn’t been the first instance that Cablevision-owned Newsday has gotten embroiled in ethical controversy.  The Times notes:

In January, the top three editors at Newsday did not report for work for a few days amid reports that they had been fired or had resigned in a dispute with Cablevision over the paper’s coverage of the New York Knicks basketball team, which is also owned by the company. The editors returned to duty, and neither they nor the company offered a full explanation of what had happened.

Newsday also recently rejected advertising from the Tennis Channel, which is upset with Cablevision because it will not carry the channel.  The Tennis Channel was rebuffed by Newsday when it tried to buy ads inviting viewers to find the network on Verizon FiOS or satellite.

Kelly McBride, the ethics group leader at the journalism foundation Poynter Institute, was troubled by Newsday‘s antics.

“Newspapers accept ads at their own discretion, but they generally set the bar pretty high for rejecting advertising, because they don’t want to be seen as denying access to free speech,” she said. She added that appearing to deny an ad for competitive business reasons, rejecting an ad that is not obviously offensive or failing to explain the rejection, could undermine a paper’s credibility.

Could a company that considers it has the discretion to reject competitors’ access to its properties also extend that notion to its broadband service?  If a competing video provider used broadband to deliver access to its channel lineup, would a competitive threat like that be welcome on Cablevision’s Optimum Online?  How about criticisms of the company or its assets?

Newsday has chosen loyalty to its owner over lucrative advertising revenue to help sustain the paper.  That has disturbing implications for the broadband world as well.

Enacting Net Neutrality protections into law guarantees a company never finds itself in a quandary over where loyalties lie.  These protections guarantee that providers do not hamper, block, or interfere with the online services customers want to utilize.  No “competitive reasons” need ever be used as an excuse to block service from consumers.

Cablevision has not engaged in any online bad behavior to date, but why wait around to find out what the future holds?

Less than half of Americans surveyed by PC Magazine report they are very satisfied with the broadband speed delivered by their Internet service provider.

PC Magazine released a comprehensive study this month on speed, provider satisfaction, and consumer opinions about the state of broadband in their community.

The publisher sampled more than 17,000 participants, checking their actual broadband speeds, and questioned them about their overall satisfaction with their online access.

The findings indicate consumers live with what provider they can get.  Even lower rated providers scored “satisfactory,” in part because consumers don’t have many choices with which to compare.

Click to enlarge

In the war between coaxial cable modem vs. copper wire DSL technology-of-the-1990s battle, PC Magazine declared the cable industry the winner, consistently delivering faster speeds more reliably than possible with telephone company DSL.  Overall, the average cable speed was “688 Kbps, while the average DSL lets you surf at just 469 Kbps—cable connections, on average, are 47 percent faster.”  Those speed measurements are based on actual web page and content delivery, not on marketed available speed.

In fact, users rated DSL an unsatisfying service, with only 20% of rural and suburban customers very impressed with DSL.  But for many who have no other choice, 50% think it’s good enough.

Or better than nothing.

One DSL provider did extremely well speed-wise in PC Magazine‘s survey, however.  Frontier Communications was rated as the fastest DSL provider in the nation, averaging “real-world” speeds of 724 Kbps, according to the survey.  But even they could only score a 20% customer satisfaction rating, with 30% dissatisfied.

There was one technology that did much, much worse.  Satellite broadband, the last possible choice for many Americans between dial-up and going without, is provided by companies like HughesNet and WildBlue, and they are unmitigated disasters in consumers’ eyes.

Just 6% of Hughes customers were satisfied, with a whopping 74% dissatisfied.  That’s because satellite broadband is extremely slow, averaging just 145 Kbps, heavily capped, and very expensive.  But for some rural Americans who live too far away from their local phone company central office, and will never see cable television, it’s likely their only choice.  Even mobile broadband signals won’t reach many of these consumers.

So what is the good news from all of this?  There is one technology that, hands-down, beats all of the rest — fiber optics to the home.  The nation’s top-rated ISP in PC Magazine’s survey is Verizon FiOS, with 71% satisfied, and just 6% dissatisfied.  Other fiber optic providers, mostly smaller local, regional, or municipal systems, scored 61% satisfaction.  Just one cable company matched that rating – Cablevision’s Optimum Online.

AT&T, with a combination of DSL and their newer U-verse platform, did considerably worse, with 38% satisfied and 24% dissatisfied.

Clearly, subscriber satisfaction comes highest from fiber optic broadband.

Click to enlarge

In statewide rankings, it all boils down to where you live.  The more populated states and those with large cities often scored higher than those with lots of wide open rural areas.  The larger the community you live in, the better the chance for fast, quality service.  In states like Wyoming or South Dakota, where more than 57% of customers reported dissatisfaction, it’s more about living with what you’re stuck with.

DirecTV wants people out of reach of its satellite service to enjoy unlimited viewing of NFL football games, and today announced it would test providing them over broadband connections.  For $100 more a year than subscribers pay now for the satellite-delivered football game coverage, DirecTV will will offer New York City viewers as many NFL games they can watch over their broadband connection for $349 a year.

DirecTV claims it will sell the service only to those who cannot obtain satellite service from the company, which presumably will limit the broadband content to apartment dwellers and other urban residents who can’t mount a satellite dish.  But in a city like New York, that can easily mean tens of thousands of potential new customers, all watching video content delivered by Cablevision, Time Warner Cable, RCN, or Verizon’s broadband services.  USA Today covered the story this morning:

DirecTV has few customers [in New York City] because skyscrapers block signals coming from satellites orbiting the equator. Also, many landlords and co-op boards don’t allow residents to get a satellite service.

“A lot of the buildings (that can’t get DirecTV) we already have in databases because they’ve got exclusive contracts with cable guys,” says Derek Chang, executive vice president for content strategy and development.

To see the games, broadband customers will download a special video player and punch in a code. Users can install the software on multiple computers, but only one will be able to stream the games at any particular time.

Games with New York’s Jets and Giants, which air on broadcast TV, will be available only when the customer’s computer is outside the New York area.

Cable operators won’t just play defense in the battle for football fans. Comcast will announce today that it will offer the NFL Red Zone Channel to customers of its Sports Entertainment Package. On Sundays, the channel will display football statistics with audio from Sirius XM Radio‘s program “Around the League” — and go live to certain games when the ball is within 20 yards of the goal.

While Cablevision, RCN, and perhaps even Verizon may not express concern about the prospect of carrying NFL games across their networks without “compensation,” Time Warner Cable, which continues to express an interest in Internet Overcharging schemes, may not be so tolerant, especially if the test is successful.  ISPs who support Internet Overcharging routinely use online video growth as a justification for usage caps and consumption pricing.  Will the NFL become part of the Re-education of their customers?

Another question to ponder – would such a service even launch in a broadband marketplace infested with usage caps and limits?