The performance doesn't match the promise.

Time Warner Cable took a fine free iPad app allowing authenticated cable TV customers to watch dozens of national cable networks and turned it into a complete disaster in its latest upgrade, now dubbed TWCable TV App for iPad.

Under no circumstances should you consider running this until the inexcusable bugs are worked out in a future release.

We tried this app at Stop the Cap! HQ last evening and ran into immediate problems — troubles shared by the majority of app users who took the time to bottom rate the app in Apple’s App Store.

1. On several attempts, the application claimed we were running a modified version of the Apple iPad 2’s basic software.  While “jailbreaking” iPad to improve the user experience is important for some, it has never been for us, and we are running an unmodified original firmware version of iPad 2.  But you can’t tell that to Time Warner Cable — the app will refuse to run when this error message displays.
2. When we were able to launch the application, we found the expanded channel lineup, which now includes around 100 national cable networks enticing… if we could manage to watch any of them.  Within two minutes of launching any channel, we found a frozen, unrecoverable picture.  The only way to restore viewing was to exit the channel and start again.  It left things completely unwatchable.  A few dozen channels you can watch or 100 you cannot watch?  This was not an improvement.
3. The “interactive program guide” addition allows users to see program listings for up to 7 days. Customers can also configure the guide to display only their favorite channels, in order to avoid scrolling through the entire channel line-up.  That last feature is essential — it will take you 7 days of eternal tedium to scroll through hundreds of channels looking for something to actually watch.  Cable companies need to abandon the traditional “program guide” and deliver an improved service that answers this basic question: what do YOU want to watch.  If I am in the mood for mysteries, show me what I can see.  If I want one of those cheap “true crime” documentaries, let me select from a seedy list of those shows either on now or upcoming.  It no longer matters what is showing on each channel at any time.  We want program content, not a recitation of upcoming programming on the Yarn Channel.
4. The ability to tune the set-top box from within the new guide in the app. Simply tap on a network logo within the iPad program guide or the “watch on TV” button within the program description to tune directly to the channel.  Playing around with this feature only showed one of my set top boxes — the DVR in the living room.  The one in the bedroom is apparently the bad child you want to forget.  It doesn’t show up at all.  This feature turns your iPad into a glorified remote control.  Its most useful function is to annoy your family as you change channels from another room.  Sick and tired of your significant other watching Design on a Dime when you could be watching Columbo?  Just change the channel on them.  Again and again.
5. The new app theoretically allows you to remotely manage your DVR recordings.  I say ‘theoretically’ because it worked only inconsistently.  I repeatedly found recordings I wanted to “manage” were completely unmanageable with the app, exiting with an error message.

Time Warner’s control freak mentality over jailbroken versions of iPad no doubt deals with their nightmare scenario: you might be an “unauthenticated” cable cord cutter trying to watch their networks for free, or even worse, record them for later viewing.  It took all of a few hours for iPad enthusiasts to outwit the cable company and work around this roadblock.

Perhaps it’s wrong to complain loudly about a free app like this, but with all of the negative reviews and basic functionality problems, one wonders who beta tested this thing?

[flv width=”512″ height=”298″]http://www.phillipdampier.com/video/WSJ Studios disarming cable in battle with Netflix Media Report 6-20-11.flv[/flv]

Wall Street Journal: Top execs of some media behemoths are shifting their public stances toward Netflix Inc. of late. They’re now trying to persuade investors that the video streaming service will expand their business rather than destroy it. (4 minutes)

You are forgiven if you are confused about the love-hate relationship the cable industry has with online video streamers like Netflix — one that the Wall Street Journal likens to manic bipolar episodes.  Weeks after blaming Netflix for getting video programming too cheaply and threatening cable subscriptions, cable industry executives were hugs and kisses about online video at the recent Cable Show in Chicago.

“The reason why there’s interest in these Internet video providers that is that they’re deploying technology that’s making the experience better for consumers,” Time Warner Cable CEO Glenn Britt said in an interview with MarketWatch during the National Cable & Telecommunications Association’s annual Cable Show last week.

“There’s nothing about [cable companies] that stops us from doing that. So I would say … we as an industry just need to pay attention and give consumers what they want. Then there’s no room for these other guys. I don’t mean to say that in a negative way, but it’s true.”

Britt

Of course, this is the same man that has earplugs firmly implanted to help resist another rejection of his Internet pricing schemes that Time Warner Cable customers loathed in 2009.  Britt’s desire to give “consumers what they want” just doesn’t play in this part of town while the cable company is installing software to measure and potentially meter broadband usage.

What is different in the online video spectrum is consumers have choices.  They can adopt Time Warner Cable’s glacially-slow rollout of its TV Everywhere concept, watch Hulu, use Netflix, or simply steal content providers don’t want them to watch.  For customers of Time Warner Cable facing competition from AT&T, there is potentially nowhere to run to avoid an Internet Overcharging scheme which could bring the online viewing party to a rapid conclusion when your viewing allowance is used up.

Britt says he is struggling with rights holders to provide more accessibility to online video streaming of popular shows.  He’s also thinking about how many restrictions to slap on subscribers.

MarketWatch talked with Britt and found him dealing with nagging questions about how many devices each user account should be authorized to use for viewing. “Should it be three, should it be 10? If I make [that number] too small, you’re not going to be happy as a customer,” Britt philosophized. “If I make it too big, you’re going to give the password to all of your friends, and they won’t have to buy a subscription to begin with.”

Arris' C4 CMTS

In the broadband speed race, no technology can deliver consistently fast upload and download speeds and offer ease-of-upgrades like fiber optics, but most of us won’t have direct access to the technology for years to come.  This week, the cable industry will attempt to suggest fiber upgrades may be unnecessary as it shows off some of the latest broadband technology at the industry’s trade show in Chicago.

Arris, a cable broadband equipment manufacturer, plans to demonstrate just how many “cable channels” it can bond together to build an enormous broadband pipeline, which the company claims will achieve “proof of concept” speeds as high as 4.5Gbps downstream and 575Mbps upstream.

Such a demonstration is impractical for actual use with today’s cable systems, because they lack enough free channel space to construct a pipe that large.  But the cable industry is betting heavily on DOCSIS 3 technology to keep them in the game as other technology threatens to win future online speed races.

At the heart of Arris’ cable broadband platform is its C4 Cable Modem Termination System (CMTS). The latest iteration, called Release 7.4, increases support for bonded channels, allows cable operators to manage the IP video demands of their subscribers, and also includes additional “intelligent network” enhancements to manage different types of broadband traffic.

Cable modem broadband technology is based on a “shared network,” meaning every customer connected to an individual CMTS is sharing the same individual broadband pipeline.  Before DOCSIS 3 technology, the maximum “raw bitrate” of that pipe was generally fixed at around 40Mbps — speed/bandwidth shared with every customer wired into that equipment.  If just a handful of customers used their broadband connection at the same time, speeds were consistently fast and reliable.  But during peak usage, too many customers could place demands on that pipe it could not sustain, and speeds for everyone began to drop.

Since most customers didn’t come close to saturating their broadband connection, hundreds of families safely shared the same pipe without noticeable speed declines.  But as high bandwidth applications like online video and file sharing grew, network engineers had to plan on fewer customers sharing the same connection or regularly split some customers off an overworked CMTS.

DOCSIS 3 technology solves many of these problems by letting cable operators “bond” multiple cable channels together to create a much larger, although-still-shared, pipe.  Arris says design improvements in its latest c4 CMTS also help manage the traffic that crosses it in the most efficient way possible to maintain a consistent user experience.

Because fiber optic competitors routinely win the broadband speed race, cable operators have to counter aggressive marketing strategies they themselves have used against dial-up and DSL service from the telephone company.  Demonstrating high speed results, even when completely impractical to deploy, still helps the industry’s marketing efforts against the competition, and delivers fodder for industry lobbyists used to counter claims by broadband advocates that other countries are deploying more advanced broadband networks that allow North America to fall behind.

Phillip Dampier

This week, the tech community has been buzzing over new entrants in the world of cloud computing.  Apple’s iCloud in particular has sparked enormous media coverage as the company plans to encourage customers to access all of their favorite content over their broadband connection.  Apple is also moving towards online distribution of many of its software products, including the forthcoming OS X Lion operating system, suggesting consumers can pass up traditional physical media like CD-ROMs or DVDs.

Cloud storage theoretically allows you to store your entire music, video and photo collection online for easy access from any device.  Watching the 20-somethings buzz about 100GB+ secure file lockers and the end of traditional file storage as we know it has been amusing, but these people need to get their heads out of the clouds.  Unless they become politically involved in America’s broadband debate, it is not going to happen the way they hope it will.

Tech entrepreneur?  Meet broadband provider reality check: the Internet Overcharging usage cap and “excessive use” pricing scheme.

While Steve Jobs was introducing iCloud, broadband providers and their industry friends have been ruminating over the impact all of this new traffic will have on their broadband networks.  In an homage to former AT&T CEO Ed Whitacre’s “you can’t use my pipes for free,” the drumbeat for implementing “control measures” for cloud computing and video traffic has been amplified several times over by certain providers, Wall Street analysts, and their trade press and equipment supplier lackeys.

One alarmed provider pondered the impact of iCloud in terms of their past experience with iTunes, which also spiked traffic when it was first released.  Others balk at the notion of consumers using broadband platforms to move entire libraries of content back and forth, especially on wireless networks.  The only sigh of relief detected?  Apple won’t start iCloud with video content — just music, at least at first.

The enemies list

The biggest targets — the companies that get a lot of pushback from providers for using “their networks” to earn millions for themselves are Google, Netflix, Amazon and Apple.  Each of them are rapidly moving into the online entertainment business, threatening to provoke more cable TV cord-cutting.  Netflix is now responsible for 30 percent of online traffic during primetime hours, a fact that some use as an accusation — as if Netflix should be held to account for its own success. Amazon has opened its own cloud based music storage and is also increasingly getting into online video content streaming.  Apple has a novel approach at handling its forthcoming iCloud music feature which should save hours in uploading, but the company is also moving towards online distribution of a growing proportion of its software, including the huge bug fixes and upgrades that will easily exceed a gigabyte if you own several Apple products.

Google is a frequent Washington target and honestly delivers the only truly effective corporate pushback to anti-consumer broadband pricing some providers have contemplated.  In fact, Google is putting its money where its mouth is building a gigabit network larger providers repeatedly scoff at as unnecessary, too costly, and too complicated.

While millions in venture capital funds new online innovations, only a miniscule amount of money is being spent to counter the lobbying major providers are doing in Washington to redefine the broadband revolution in their terms, complete with usage pricing that bears no relation to cost, arbitrary usage limits, and ongoing lack of true competition.

Online innovation is grand, but allowing providers to strangle it with Internet Overcharging schemes guarantees to end the party real fast.

Individually, none of the new cloud services are likely to blow out usage caps in excess of 100GB, but in combination they certainly could.  Anyone using online file backup, cloud storage of video and large music collections, uses Netflix or other online streaming services, and spends lots of time on the web will easily approach the limits some providers have established.  That doesn’t even include large software updates.  Unless you have an unlimited usage plan on the wireless side, don’t even think about using most of these services with AT&T’s 2GB monthly wireless usage cap.

Glenn Britt: The Internet is a utility which is why we can keep raising the price.

In the handful of countries with ubiquitous Internet Overcharging, little of this will pose a problem — companies won’t launch cloud computing services in markets where usage caps will effectively keep customers from using them.

That is why it is critical for some of America’s largest technology companies to get on board the fight against Internet Overcharging, and demand Washington recognize broadband as a utility service that should be wide open and usage cap free.  The evidence is right in front of you.  Time Warner Cable CEO Glenn Britt recognizes the fact broadband is an essential part of our lives today, which is why he is confident enough to keep raising the price and charging even more in the future.  It’s not about “network congestion,” “building the next generation of broadband,” or “pricing fairness.”  Stop the Cap! started at ground zero for Time Warner Cable’s 2009 version of “pricing fairness” — $150 a month for an unlimited use broadband account that likely cost major providers less than $10 a month to provide.  It’s about pure, naked profiteering, unchecked by free market competition in today’s broadband duopoly.

Unless a company like Google can vastly expand its own broadband rollouts, it is increasingly apparent to me (and many others), we may have to move towards an entirely different model for broadband in the United States — one built on the premise of the Interstate Highway System.  One advanced, publicly-owned fiber network open to all providers on which telecommunications services can travel to homes and businesses from coast to coast.

Nobody says private companies shouldn’t be able to compete, but every day more evidence arrives they will never be inclined to deliver the next generation of service that other countries around the world are starting to take for granted.  They will instead protect their current business models at all costs, even if that means throwing America’s broadband innovation revolution under the bus.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CNN Will iCloud Measure Up 6-7-11.flv[/flv]

CNN takes a look at what makes Apple’s iCloud service different from competitors from Google and Amazon.  (5 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CNN Dropbox Cloud Computing 6-8-11.flv[/flv]

CNN talks with the folks at Dropbox about their cloud file storage system.  (3 minutes)

More than halfway into Glenn Britt’s appearance last week at a Wall Street-sponsored investor event, the head of the nation’s second largest cable company candidly admitted years of price hiking is finally driving a growing segment of America’s hard-pressed middle class out of the market:

“There is a segment of our economy that should be of concern.  We have a bifurcating economy where people who are college educated and like everybody in this room are doing okay.  For that segment, pay TV [pricing] is fine.  There is another group of people who are sort of falling out of the middle class.  For some of those people, pay TV is too expensive.”

That’s a remarkable admission from a cable company that has consistently raised prices for its products well in excess of inflation for at least a decade, and judging from the rest of his comments, there is plenty more of the same on the way.

Britt is nearing his 10th anniversary as CEO of what is now Time Warner Cable, formerly a division of AOL/Time-Warner.  In the past decade, the company he oversees has undergone a transformation in its business model. In 2001, digital cable was all the rage, delivering the 500-channel television universe at the cost of rapidly increasing cable bills.  Cable broadband was just coming back from the dot.com crash, with many Americans still mystified by the concept of “www” and whether a web address had a “/” or a “\” in it.

Time Warner Cable CEO Glenn Britt tells Wall Street investors at the Sanford Bernstein conference the company is using their customers’ addiction to high speed broadband as leverage for rate increases — three in the last three years. Britt’s world view for Internet Overcharging schemes like consumption billing are reinforced in a room where ordinary customers aren’t invited and the Wall Street types in attendance dream about the enormous profits such pricing would bring. June 1, 2011. (6 minutes)
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Today, broadband is threatening to become the cable industry’s most important product — one that Americans will crawl through broken glass to buy.  In larger cities, the competitive war between DSL and cable broadband has been settled and DSL lost.  That has brought Time Warner a steady stream of customers departing their local phone company and bringing their telecommunications business with them.  Even during the economic downturn, Britt notes, one of the last products people will agree to give up is their broadband Internet access.

“Broadband is becoming more and more central to people’s lives,” Britt said. “It is becoming our primary product. People are telling us that if they were down to their last dollar, they’d drop broadband last.”

Britt openly tells investors Time Warner Cable will take that last dollar, and many more.

“We are able to raise prices,” Britt notes. “As broadband becomes a utility, you can charge more.  So after a dozen years of not raising prices for broadband service, for the last three years we have been raising prices.”

Britt notes the company is also enjoying increased average revenue per customer as many upgrade their broadband service to higher speed tiers which deliver higher revenue to the cable operator.

But as the market for broadband matures, the next level of profits could come from so-called “consumption pricing,” which could make yesterday’s rate increases look like a miniscule price adjustment.  In 2009, Time Warner Cable sought to test new broadband pricing that would have tripled the cost of unlimited broadband from $50 a month to an astonishing $150 a month.  A firestorm of protests for this level of Internet Overcharging temporarily killed the prospect of OPEC-like profits, unsettling some Wall Street investors and analysts, many who refuse to let the dream die.

Among the biggest proponents of this kind of metered pricing is, in fact, Sanford Bernstein — the sponsor of the conference.  So it came as no surprise Britt faced additional browbeating in the hour-long interview to reintroduce these pricing schemes.  After all, Britt is told, AT&T has implemented a usage cap and Cable One has (what the interviewer calls) a “quite interesting” pricing model — delivering the smallest usage caps to customers with the highest speed tiers.  So when will Time Warner follow suit?

Once again, Britt said he’s a true believer in consumption billing and thinks the industry will move in that direction, but refused to give an exact timetable.  “Consumption billing” goes beyond traditional usage caps by establishing a combination of a flat monthly service fee, and additional charges for the amount of data you use.  Time Warner’s original proposal limited consumption to 40GB per month at today’s broadband prices, but added an overlimit fee of $1-2 for each additional gigabyte.

The strangest part of the hour was Britt’s defense of usage pricing with an impromptu discussion with his wife the evening before about the pricing models of public transit in European capitals (they’ve no doubt visited), and metropolitan New York City.

Britt shared that in the finest cities of Old Europe, bus and train travelers paid different rates based on how far they traveled within the city.  In New York, his wife noted, one price gets you access to any point in the city on the subway.  

How fair is that?

Aside from the hilariously unlikely scenario either Britt or his wife have stepped foot on a New York City public bus or subway train in the last decade, his rendition of “consumption billing is fairer”-reasoning fell flat because it argues a false equivalence between the cost to move data and the expenses of a public transit system.  Remember, Time Warner is the cable company that pitches unlimited long distance calling on the one platform that most closely resembles broadband — telephone service.

“People want us to invest more to keep up with the traffic,” Britt argued.  “People who use it should pay less — people who want to spend eight hours a day watching video online is fine with me, but they should pay more than somebody who reads e-mail once a week.”

This is the same Glenn Britt who just minutes earlier confessed the cable company has been raising prices on all of its broadband customers for three years in a row because they can.  Earlier attempts at consumption billing saved nobody a penny.  Light users were given a paltry usage allowance that could be largely consumed by downloads of security patches and software updates, after which a very punitive overlimit fee kicked in.  Besides, Time Warner Cable already sells a “lite” usage plan today that has few takers.  Most consumers want, and are willing to pay for a standard, flat rate broadband account.  That’s the account Britt and his Wall Street cheerleaders want to get rid of come hell or high water.

Britt is asked whether pay television is getting too expensive for the hard-pressed middle class. For many consumers, it is, which is why the company is developing its “welfare” tier called TV Essentials — a sampling of cable networks with plenty of holes in the lineup to remind subscribers what they are missing if they make do with this less expensive package. June 1, 2011. (3 minutes)
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Throughout the hour long interview, Britt’s read of the hard-pressed common American family comes across as more than a little hollow — more like hopelessly out of touch.  One part Marie “Let Them Eat Cake” Antoinette and one-part “we’ll throw a bone to some and raise prices on the rest,” Britt is content lecturing consumers — discouraging them from crazy ideas like “a-la-carte” cable pricing and reasonably priced broadband.

The Wall Street crowd loved every minute, and the friendly echo chamber atmosphere made Britt feel more than welcome at the conference.  While Time Warner Cable’s CEO spent more than a hour talking to Wall Street, he has no time to actually sit down and talk with his customers — the ones that want nothing to do with his Internet pricing schemes.  Indeed, at one point Sanford Bernstein’s host dismisses customers as “people who want everything for free,” a contention Britt partly agreed with.

Have another piece of cake.

If you are still wealthy enough to buy an iPad and are enjoying Time Warner Cable’s free streaming app, watch out. It may not be free for long. As Britt partially admits, Time Warner Cable is using the online video service as a “Trojan Horse” to get subscribers hooked on their online video, before they attach a price tag to the service. June 1, 2011. (3 minutes)
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And what about all of this much-ballyhooed “investment” in tomorrow’s broadband networks?

Britt confesses the cable company is spending less than ever on system upgrades and capital construction projects.  Why?  The company forecasts its demand and growth five years out and budgets accordingly.  The current target is to spend just 15 percent of revenue on such projects, and based on budget planning, there is no urgent need to upgrade Time Warner’s broadband networks to keep up with demand.  In fact, it was all smiles when Britt revealed one of the company’s biggest expenses — the costly set top box — may not be a permanent part of America’s cable future after all.  Britt offered there was a good chance capital spending might even decline further in the future.

Britt suggests the next generation of television sets will deliver the same functionality as today’s set top box at a cost paid by the consumer.  Time Warner’s slow march to all digital cable means the need for wholesale upgrades of cable systems is over for perhaps a generation.  And with an IP-based cable delivery platform, software upgrades and improvements can be made without paying the high asking price charged by today’s handful of set top manufacturers.

In fact, outside of programming costs, Britt doesn’t see any long term challenges to years of good times for investors. Even minor competition from the telephone companies, who generally charge prices very similar to what Time Warner Cable charges, pose no big threat.

His biggest nightmare?  A check on the industry’s near-unfettered power by Washington regulators.  Despite Britt’s claims the cable industry is already well-regulated, in fact it is not.  Since 1996, cable companies can charge whatever they choose for standard cable, phone and Internet service.  Consumption billing, which will almost certainly be seen as gouging by consumers, may trigger an unwelcome intrusion by Congress, especially if the industry continues to cause a drag on America’s broadband ranking, already waning.

For investors, the glory days of huge rate hikes for cable television are likely behind us, Britt warns.  But have no fear: for the generally well-heeled and barely-hanging-on there is plenty of room for more rate increases on broadband — and meters, too.

Once again, Britt unintentionally admits the truth: Time Warner Cable does not have a broadband congestion problem that requires an Internet Overcharging scheme to solve. In fact, he admits the cable company is spending less than ever on network upgrades for residential subscribers, and expects that trend to continue. He’s also avoiding overpaying for merger and acquisition opportunities. June 1, 2011. (6 minutes)
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