After nearly a half-million Canadians expressed outrage about Bell’s Internet Overcharging practices, the company is responding.  This week, Bell sent a letter to their wholesale customers announcing it plans to end the practice of speed throttling peer-to-peer file traffic (at least for them):

Effective November 2011, new links implemented by Bell to augment our DSL network may not be subject to Technical Internet Traffic Management Practices (ITMP).  ITMPs were introduced in March, 2008 to address congestion on the network due to the increased use of Peer-to-Peer file sharing applications during peak periods. While congestion still exists, the impact of Peer-to-Peer file sharing applications on congestion has reduced. Furthermore, as we continue to groom and build out our network, customers may be migrated to network facilities where Technical Internet Traffic Management Practices (ITMPs) will not be applied.

Peer-to-peer traffic, once all the rage for swapping music, movies, and software (legally or otherwise), has been declining as a percentage of Internet traffic and legal online entertainment services (Netflix, et al.) have become available.  Copyright crackdowns and usage caps manage to further restrict customers from leaving P2P software running continuously as it can rapidly eat into usage allowances.

With increased capacity of Bell’s networks and decreased interest in file swapping software among customers, the practice of throttling such traffic (along with the unintended collateral damage to online gaming), means such network management practices have outlived their usefulness.

Providers these days are far more likely to blame online video for congested networks.  But once providers attach a speed throttle to an application, it can be difficult to remove.  Even as Bell announced it would no longer throttle their wholesale clients, retail customers will still suffer with reduced speeds during “peak usage times” — 4:30pm-2am local time.

Michael Geist, who covers Canadian broadband issues, wonders if Bell’s throttles are actually in violation of the Canadian Radio-television and Telecommunications Commission’s traffic management guidelines:

While Bell says its congestion has been reduced, its retail throttling practices have remained unchanged, throttling P2P applications from 4:30 pm to 2:00 am.  Given the decline in congestion, a CRTC complaint might ask whether the current throttling policy “results in discrimination or preference as little as reasonably possible” and ask for explanation why its data cap policies “would not reasonably address the need and effectively achieve the same purpose as the ITMP.”  In fact, the same can now be said for many other ISPs who deploy broad based throttling practices (Rogers, Cogeco), which may not be reasonable under the CRTC policy.

Netflix CEO Reed Hastings posted his version of a mea culpa on the company’s blog early this morning pulling the plug on dividing up online video streaming and DVD-by-mail rentals:

It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.

This means no change: one website, one account, one password… in other words, no Qwikster.

While the July price change was necessary, we are now done with price changes.

We’re constantly improving our streaming selection. We’ve recently added hundreds of movies from Paramount, Sony, Universal, Fox, Warner Bros., Lionsgate, MGM and Miramax. Plus, in the last couple of weeks alone, we’ve added over 3,500 TV episodes from ABC, NBC, FOX, CBS, USA, E!, Nickelodeon, Disney Channel, ABC Family, Discovery Channel, TLC, SyFy, A&E, History, and PBS.

We value our members, and we are committed to making Netflix the best place to get movies & TV shows.

Hastings doesn’t come out and directly say his decision to split streaming and DVD rentals was a mistake, but the intended audience for his short blog post is clear — the tens of thousands of customers upset about the company’s recent price and plan changes.  Many have complained Netflix lacks current movie titles available for streaming, and news reports indicate the company is on the verge of losing a key supplier of the current content Netflix does have — Starz.

But Hastings has not pulled back completely from the idea of dividing the streaming and movie rental services Netflix offers.  In a news release read by investors, Hastings said the problem wasn’t that Netflix sought to separate the services, it was that they tried too fast.

“Consumers value the simplicity Netflix has always offered and we respect that,” said Hastings. “There is a difference between moving quickly – which Netflix has done very well for years – and moving too fast, which is what we did in this case.”

While most rural telephone companies are selling customers 1-3Mbps copper-delivered DSL service, Alcatel Lucent has announced the commercial availability of VDSL 2 Vectoring, a new way of delivering up to 100Mbps over the copper wire telephone network most rural North Americans still depend on for telecommunications service.

VDSL2 combines a fiber-copper hybrid network similar to Bell’s Fibe or AT&T’s U-verse, with interference-cancelling technology called “vectoring” to deliver speeds much closer to the 100Mbps theoretical limit of current DSL technology.

“Alcatel-Lucent’s plan to make VDSL2 vectoring commercially available is very timely,” said Rob Gallagher, Principal Analyst, Head of Broadband & TV Research, Informa.  “VDSL2 Vectoring promises to bring speeds of 100Mbps and beyond to advanced copper/fiber hybrid networks and make super fast broadband speeds available to many more people, much faster than many in the industry had thought possible.”

A new way to boost copper speeds even faster.

Different flavors of DSL are currently in use around North America and beyond.  The most basic form, ADSL, also happens to be the most commonplace among phone companies offering basic broadband service.  For customers up to 12,000 feet away from a phone company central office, DSL delivers speeds usually at 1Mbps or faster.  Customers enjoying the fastest speeds must live much closer to the phone company facilities.  The further away you live, the slower your broadband speed.  In rural areas, consumers can live further away than the maximum distance of the central office, which means no DSL service for those subscribers.

A combination of signal loss and interference, called “crosstalk,” from adjacent copper wire pairs are both the enemies of DSL broadband, because they can drastically reduce speeds.

Telephone companies can address this problem by building new satellite central offices located halfway between customers and their primary facilities.  These offices, usually connected by fiber, can successfully reduce the amount of copper wire between the customer and the company, boosting speeds.  Many phone companies also deploy DSL extensions called D-SLAMs, which can be attached to a phone pole or enclosed in a metal box by the roadside.  A fiber cable connects the D-SLAM back to the phone company, while existing copper phone wires go back to individual subscribers.

More modern forms of DSL: ADSL2, ADSL2+, and VDSL, share some of those concepts.  The key is cutting as much copper wire out of the network as possible, replacing it with fiber optic cable which does not suffer signal loss or interference in the same way.

Many European and Pacific broadband networks rely on ADSL2/2+, which can usually deliver reliable speeds in the 20Mbps range.  VDSL networks offer even more bandwidth, and are the basis of U-verse and Fibe, which split up broadband, phone service, and television on the same cable.  When customers demand even faster speeds, phone companies can “bond” several individual DSL connections together to deliver faster speeds.  Some traditional ADSL providers do that today for their customers, especially in areas where low speeds prevail.

An argument the phone company will love.

Alcatel Lucent says VDSL2 with Vectoring is the next best thing to fiber to the home, because it is cheaper to deploy with fewer headaches from local authorities when streets and yards are dug up for fiber cable replacements.  It also meets the growing speed needs of average consumers.  Alcatel Lucent predicts the minimum speed North Americans will need to support the next generation of online video is 50Mbps, more than 10 times the speed phone companies like Verizon, AT&T, Frontier, and CenturyLink provide over their traditional DSL networks, especially in rural and suburban areas.

Vectoring can deliver results for phone companies with aging copper wire infrastructure, more prone to crosstalk and other signal anomalies.  Alcatel Lucent compares vectoring with noise-cancellation headphones.  By sampling the current noise conditions on copper cable networks, vectoring can suppress the impact of the interference, boosting speeds and delivering more reliable results.

With technologies like VDSL2 with Vectoring promising speeds far faster than what rural North Americans currently enjoy, the Federal Communications Commission may want to re-evaluate its national minimum speed standard for broadband — 3-4Mbps — found in its National Broadband Plan.  Alcatel Lucent promises they can do much better.

[flv width=”640″ height=”324″]http://www.phillipdampier.com/video/Alcatel Lucent VDSL2.flv[/flv]

Alcatel Lucent produced this video to promote its new VDSL2 with Vectoring technology.  The video targets cost-conscious phone companies who are being pressured to deliver faster service, but don’t want to spend the money on a fiber to the home network.  (6 minutes)

Get ready for Qwikster

Netflix CEO Reed Hastings apologized this morning on the company’s blog for the perceived lack of “respect and humility in the way we announced the separation of DVD and streaming, and the price changes,” imposed on customers this month.

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD, plus lots of TV series. We want to advertise the breadth of our incredible DVD offering so that as many people as possible know it still exists, and it is a great option for those who want the huge and comprehensive selection on DVD. DVD by mail may not last forever, but we want it to last as long as possible.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We feel we need to focus on rapid improvement as streaming technology and the market evolve, without having to maintain compatibility with our DVD by mail service.

So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to “Qwikster”.

We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/YouTube An explanation and some reflections 9-19-11.flv[/flv]

Netflix CEO Reed Hastings apologizes and explains the company’s new mailed DVD service Qwikster.  (3 minutes)

Hastings promises little will change with Netflix’s DVD-rental business except the name.  But is that enough to erase the perceived price and policy changes customers are complaining about?  Some of our readers say no, and most of the 10,000+ comments on Netflix’s blog as of this afternoon were also very hostile.

“He’s re-arranging the deck chairs and calling them lounge seats, but they are really the same deck chairs,” shares reader Tom Defrancisco in Austin, who shared the story with us.  “The ship is still taking on water, and that will only get worse when the rest of Hollywood gets their piece.”

Defrancisco is referring to ongoing content contract renewals Netflix is pursuing to keep, and expand, its online video streaming.  With the potential forthcoming loss of content from Starz, which could take a significant amount of current movie titles offline, subscribers may not be willing to pay more for less content to stream.

“It’s inevitable Netflix will have to raise streaming prices in the next six months when some of their content deals are renewed, and I am asking myself if it is worth $10-12 a month to stream old documentaries, TV shows, and movies I barely care about when current movies are simply not available online,” Defrancisco adds.

[flv]http://www.phillipdampier.com/video/CNBC Netflix Quixster Equals Quitster 9-19-11.flv[/flv]

CNBC investors and analysts are calling Netflix’s announcement they are splitting up their streaming and DVD rental business a “the third strike” for the company and are telling investors to get out before it’s too late.  “Qwikster=QUITster,” says Michael Pachter, Wedbush Securities, who thinks customers are once again the big losers.  “In the last three months, customers have seen prices rise, the quality of streaming content decline, and they just made the service a lot more complicated.”  (4 minutes)

Several of our readers miss Netflix’s 1-out-DVD/streaming companion plan, which used to offer unlimited streaming and one DVD rental at a time for $9.99 a month.

“I don’t care if they call it Netflix or Qwikster or MasterWatch,” says our reader Kyle. “It’s the same thing at the same high price called something else.  Who are they trying to fool?  I think it’s very telling Mr. Hastings doesn’t even directly own shares in his own company, and has sold off tens of millions in indirect shares he controls.”

The company’s new YouTube channel is also being pelted with negative views of Netflix’s latest business moves.

VoiceOreezn:

You guys just don’t get it. You don’t care what your subscribers want, and now are trying to justify your actions. Your streaming service sucks, and the pickings are very slim. I cancelled my account. It’s not about price, it’s about greed. You started off with a good concept, (but not enough streaming movies). Now, you’re just another greedy corporation. Want people back? Give them MORE, not less. I’d be very afraid of Amazon if I were you.

Netflix stock has lost nearly 50 percent of its value since the company first announced its price increase and plan changes on July 12.  Last week, Netflix admitted it was adding fewer new subscribers than forecast since raising prices nearly 60 percent on combination streaming-DVD plans.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg Cory Johnson Discusses Netflix Subscriptions 9-16-11.flv[/flv]

Bloomberg talks with Cory Johnson about the outlook for Netflix Inc., after the company cut its U.S. subscribers forecast following a price increase.  Netflix has some surprise expenses coming up.   (2 minutes)

Some analysts, including Gabelli & Co analyst Brett Harriss don’t think today’s developments will make much of a difference, telling Reuters Hastings has talked repeatedly about separating the businesses in the past.

But one thing Qwikster will bring that Netflix never had: video game rentals for Wii, Playstation 3 and XBox 360 owners.

MediaMall this week introduced PlayLater, a new software DVR for online video, allowing users to record online streamed content from Hulu, Netflix, or from almost any other website, storing unlimited content on your personal computer for later viewing.

PlayLater is being marketed as a companion to the company’s first product — PlayOn, which streams virtually any video format to television sets and portable devices like smartphones and tablet computers.

MediaMall’s products directly target pay television “cord-cutters.”  By serving up unlimited video content from web video providers — recorded or live — to television sets and portable devices, there may be more than enough to watch without paying for hundreds of cable networks you don’t care about.

PlayLater works easiest with its built-in online program guide, listing programming from the various “channels” the service supports.  Already “built-in” is listings for online content from Hulu, Netflix, Amazon’s Video On Demand, Pandora, YouTube, CNN, Fox News, TNT, and at least a dozen other networks.  Third party “plug-ins” extend the number of “channels” to other video content websites.

Viewers simply find the show or shows they want to record through the guide and press the “record” button to begin the capturing process.  Shows are quietly recorded in the background, and small pop-ups alert you when various recordings are completed.  The resulting files, recorded in a secure DRM Windows Media format, reside on your hard drive for later viewing.  You can record as much as your hard drive can accommodate, and beta testers quickly found they often amassed hundreds of recordings over a month — providing more content that most cable DVRs can handle.

When combined with MediaMall’s PlayOn, PlayLater viewers can take the show on the road, watching their stored shows over a television set in the next room or in another state, remotely streamed over your broadband connection.  You can also watch on Android or iPhone smartphones, or on tablet computers like Apple’s iPad.

MediaMall products come with a 14-day free trial, but after that you have to pay to keep watching.  The company intends to sell the packaged suite of PlayOn and PlayLater for $7.99 a month, or $69.99 per year.

Stop the Cap! has been using PlayOn at our headquarters for a few months now, and we’ve been very impressed with the results.  PlayOn effectively streams virtually any video file format we throw at it over to our Roku box.  It has largely replaced our first generation Apple TV running Boxee software, which has gotten progressively more troublesome with age.  The picture quality over our wireless N network has been excellent, and the accompanying Android app has also worked well streaming shows over Verizon Wireless’ 4G LTE network or Wi-Fi.  With Time Warner Cable’s 30/5Mbps DOCSIS 3 broadband service, PlayOn’s picture quality remains excellent even when streamed to remote televisions.

PlayLater is an interesting concept, but we’re not as impressed with MediaMall’s newest endeavor, for these reasons:

Android Phone PlayOn Media Player

MediaMall has no official partnerships with any of the content producers supported by the product.  After covering other product innovations that offer consumers increased viewing convenience, we’re certain content producers will adopt the same hostile response to PlayLater they have with other recording software that allows viewers to store a digital copy on their home computer.  That response could come in lawsuits or through technical adjustments to try and block access to PlayLater.  The company says the legality of their software DVR should not be an issue, considering consumers can already record shows on cable company DVRs and home video recording units.  The biggest “risk” for MediaMall is the fact it allows users to record and save shows from services like Hulu, even after their “online viewing window” expires (typically after a month).  You could theoretically build a season-long collection of shows with PlayLater, a concept that violates Hulu’s terms and conditions.

While the concept of a DVR for online viewing allows for convenient time-shifting, most of the shows available to record are already available “on-demand.”  It makes little sense to record a show you can launch and watch anytime you want.  MediaMall says their product will appeal most to travelers who find themselves without an Internet connection, either because they are flying, driving, or visiting relatives without Internet access.  In these cases, watching pre-recorded shows may make sense. We think the concept of automatically recording shows from live video streams (or from Slingbox, cable or satellite TV) would be more helpful.  Those of us who would like to keep cable but dispense with overpriced DVR rental fees would thank you.

The PlayLater application currently works only on Windows-based computers.  A Mac version is reportedly in development.

Remote viewing requires the PlayOn companion application, which means leaving two software programs running continuously.

Recordings are DRM-protected and technically rely on a “screen-recording” approach, albeit one that takes place in the background.  Recordings occur in real time, and the video quality suffers slightly from the transcoding between the original media format and the DRM-protected video file eventually produced and saved on your computer.  Tests showed some occasional screen glitches when busy websites suffered from traffic congestion.  We also found very slight audio sync problems from time to time, but were barely noticeable.

You can’t currently move the video files and watch them on another computer or device — they either have to be watched on the original computer, or streamed with PlayOn to another device.

The package may be too expensive for some viewers’ tastes.  Without PlayOn, PlayLater sells for $4.99 a month or $49.99 a year, but that ties your viewing options down.

Overall, PlayLater will probably be most attractive to those who find themselves uncomfortably without their Internet connection and looking for something to watch.  If you install the software on a portable laptop (left on to handle recordings), watching on the computer itself may prove to be the most convenient way to watch.  But we’re not impressed with the restrictive DRM making it impossible to simply transfer recordings between devices without streaming, and the concept of recording on-demand programming that can be watched whenever one wants anyway is not going to convince a number of people to pay $50 a year for the software.  PlayOn has proved far more useful to us than PlayLater probably ever will.  But one benefit we did appreciate with PlayLater — the ability to easily skip the increasing commercial load found on Hulu.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/PlayLater.flv[/flv]

An introduction to PlayLater.  (1 minute)