Video programmers that want to avoid the problem of usage allowances that can deter internet video streaming have a new way to make an end run around Net Neutrality, distributing their content “cap-free” through “virtual cable channels” that are distributed over broadband, but appear like traditional cable TV channels on a set-top box.

This morning, Fierce Cable noted Wurl’s IP-based streaming cable television network platform was here, offering cable operators new cable channels that are actually delivered over the customer’s internet connection. The Alt Channel, Streaming News Network, The Sports Feed and Popcornflix will appear on set-top boxes and onscreen guides like traditional linear cable channels, starting in August. Wurl claims at least 51, mostly small and independent cable operators, have already signed up for the service, which could quickly expand to 10-12 channels in the future. But Multichannel News has confirmed only one partner so far — Fidelity Communications, a small cable operator serving parts of Arkansas, Louisiana, Missouri, Oklahoma and Texas.

What makes these channels very different from the other networks on the lineup is that they are delivered over the customer’s internet connection directly into a cable set-top box, and will generally be exempt from any usage allowances or caps providers impose on broadband usage. Wurl acts as a distributor, obtaining content from “popular online studios” that “until now has only been available on computers and mobile devices.” Wurl’s partners can get their content exposed on traditional cable TV to a potentially greater audience, who can watch while not worrying about using up their monthly internet usage allowance.

The first series of bracketed channels are Wurl-TV broadband based channels, while the second are traditional linear cable networks delivered by RF or QAM. Both integrate seamlessly into the cable set-top box’s on-screen program guide.

Wurl’s unicast approach relies on its own content delivery network to provide one internet stream for each set-top box accessing its programming, which also allows for support of on-demand programming. But every cable customer watching a Wurl channel is effectively streaming video over their internet connection. Cable operators usually blame internet video for consuming most of their available internet bandwidth, necessitating the “need” for usage allowances/caps or usage based billing to manage and pay for bandwidth “fairly.” Yet Wurl’s networks consume just as much bandwidth as traditional online video. But because Wurl is partnering with cable operators, that content is not subject to the usage caps Netflix, Hulu, or Amazon Video customers have to contend with.

Wurl claims its approach is so cable-operator friendly, “there’s no reason to say no,” said Sean Doherty, Wurl’s CEO and co-founder.

Cable operators are offered Wurl channels for free, with no affiliate fees or upfront costs, and no significant technology costs since the channels are distributed direct to the set-top box over broadband, not RF or QAM. A video player is embedded into the virtual cable channel, which allows viewers to pause, rewind, and fast forward programming.

In the future, cable systems are expected to gradually transition to IP-delivery of all of their video content, turning the cable TV line in your home into one giant broadband connection, across which television, internet access, and phone service are delivered.

But cable operators are still making distinctions between services that are gradually becoming different in name only. If a customer watches a Wurl channel over the internet on their desktop, that would count against their usage allowance. But if they watch over a cable-TV set-top box, it won’t, despite the fact the journey the channel takes to reach the viewer is exactly the same. That gives certain content providers an advantage others lack, representing a classic end run around Net Neutrality.

To be fair, that is not a distinction Wurl has made in any of its marketing material, but the fact preferred content can be managed this way is just one more reason the FCC should ban usage caps and usage-based billing on consumer internet accounts. Wurl’s own marketing material tells operators the cost and impact of its video streaming on the cable operator’s existing infrastructure is next to zero… because Wurl’s content comes across broadband platforms already so robust, they can easily accommodate the potential of thousands of viewers all watching Wurl channels without any issues. That reality undermines the cable industry’s own questionable arguments about the need for data caps or usage billing.

Bull Connor was Birmingham, Ala.’s notorious Commissioner of Public Safety in the 1950’s and 1960’s.

In an astonishing guest editorial published by USA TODAY, Rev. Jesse Jackson evoked imagery of the 1960s civil rights movement as a backdrop to claim the Federal Communication Commission’s plan to promote an open, competitive market for set-top boxes was racist.

“National news coverage of the snarling dogs, water hoses and church bombings in the American South were the catalysts to exposing the ugly truths of racism and bigotry in the 1960s. Local news outlets gave new meaning to what the struggle looked like for people on its front lines,” wrote Jackson. “That is why a new proposal at the Federal Communications Commission (FCC) to regulate TV ‘set top boxes’ has raised so much concern.”

That “concern” has come almost entirely from the cable and telco-TV industry and their allies, which have compared the potential breakup of a lucrative cable TV equipment monopoly to anti-Americanism, minority television genocide, an invitation to piracy and a pathway for total world domination by Google.

In April, we reported the rhetoric surrounding the proposal, which would create an open standard allowing any manufacturer to make and sell their own set-top box, had already taken Hyperbole Hill. But Rev. Jackson’s latest guest editorial rockets the ridiculousness of the cable industry’s opposition into the stratosphere.

Jackson claims (wrongly) the proposal will lead third-party manufacturers to segregate minority television content, apparently in a way that resembles life in rural Mississippi in 1962. It evokes dreams of hordes of Google vans roaming across the southern countryside looking for trouble by stripping networks like Revolt and Vme TV of their ad revenue and copyright protection. It just isn’t true. But one line in Jackson’s commentary does prove revealing — noting all these terrible events could all take place “without any compensation.”

Jackson

This is the diamond in the rough of this near-senseless editorial. Like most things in the world of Big Telecom public policy, it’s all about the money. Jackson’s Rainbow PUSH Coalition apparently isn’t what it used to be. Originally created to promote civil rights and diversity, the organization these days is just as likely to promote Big Telecom mergers and its public policy agenda, usually in exchange for contributions to Jackson’s groups, although such quid-pro-quo is always hotly denied. Therefore, we shall call them monetary “coincidences.” His coincidental association with Comcast, AT&T, Verizon and others runs back more than a decade:

• Bell Atlantic (later Verizon) coincidentally donated $1 million to Jackson and his groups. In 1999, Jackson coincidentally endorsed the merger of GTE and Bell Atlantic into a new entity known as Verizon, which coincidentally pledged $300,000 to Jackson annually through the year 2002;
• In 1998 Jackson was strongly opposed to the merger of SBC and Ameritech (which would later emerge as AT&T), suggesting it was anti-democratic. After the two companies donated $500,000 to Jackson’s Citizenship Education Fund (given a dubious rating by Charity Navigator), Jackson coincidentally did a complete 180, praising the merger. It didn’t hurt that Ameritech coincidentally sold part of its cellular business to Georgetown Partners, owned coincidentally by one of Jackson’s closest friends.
• Not to be left out, AT&T coincidentally donated $425,000 to Jackson’s Citizenship Education Fund in 1999, right after Jackson coincidentally withdrew his opposition to the merger of AT&T and TCI Cable (later sold to Comcast).
• Jackson coincidentally has maintained a regular presence in proceedings involving Comcast’s various business dealings, particularly its merger with NBCUniversal, which it coincidentally endorsed as “pro-consumer.”

Jackson mentioned his views have the support of certain other civil rights organization including the National Urban League and the League of United Latin American Citizens (LULAC), two groups Stop the Cap! has written about extensively regarding their ongoing committed support of Big Telecom mergers, deregulation, and other public policy agendas. They don’t work for free — substantial contributions and other compensation from those same companies head into the coffers of both groups. LULAC counts AT&T, Comcast, Cox, the National Cable & Telecommunications Association, Time Warner Cable and Verizon as members of their “corporate alliance.” None of those companies support the FCC’s plan to open up the set-top box marketplace.

Jackson cheapens the legacy of the civil rights movement in his efforts to draw comparisons between the horrible atrocities of the past with the fat equipment profits the cable industry is counting on in the future.

His views are also simply provably wrong. Jackson’s claim that the government was somehow responsible for the destruction of local multicultural newspapers at a time when the entire newspaper industry continues to struggle against online media is ludicrous. His myopic view that the elimination of a minority tax certificate program is the reason minorities don’t own many radio and television stations today ignores the fact many former minority owners cashed out and sold those stations (at a massive profit) after the Clinton Administration deregulated the industry in the late 1990s, which lead to a massive wave of ownership consolidation. Finding individuals, minority or otherwise, that still own local radio and television stations isn’t as easy as it once was.

Jackson and his supporters are wasting their time fighting to preserve the dying concept of the 500-channel linear TV marketplace. Consumers, minorities included, are not clamoring for more minority networks littering the cable dial that spend much of their broadcast day airing program length commercials and reruns of Good Times or The Cosby Show. Many of these networks only add to the growing cost of cable TV. Viewers want on-demand access to quality original programming they can actually find and watch.

We’d also remind Jackson minorities also pay the outrageous price of set-top box rentals, something Jackson and his organization should be sensitive about. Busting the set-top box monopoly means every American will pay lower rates for this equipment. We do understand it won’t help Jackson’s bank account, or those of other civil rights groups that kowtow to their corporate friends, but who exactly do they represent?

Daring to suggest that this debate has anything to do with Bull Connor’s outrageous behavior in Birmingham, Ala. in 1963, where Connor ordered the city fire department to turn fire hoses on peaceful civil rights protesters and attacked them with police dogs, tarnishes the reputation of Jackson and his group and demonstrates just how desperate the cable industry is getting trying to credibly defend a monopoly. Jackson should withdraw those remarks.

If you are or were a Cablevision cable-TV customer, the cable company may owe you up to $140 for overcharging you for their set-top box, but only if you ask.

Current and former subscribers in New Jersey, New York, and Connecticut will share the proceeds of a settlement fund proposed in federal court in response to a class action lawsuit (Marchese v. Cablevision Systems Corp.) that alleged Cablevision has been misrepresenting the need for its cable equipment dating back to 2004.

You probably qualify as a class member if you had cable television service and a Cablevision set-top box anytime between April 30, 2004 and March 9, 2016. Former subscribers will likely receive a check valued at $20-40. Current customers will be offered the option of a one-time bill credit of $20-40 or the opportunity to get free services from Cablevision valued at $50-140. The longer you’ve been a customer, the higher the value of the free services you may qualify for, including free premium movie channels or multi-room DVR service. If you already have both, you will only qualify for the bill credit.

Customers should register as a class member to guarantee a share of the settlement proceeds. Visit cableboxsettlement.com to register online, e-mail [email protected] or call 1-888-760-4871. The deadline to file a claim is Sept. 23, 2016.

The proceeds of the settlement will likely be distributed by the end of this year, after a fairness hearing scheduled for September to discuss the requested attorneys fee, estimated to be as high as $9.5 million.

As is often the case in class action lawsuits, the company being sued need not admit any wrongdoing, and Cablevision is proclaiming its innocence.

“Cablevision denies all of the claims and allegations in the lawsuit and notes that the settlement is subject to final approval of the court,” a company statement said. “We cannot comment further beyond the publicly available filings in the litigation.”

It’s all hands on deck for a cable industry desperate to protect billions in revenue earned from a monopoly stranglehold on the set-top box, now under threat by a proposal at the FCC to open up the market to competition.

While cable industry groups decry the proposal as a solution looking for a problem, at least 99 percent of cable customers are required to lease the equipment they need to watch pay television. That has become a reliable source of revenue for the industry and set-top box manufacturers, who share the $231 each customer pays a year in rental fees. Collectively that amounts to $20 billion in annual revenue. The FCC argues there is ample evidence cable operators and manufacturers are taking advantage of that captive marketplace, raising rental fees an average of 185% over the last 20 years while other electronic items have seen price declines as much as 90 percent.

With that kind of money on the line and a recent statement from the Obama Administration it fully supports FCC Chairman Thomas Wheeler’s proposal, Wall Street has gotten jittery over cable stocks — a clear sign investors are worried about the economic impact of additional competition and lower prices.

Wheeler

“Instead of spending nearly $1,000 over four years to lease a set of behind-the-times boxes, American families will have options to own a device for much less money that will integrate everything they want — including their cable or satellite content, as well as online streaming apps — in one, easier-to-use gadget,” Jason Furman, chairman of the Council of Economic Advisers, wrote in a White House blog post.

The proposal would coordinate the establishment of an “open standard” for set-top box technology, making it possible for multiple manufacturers to enter the market and compete.

The idea is not without precedent. The cable modem marketplace uses a DOCSIS standard any manufacturer can use to launch their own modem. Once the modem is certified, broadband consumers can choose to either rent the modem from their cable operator ($10 a month from Time Warner) or buy one outright, usually for less than $70, easily paying for itself in less than one year.

But the set-top box proposal just doesn’t add up, argues Comcast — one of the strongest opponents of Chairman Wheeler’s proposal.

“A new government technology mandate makes little sense when the apps-based marketplace solution also endorsed by the FCC’s technical advisory committee is driving additional retail availability of third-party devices without any of the privacy, diversity, intellectual property, legal authority, or other substantial concerns raised by the chairman’s mandate,” wrote David Cohen, Comcast’s top lobbyist.

The National Cable and Telecommunications Association (NCTA) — the country’s largest cable industry lobbying group, said much the same thing.

The Roku set-top streaming device.

“By reading the White House blog, you have to wonder how they could ignore that the world’s largest tech companies — which are often touted in other Administration initiatives — including Apple, Amazon, Google, Netflix and many others are providing exactly the choice in video services and devices that they claim to want,” the NCTA wrote.

Their argument is that a competitive set-top box market has already emerged without any interference from the FCC. Time Warner Cable, for example, voluntarily offers most of its lineup on the Roku platform. Comcast’s XFINITY TV app allows subscribers to watch cable channels over a variety of iOS and Android devices. Several operators also support videogame consoles as an alternative to renting set-top boxes.

But few allow customers to completely escape renting at least one set-top box, especially for premium movie channels. Others don’t support more than one or two streaming video consoles like Roku, Apple TV, or Amazon Fire TV.

In Canada, cable customers can often buy their own set-top boxes and DVRs (known as PVRs up north) from major electronics retailers like Best Buy. For example, Shaw customers in western Canada can purchase a XG1 500GB HD Dual Tuner PVR with 6 built-in tuners and a 500GB hard drive (upgradable), which supports recording up to 6 HD shows simultaneously, for under $350. With some cable companies charging up to $15 a month for similar equipment, it would take just under two years to recoup the purchase cost. Many cable subscribers rent the same DVR for as long as five years before the hard drive starts acting up, necessitating replacement (of the drive).

Endangered cable network? Minority programmers say set-top box competition will destroy their networks.

Arguing the technical issues of cable box competition isn’t apparently enough of a winning argument, so the industry has drafted the support of minority cable programmers and friendly legislators who have taken Hyperbole Hill with declarations that set-top box competition will result in “the ultimate extinction of minority and special-interest programmers.”

How?

A competitive set-top box manufacturer may decide to ignore the way cable channels are now numbered on the cable dial. With everything negotiable, many programmers offer discounts or other incentives to win a lower channel number, avoiding the Channel Siberia effect of finding one’s network on a four digit channel number that channel surfers will likely never reach.

Their fear is that an entity like Google or Apple will pay no attention to how Comcast or Time Warner chooses to number its channels, and will use a different system that puts the most popular channels first.

Fees: $34.95 for TV package, $35.90 in equipment and service fees.

But that assumes consumers care about channel numbers and not programs. Those who argue the days of linear TV are coming to an end doubt opening the set-top box market up for competition presents the biggest threat to these minority and specialty programmers. Those that devote hours of their broadcast day to reruns and program length commercials are probably at the most risk, because they lack quality original programming viewers want to see.

Hal Singer, who produces research reports for the telecom industry-backed Progressive Policy Institute, even goes as far as to suggest competitive set-top boxes will discourage telephone companies from building fiber to the home service, because they won’t get the advertising revenue for TV service they might otherwise receive from a captive set-top box market. But Singer ignores the fact Verizon effectively stopped substantial expansion of its FiOS network in 2010 (except in Boston) and AT&T now focuses most of its marketing on selling DirecTV service to TV customers, not U-verse – it’s fiber to the neighborhood service.

But Singer may be accurate on one point. If the cable industry loses revenue from set-top box rental fees, it may simply raise the rates it charges for cable television to make up the difference.

“So long as high-value customers for home video also demand more set-top boxes—a reasonable assumption—then pay TV operators can use metering to reduce the total price of home entertainment for cable customers,” Singer opines. “If this pricing structure were upended by the FCC’s proposal, economic theory predicts that pay TV prices would rise, thereby crowding out marginal video customers.”