(Courtesy: Lab squad)

The broadband stimulus package advocated by the Obama Administration may become a feeding frenzy for waste, fraud, and abuse.  That’s the attitude of several public interest groups concerned about how public tax dollars are being used to study, map, construct, and deploy broadband networks to reach the underserved, and those without any broadband service at all.

Now the story has drawn the attention of the Associated Press’ technology reporter Peter Svensson, who along with Joelle Tessler, have written a piece exploring just where American taxpayer dollars are going on broadband mapping.

The $787 billion stimulus bill championed by the Obama administration set aside up to $350 million to create a national broadband map that could guide policies aimed at expanding high-speed Internet access. That $350 million tag struck some people in the telecommunications industry as excessive, compared with existing, smaller efforts. The map won’t even be done in time to help decide where to spend much of the $7.2 billion in stimulus money earmarked for broadband programs.

Svensson and Tessler talked to a variety of industry experts, as well as companies that often find themselves at a major disadvantage when trying to bid for mapping funds and discover the lowest bid for the best work isn’t always the determining factor.

The consensus is that the government is at risk for overspending up to 90% of the money set aside for mapping, and has vastly overestimated the actual costs:

Rory Altman, director at telecommunications consulting firm Altman Vilandrie & Co., which has helped clients map broadband availability in some areas, said $350 million was a “ridiculous” amount of money to spend on a national broadband map.

Even $100 million might be high. The firm could create a national broadband map for $3.5 million, and “would gladly do it for $35 million,” Altman said.

More concerning is the fact that some of the interests that have successfully won mapping contracts are infested with self-interested telecommunications company executives who have a vested interest in steering the findings of the mapping projects, as well as defending common industry practices of withholding data for “customer privacy” and “competitive” reasons.  Allowing the telecommunications industry to provide the raw data (considerably redacted), a practice defended by telecommunications executives sitting on the boards of some mapping firms winning bids, is a recipe for the production of industry-favorable maps.

Public Knowledge, a public interest group, has been particularly critical of broadband mapping strategies, essential to measuring the current availability and very definition of what is broadband service in the United States.  Art Brodsky, communications director of the group, has reported extensively on the issue for months.

Art Brodsky, for Public Knowledge:

It would be a shame if the stimulus mapping/grant program and the broadband plan were considered in isolation, because they are, together, pieces of the same puzzle. Certainly the telephone and cable industries are considering them together, and using the leverage on one to influence the other to reach the inevitable conclusion that no new broadband policies are needed and that everything will be just fine if we leave the companies in control. Ignore our slumping world rankings for broadband. Ignore the lack of choice. Let’s try to connect the dots into a long silver thread.

The first dot is broadband mapping. If the maps show there is no problem with broadband coverage, then there should be no need for legislation, regulation or any other policies that would immediately be branded a “solution in search of a problem” by the telecom industries. Connected Nation plays a key role here, because their maps will be constructed in at least a dozen states, perhaps more, under the broadband stimulus plan.

Unfortunately, the way the stimulus mapping program is going, that piece is falling nicely into place. By agreeing to the telephone and cable industry’s request – some might say caving into the industry’s demand – that broadband speeds not be reported, the National Telecommunications and Information Administration (NTIA) opened the door for all kinds of mischief. In public comments, NTIA officials said such an agreement was necessary to gain the cooperation of the telephone and cable companies. That’s one way to look at it. Another way is that by requiring the carriers to report broadband speeds – even if their reports were inaccurate – at least there would be something on the record that could be corrected, criticized or cited. Without speed data, the value of the program diminishes. Even under the old rules, all the carriers had to show was “advertised” speeds, so the carriers started advertising. The speeds agreed to by NTIA as “broadband” in the first place are relatively slow anyway.

Mark Seifert, oversees the broadband grant and mapping programs at the NTIA defends the spending proposals by the federal government.  Seifert told the AP that since much of the data will come from the providers’ themselves, NTIA plans to “independently verify” the veracity of the data it receives, which he claims could include door-to-door verification with individual residents and other unspecified verification procedures.

Meanwhile, critics of some of the industry-connected broadband mapping efforts say the groundwork may be laid for future challenges by the nation’s largest broadband providers (large telephone and cable companies) who almost uniformly avoided participating in the first round of stimulus grant applications.

Michael Tattersall, founder of the mapping company Stratsoft is concerned.  He told Public Knowledge incomplete or false map data could be used by providers to have other groups’ stimulus applications thrown out.

If the maps show there is more coverage in rural areas than there actually is, then Tattersall said, the “smaller, in-state broadband providers that are applying for funds that will be directly affected by the quality and integrity of state-commissioned broadband maps.” There could be challenges by the larger carriers, which didn’t apply for stimulus funds, to broadband grants from smaller rural, municipal or neighborhood based on already existing Connected Nation maps.

Disqualified applications based on discredited map data could throw the entire stimulus program into doubt, allowing telecommunications lobbyists for the big providers to argue the stimulus program is a failure and needs to be started over, with recommendations those large providers get the bulk of the money.

Indeed, several providers are already concerned with the prospect that stimulus funds could be used to bring competition to their areas — start-ups and projects funded by government money that could eventually directly compete against their existing offerings, designated as too slow or backwards for 21st century broadband.

With providers already trying to downplay expectations for what defines fast, robust broadband, it leaves incumbent providers keeping their communities in a perpetual slow lane in a much better position not to stick out like a sore thumb.  Brodsky again:

In addition to using the maps, telecom carriers are also trying to freeze the idea of advancing broadband into what exists today.

AT&T led the charge on this, in a remarkable filing that would, in essence, freeze broadband where it is now because that’s what the stimulus law directs the FCC to do when it formulates a broadband plan. AT&T said, “In other words, the definition of broadband must comprise services that can practicably be deployed in unserved and underserved areas—and must comprise services that today’s unserved Americans can and will actually adopt.”

“Comcast isn’t looking to make a $50 billion purchase.”

Stephen Burke, Comcast Chief Operating Officer

Now that Comcast has been freed from that pesky provision of the 1992 Cable Act, authorizing the Federal Communications Commission to set a maximum size for large corporate cable operators, the nation’s largest cable operator is now considering breaking out the checkbook and going on a shopping spree.  That is likely to spark a merger and acquisition frenzy among several players in the industry which could dramatically reduce America’s choices for telecommunications services.

Bloomberg News this evening quotes Stephen Burke, Comcast’s Chief Operating Officer, that it will consider buying other cable operators at a “good price.”

“If there is a way to acquire cable systems for what we consider a good price, ones that are well managed, we would certainly look at whatever is out three,” Burke, 51, said today at a Bank of America Corp. conference in Marina del Rey, California. Still, the company “isn’t waking up every morning” evaluating how it can become bigger, he said.

The Wall Street Journal calls the decision by the U.S. Court of Appeals in Washington, freeing Comcast from its limits, the start of “the coming cable consolidation.”

Martin Peers, writing for the Journal, said that when the dust settles, phone companies might own satellite TV providers and cable companies might end up consolidating into one or two super-sized providers blanketing the entire country with service.

Consumers would be left with a handful of providers for all of their communications needs, from telephone to broadband to television, if the courts open the door with more decisions favorable to the industry and antitrust reviews aren’t aggressively undertaken.

Starting with Comcast, Burke thinks Comcast’s first priority might be to buy up more programmers.  Comcast already has ownership interests in several cable networks, and Burke feels “content channels are good businesses, and we wouldn’t be doing out job if we didn’t try to figure out a way to get bigger in those businesses.”

With Comcast and Cablevision joining forces to sue their way out of the cable network exclusivity ban, owning and controlling those networks, and what competitors get access to their programming, could be an important asset in an ever-consolidating marketplace.  Imagine if U-verse or FiOS was denied access to ESPN, The Weather Channel, CNN, and other popular cable channels.  Would subscribers be compelled to switch providers if they could no longer get the channels they want to watch?

The Journal ponders the coming consolidation frenzy:

Comcast and other cable companies will probably need to consider more consolidation — if not now, in the next couple of years. They are still losing market share to satellite and phone rivals. Comcast lost nearly 700,000 basic subscribers in the year to June. Time Warner Cable has fallen to No. 4 among TV providers, behind satellite firms DirecTV Group and Dish Network.

Cable operators are more than offsetting video losses by selling phone and Internet-access. Eventually, though, those opportunities will peter out. And phone companies’ competitive threat in video could be enhanced by a combination with satellite TV.

The newspaper speculates about this kind of marketplace in the near future:

Today's pay television marketplace

AT&T DirecTV: The Journal ponders an AT&T buyout of DirecTV resulting in a reduction in AT&T’s investment in U-verse, pushing consumers to its newly-acquired satellite service and redirecting investment into the overburdened AT&T mobile phone network.

VerizonDISH: A Verizon buyout of DISH would allow the phone company to push more rural customers to DISH satellite service, and reduce the expense of wiring all but the nation’s largest cities with fiber optics.

Comcast (formerly Comcast & Time Warner Cable, if not others): A supersized Comcast absorbs Time Warner Cable and becomes an even more dominant cable operator, leveraging its investment in Clearwire to offer a  wireless data option to stay competitive with the mobile phone companies like AT&T and Verizon Wireless.

That would leave most Americans with just three choices for telecommunications services capable of bundling multiple products together.  Wouldn’t such a merger-mania trigger antitrust implications and government review?

The Journal doesn’t think so:

Would such a deal pass antitrust scrutiny, even absent the ownership cap? There is a good chance, say several antitrust lawyers. A major focus of antitrust law is whether a merger reduces competition in a way that could raise prices or otherwise hurt consumers. As cable operators generally don’t compete with one another, merging wouldn’t cut competition.

But what kind of benefits would be found for consumers?  If one resides in a city too small to be judged worthy of fiber optic deployment, consumers could be told to get the satellite television service and live with the copper wiring the phone companies provide today.

Cable operators would be in a fine position to compete, as they traditionally have, against satellite television because of the technical limitations of satellite service, ranging from consumer objections to having a dish on their home, to a limit on the number of sets that can be wired, to the inability to get a clear view of the satellite because of nearby trees or other obstructions.

Who pays for the debt likely incurred from a bidding war during a merger frenzy?  Guess.

Phillip “Doesn’t Derive a Paycheck From Writing This” Dampier

I see it took all of five minutes for George Ou and his friends at Digital Society to be swayed by the tunnel vision myopia of last week’s latest effort to justify Internet Overcharging schemes.

Until recently, I’ve always rationalized my distain for smaller usage caps by ignoring the fact that I’m being subsidized by the majority of broadband consumers.  However, a new study from Robert Shapiro and Kevin Hassett at Georgetown University is forcing me to reexamine my personal bias against usage caps.

There’s a shock, especially after telling your readers caps “were needed.”

As I predicted, our astroturfing and industry friends would have a field day over this narrowly focused report that demands readers consider their data, their defined problem, and their single proposed solution.  The real world is, of course, slightly more complicated.

I used to debate some of my economist friends on why I thought metered pricing or more restrictive usage caps were a bad idea, but I couldn’t honestly say that my opinion was entirely objective.  My dislike for usage caps stems from the fact that I am a heavy broadband user and an uncapped broadband service is very beneficial to me since everyone else pays a little more so that I can pay a lot less on my broadband service.  But beyond self interest, I can’t make a good argument why the majority of broadband users who don’t need to transfer a lot of data should subsidize my Internet requirements.

Your opinion is still not entirely objective, George.  Your employer has industry connections.

Our readers, many of whom are hardly the usage piggies the industry would define anyone who opposes these overcharging schemes, all agree whether it’s 5GB or 150GB per month, they do not want to watch an Internet “gas gauge” or lose their option of flat rate broadband pricing that has worked successfully for this industry for more than a decade.  George and his friends assume this is an “us vs. them” argument — big broadband users want little broadband users to subsidize their service.

That’s assuming facts not in evidence.

What is in evidence are studies and surveys which show that consumers overwhelmingly do not want meters, caps, usage tiers, or other such restrictions on their service.  They recognize that a provider who claims to want to “fairly charge” people for service always means “everyone pays more, some much more than others.”  To set the table for this “fairness,” they’ve hired Washington PR firms to pretend to advocate for consumers and hide their industry connections.  Nothing suspicious about that, right?

Although George can’t make a good argument opposing usage caps, that doesn’t mean there aren’t any.  Among the many reasons to oppose caps:

• Innovation: Jobs and economic growth come from the online economy.  New services created today by U.S. companies, popular here and abroad, would be stifled from punitive usage caps and consumption billing.  Even the broadband industry, now in a clamor to provide their own online video services, sees value from the high bandwidth applications that would have never existed in a capped broadband universe, and they are the ones complaining the loudest about congested networks.
• Consumer Wishes: Consumers overwhelmingly enjoy their flat rate broadband service, and are willing to pay today’s pricing to keep it.  The loyalty for broadband is much greater than for providers’ other product lines – television and telephone.  That says something important — don’t ruin a good thing.
• The Fantasy of Savings: As already happened across several Time Warner Cable communities subjected to “experimentation,” the original proposals for lower consumption tier pricing offered zero savings to consumers who could already acquire flat rate “lite” service for the same or even lower prices.  Even when tiers and usage allowances were adjusted after being called out on this point, consumer outrage continued once consumers realized they’d pay three times more for the same broadband service they had before the experiment, with absolutely no improvement in service.  Comcast and other smaller providers already have usage caps and limits.  Pricing did not decline.  Many combine a usage allowance -and- lower speed for “economy” tiers, negating the argument that lower pricing would be achieved with fast speeds -and- a usage allowance.
• Justifying Caps Based on Flawed Analysis: The report’s authors only assume customer adoption at standard service pricing, completely ignoring the already-available “economy” tier services now available at slower speeds.
• Speed Based Tiers vs. Consumption Based Tiers: Consumers advocate for speed-based tiering, already familiar to them and widely accepted.  New premium speed tiers of service can and do already generate significant revenue for those who offer them, providing the resources for network expansion providers claim they need.
• Current Profits & Self Interested Motives: Broadband continues to be a massively profitable business for providers, earning billions in profits every year.  Now, even as some of those providers reduce investments in their own networks, they claim a need to throw away the existing flat rate business model.  Instead, they want paltry usage allowances and overlimit penalties that would reduce demand on their networks.  That conveniently also reduces online video traffic, of particular concern to cable television companies.
• Competition & Pricing: A monopoly or duopoly exists for most Americans, limiting competition and the opportunity for price savings.  Assuming that providers would reduce pricing for capped service has not been the result in Canada, where this kind of business model already exists.  Indeed, prices increased for broadband, usage allowances have actually dropped among some major providers like Bell, and speed throttles have been introduced both in the retail and wholesale markets.

More recently, building our colocation server for Digital Society has made me realize that usage caps not only has the potential to lower prices, but it can also facilitate higher bandwidth performance.  Case in point, Digital Society pays $50 per month for colocation service with a 100 Mbps Internet circuit, and at least $20 of that is for rack space and electricity.  How is it possible that we can get 100 Mbps of bandwidth for ~$30 when 100 Mbps of dedicated Internet bandwidth in colocation facilities normally costs $1000?  The answer lies in usage caps, which cap us to 1000 GBs of file transfer per month which means we can only average 3 Mbps.

One thousand gigabytes for $30 a month.  If providers were providing that kind of allowance, many consumers would consider this a non-issue.  But of course they are not.  Frontier Communications charges more than that for DSL service with a 5GB per month allowance in their Acceptable Use Policy (not currently enforced.)  Time Warner Cable advocated 40GB per month for $40-50 a month.  Comcast charges around $40-45 a month for up to 250GB.  Not one of these providers lowered their prices in return for this cap.  They simply sought to limit customer usage, with overlimit fees and penalties to be determined later.

Of course, web hosting is also an intensively competitive business.  There are hundreds of choices for web hosting.  There are also different levels of service, from shared web hosting to dedicated servers.  That is where the disparity of pricing is most evident, not in the “usage cap” (which is routinely more of a footnote and designed to keep Bit Torrent and high bandwidth file transfer services off their network). There is an enormous difference in pricing between a shared server environment with a 1000GB usage cap and a dedicated rack mount server located in a local facility with 24 hour security, monitoring, and redundancy/backup services, even with the same usage cap.

So the irony of a regulation intended to “protect” the little guy from “unfair usage caps” would actually force our small organization onto the permanent slow lane.

Actually, the Massa bill has no impact on web hosting usage caps whatsoever.  George’s provider friends would be his biggest risk — the ones that would “sell” insurance to his organization is he wanted assurance that his traffic would not be throttled by consumer ISPs.  I’d be happy to recommend other hosting providers for George if he felt trapped on a “slow lane.”  That’s because there is actual competition in web hosting providers.  If the one or two broadband providers serving most Americans had their way, it would be consumers stuck on a permanent slow lane with throttled service, not organizations like his.

So, who is in agreement with George on this question?  None of his readers, as his latest article carries no reader responses.  But fellow industry-connected astroturfers and providers themselves share their love:

• “This is the story that ISP’s have failed to tell effectively — that consumption-based billing may, in fact, be fairer for consumers.” — Michael Willner, CEO Insight Communications
• “Ars Technica reports on an interesting theory being floated by former Clinton economic advisor Robert J. Shapiro and Federal Reserve economist Kevin A. Hassett” — Brad, astroturfer Internet Innovation Alliance
• “The only way … is to introduce some form of equitable pay-as-you-use pricing.  And I could not agree more.” — Ulf Wolf, Digital Communities Blogs (sponsored by AT&T, Qwest, etc.)

PC Magazine reported even Robert Shapiro, one of the report’s authors, is not advocating for usage caps:

“We’re not talking about a bandwidth cap,” Shapiro said during a call with reporters. “We were looking simply at the different pricing models and their impact on the projections of broadband uptake based on these income sensitivities.”

The report does not specify how ISPs should implement pricing, Shapiro said. “The most important thing to me as an economist is the flexibility – that is, Internet Providers can better determine than I can the particular model that works best.”

That’s not the message astroturfers are taking forward, as they try and sell this as “pro-consumer.”

Competition does occasionally bring lower prices, but only to those who threaten to abandon their current provider to take their business elsewhere.

Residents in several suburbs of Syracuse, New York have learned that trick as Verizon nears the launch of FiOS service in their area, and the result is significant savings of more than $240 a year, just for the asking.

“Where we find the competition really paying off is for those consumers who might already be with Time Warner,” Doug Williams, a Cambridge-based analyst with Forrester Research told the Syracuse Post-Standard.  “People whose promotional deals are ending are often able to get a sweet deal with nothing more than a phone call and a mention of the word “FiOS.”

It worked for Doug himself up in Boston, where his mother is served by Comcast:

Doug Williams had a fool-proof plan for his mother-in-law to get at least $20 knocked off her cable bill: Call the cable company and tell them Verizon FiOS television was in her neighborhood.

It worked without a hitch. The operator looked up her address, then gave her a discount without any hesitation. Williams’ family lives in the Boston area, where Verizon’s fiber optic television service is the first real competition to the area’s entrenched cable provider, Comcast.

The Syracuse suburbs of Clay, Cicero, East Syracuse, North Syracuse and Fleming already have, or will soon have access to FiOS.  The towns of DeWitt and Salina last week approved franchise agreements with Verizon to provide the service, and Camillus approved the franchise agreement on August 25.

The addition of the Camillus television franchises brings to 161 the total number of New York municipalities that have authorized Verizon to provide FiOS TV service.

The company is in the process of building and installing the necessary video equipment in local central offices in the central New York region, and anticipates that FiOS TV service will be turned on for new customers in
municipalities there in the fall.

[flv width=”296″ height=”222″]http://www.phillipdampier.com/video/WSYR Syracuse FiOS Coming to CNY.flv[/flv]

WSYR-TV Syracuse covers the announcement by Clay officials of Verizon’s first franchise agreement in the area. (3/16/2009)

Time Warner Cable has been preparing for Verizon for at least a year, starting with complaints about how the franchise agreement was handled in Clay, where Time Warner officials claimed they were given insufficient notice to review the franchise proposal.  That claim was brushed aside by the New York Public Service Commission, which has a history of rubber stamping franchise proposals anyway.  Time Warner has had little to say about other franchise agreement negotiations since.

The cable company has also been wringing its hands about fears Verizon’s construction crews will be digging up their customers’ lawns, making a mess, and accidentally interrupting service for their customers.  Time Warner’s concerns may have come in part from a WSYR-TV report back in June highlighting the frustrations of Clay residents who have been inconvenienced by Verizon’s slow work in their area.  But most consumers welcome the competition.

[flv width=”296″ height=”222″]http://www.phillipdampier.com/video/WSYR Syracuse Preparing for FiOS.flv[/flv]

WSYR-TV Syracuse highlights the plight of Clay residents running out of patience as Verizon wires their community for FiOS. (6/4/09)

“People are excited. It looks like there will be an opportunity for choice,” Cicero town supervisor Chet Dudzinski told the newspaper.

Verizon FiOS installation crews start to wear out welcome in Clay, N.Y.

Time Warner claims it’s not worried by the competition, noting it successfully competes in many other FiOS-wired communities.  But Time Warner’s marketing efforts have changed with the looming threat of competition.  First, the company brought a “price protection agreement” to the area, trying to lock in existing customers to a lengthy contract before the competition arrived, limiting their chances to switch providers.  Then the company embarked on a major HD channel expansion, quickly bringing Syracuse residents more than 100 HD channels.  Time Warner promoted their heavy emphasis on local sports programming, touting Syracuse University football and basketball games, and local high school sports coverage.

Verizon shot back they will feature more than 115 HD channels, and 70% of their 15,000 videos on demand are available for free.  Verizon also will carry many Syracuse sports events, and will also bring NFL Network and ESPN 360 to the area, services Time Warner has refused to carry.

Consumers enjoy the competitive choice, and with the possibility walking their cable and broadband service to the “other guy” across town, will be able to leverage some additional savings off their service.

For Syracuse city residents, the wait will be somewhat longer.  City officials are wrangling over the kinds of public access programming and service policies Verizon will be required to provide before they will negotiate a franchise agreement with them.  The foot dragging may last a year or longer, as the city will vote Monday on whether to spend $30,000 of taxpayers’ money just to ascertain what the city needs from Verizon when negotiations begin.  City residents who want competition now may want to inform their elected officials spending $30,000 to “study” the issue is just a tad excessive, especially considering The Google provides ample information, for free, about what other communities across the northeast have accomplished as part of their negotiations with the dominant phone company in the region.

Verizon’s complete list of franchises in New York state is below the jump.

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AT&T unveiled its U-verse service Monday in Louisville, in a ribbon-cutting ceremony with claims that residents “finally have a choice” for cable service in the area.

AT&T will compete head-on with incumbent cable operator Insight Communications, which has been the only cable provider in Jefferson County for at least a decade.

AT&T promises customers packages starting at $49 a month, as well as digital video recorder set top boxes that can record up to four shows at the same time, and display the recorded programming on any AT&T-wired television in the house.  AT&T also promises residents significant savings when they choose AT&T for video, telephone, and broadband service, and will even include a “quad-play” bundle including AT&T Wireless mobile phone service, resulting in one bill for all AT&T services.

AT&T’s U-verse system is an advanced form of DSL, using a hybrid network of fiber optic cables wired into neighborhoods that interface with ordinary copper telephone wiring that already exists in most Louisville homes.  The technology reduces the costs of wiring every home with fiber optics, but can still offer advanced services “beyond what cable can offer,” according to AT&T.

Consumers across Louisville welcomed the competition.

Tabitha Rhodes told the Louisville Courier-Journal the lack of competition was bothersome.  “It is like there is only one shoe store in town,” she said. “I want 20 shoe stores.”

Rhodes’ husband, Tate, said he hopes AT&T’s competition will force Insight to become a more reliable cable company. Rhodes said their cable service has experienced dropped channels, poor quality pictures, and even pesky neighborhood squirrels that gnawed through the cable line serving his street.

The U-verse service also ties in with an Apple iPhone application, which when run on AT&T’s wireless network allows customers to program their television recording remotely.

Insight customer Rhonda Petr, 44, said she now pays $15 per month for digital video recorder service for each of two television sets in her home, in addition to a bundled monthly subscription for premium cable, phone and Internet service.

Petr said she liked the idea of DVR service without “nickel and dime” charges for each TV set.

Insight Communications dismissed AT&T’s U-verse as little more than smoke and mirrors, according to company spokesman Jason Keller.

“Insight has been Louisville’s technology leader for more than a decade,” company spokesman Jason Keller said Friday.

“One more competitor… won’t change that,” Keller said.

Insight’s system in Louisville is the largest in the company’s nationwide portfolio.  Company officials point to investments Insight has made in the Louisville area to introduce additional services, including “a broadband service that is faster than what AT&T is offering.”

Insight offers 20Mbps service for $17 less than what AT&T charges for 18Mbps, according to one reader.

Insight claims that AT&T is relying on the same old wiring that has been around “since the days of Alexander Graham Bell” to deliver service, and Insight has a “technological advantage in broadband width.”

The question on everyone’s mind is, how much will consumers save?

As the Courier-Journal notes, both are primarily competing on services, not on price:

Both Insight and AT&T offer bundled packages combining telephone, television and Internet starting at about $100 per month.The two compete chiefly on features. For instance, Insight offers faster Internet access, while AT&T is promoting U-Verse’s features that link television, home phone service, wireless phone service, and Internet together.

Rob Enderle, a technology consultant and president of the Enderle Group based in San Jose, Calif., told the newspaper the big savings are found in new customer promotional offers, which he calls “low teaser rates.”  In many Verizon FiOS TV areas that compete with cable, promotional new customer offers also often include long-term contracts lasting 12-24 months.

Incumbent cable companies often launch pre-emptive marketing blitzes to sell their customers on “price protection agreements” just before a competitor comes to town.

“They will try to lock up as many customers as they can,” Enderle told the newspaper.

In Louisville, Insight may have managed to accomplish that with their one-year “price protection agreement” they have managed to sell many of their customers.  The marketing for such agreements promises no price increases for the term of the contract, something that might sound attractive to price-sensitive cable subscribers facing relentless annual rate hikes.

AT&T has no such contract requirements in Louisville, although the company has used them in other markets to lock in customers taking advantage of promotional offers.

Once those promotional offers expire, the two companies will end up charging roughly the same prices for the various packages they offer.  Customers can choose which provider gives them the channels and services they want, as well as which offers better quality service.  The elusive savings, once the promotions expire, are still hard to find.

One Louisville reader called both companies to compare:

Just did a comparison on the different packages AT&T would offer: slower Internet, any additional DVR boxes would be $15/mo (same as Insight), HD channels would be $10/mo (free with Insight), and they would offer no more channels than Insight and both offer garbage as far as programs go. Yeah, I think Insight needs some competition in order to provide its customers with better pricing and better quality, but slower Internet and having to pay to access HD channels is BS. AT&T better come up with something better.

Multiple video news reports about AT&T’s U-verse launch in Louisville can be found below the jump.  Many also include product introductions and short demos.

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