There was quite a buzz this week over a story in The Business Insider reporting that Hulu reaches more viewers than Time Warner Cable (the nation’s second largest cable operator) has subscribers.  They found 38 million Americans watched Hulu and just 34 million Americans are Time Warner customers.

It’s interesting trivia, but really doesn’t mean all that much… yet.  In fact, Comcast, the nation’s largest cable operator has 62 million subscribers, so Hulu has a long way to go to beat Comcast, not to mention websites like Google Video and YouTube, which have more than 120 million combined viewers.

More importantly, Time Warner Cable has no trouble monetizing its business, as any cable subscriber knows when that ever-increasing bill arrives every month.  The same cannot be said for Hulu, which originally depended on an advertising model to sustain itself, at the same time the domestic online advertising marketplace imploded with the near-economic collapse last fall.  If television networks and newspapers can’t sell their ad inventories, the online advertising market, still a novelty for many advertisers, is in even worse shape.

Time Warner Cable is not losing any sleep over Hulu at the moment, and if they do become a nuisance, that consumption billing concept (or hard usage cap) is always an option to deter people from watching too much.

Broadband providers who pass along video content to their customers, without any ownership interest in those videos, are stuck in the position of owning “dumb pipes.”  In the month of July alone, comScore estimated that more than 21.4 billion videos were viewed on American-owned video websites.  Those videos ranged from the five minute karaoke performance from the guy in Des Moines who posted his performance to YouTube, to hour long dramas watched on a network TV website.

What people didn’t watch were all of the most popular shows from cable networks.  Dedicated viewers who needed to watch the entire second season of A&E’s Crime 360 show had to head to Usenet newsgroups or Bit Torrent websites to ferret out someone’s personal recording collection uploaded to share.  A&E only streams one episode from the second season at a time.

That explains why the cable industry is in a hurry to test their TV Everywhere project.  Cable and other pay-television customers will discover a lot more videos hosted on cable network websites suddenly “authenticating” their subscription status, and locking out those who don’t have a subscription (or offering teaser videos or a much more limited menu of viewing choices).

The upsides for TV Everywhere include pleasing existing pay television subscribers with more online videos.  They also get to sell advertising to accompany these on demand videos.  Those cable network websites may also have ads on them and can also promote their other programming.  Perhaps even more importantly, the industry will have a new tool in their subscriber retention arsenal — the ability to delicately remind subscribers wavering over whether to continue their cable TV package that they can forget about replacing it with watching shows online for free. Owning or controlling the content (and the distribution network) is always better than simply being used to transport someone else’s content.  You can’t giveth and taketh away content you don’t own — you can just make it prohibitively expensive to watch with Internet Overcharging schemes.

The downside, at least in their eyes, is the amount of bandwidth these videos will occupy on their existing distribution platforms.  In 2008, the “big threat” that demanded usage caps and/or consumption billing came from Bit Torrent.  In 2009, it’s online video.

Of course, two of the nation’s largest providers that have “appreciated” consumption billing and usage caps — Comcast and Time Warner Cable — are also enthusiastic founding partners of TV Everywhere.  That presents a problem.  A video platform like TV Everywhere, which may one day usurp Google’s dominance in online videos, is being run by the same people trying to convince Americans of broadband capacity problems and the need to cap usage or switch to consumption billing schemes.  TV Everywhere effectively takes the wind out of that argument because, as any consumer will ask, if your platform is too congested to handle online video, why in the world would you seek to make the “problem” much worse?

That’s a rhetorical problem astroturf groups are being hired to explain away.  They apparently couldn’t sell it to consumers during focus group testing, so now they’ll try the sock puppets instead.

J.P. Morgan Securities likes what it sees from Comcast and Time Warner Cable, the nation’s largest cable companies.  It has begun coverage of both companies, calling them ripe for growth potential.

Analyst Mike McCormack was particularly impressed with the cable companies’ success in selling bundled products to customers — packages containing video, telephone, and broadband service.  McCormack also noted that cable companies’ capital expenditures to provide services to customers continue to decline, allowing earnings and free cash flow to increase.

In a note to investors, the Wall Street firm said both companies had great potential to increase revenue from customers signing up for voice and data services, which the firm feels has low penetration rates.  Comcast was praised for its position to expand the “average revenue per user (or subscriber)” as higher speed data products gain popularity.

McCormack was much less positive about cable’s biggest rivals — telephone companies.  McCormack said cable was in a stronger position because telephone companies are continuing to lose an increasing number of traditional wired phone line customers, and earnings from the “maturing and increasingly competitive” wireless industry are likely to be lower.

The wireless mobile phone industry, especially prepaid mobile service, continues to undergo a price war which is positive for consumers, but seen as increasingly negative by Wall Street.

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

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

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

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

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

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

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

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

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

An electrical fire at Time Warner Cable’s headquarters in El Paso, Texas knocked out cable television, Internet, and telephone services for customers across El Paso Tuesday.

Company officials claimed the fire, which did only minor damage, interrupted service for several hours, but some customers reported phone service and on-demand programming interruptions extending into Wednesday.  Although Time Warner claimed the problem affected only “a few” subscribers, KFOX-TV reported the outage affected the entire city of El Paso.

Ironically, although the company’s customer service center was closed Wednesday, the bill payment office remained open for business.

Service has since been restored across the city.

KFOX-TV, El Paso’s local Fox affiliate, has the most in-depth coverage of Time Warner Cable issues in southwest Texas:

[flv width=”640″ height=”360″]http://www.phillipdampier.com/video/KFOX El Paso Time Warner Services Restored Customers Ask For Credit – News Story 8-12-09.flv[/flv]

Warning – Loud Audio!

Time Warner Cable will only issue credits for service interruptions to those who specifically request them.  Residents of El Paso can call 1-800-222-5355 to request credit.

KTSM-TV also reported that some Internet customers may have also been affected with extended outages, even after cable television service was restored:

[flv width=”382″ height=”288″]http://phillipdampier.com/video/KTSM?from=%40 El Paso El Paso Cable Outage Blamed On Power Surge 8-12-09.flv[/flv]

El Paso and Time Warner Cable have had an occasionally contentious history with one another, extending back a year ago when service problems plagued area residents.

Repeated media attention, and the involvement of state and local officials became necessary.  But the ability for the state to deal with poorly performing cable companies is limited — Texas is one of the states that issues statewide cable franchises, tying the hands of local officials.  Additionally, very little state regulation of telecommunications services in Texas means customers often have limited recourse to deal with bad service, beyond simply trying to find an alternative provider, if available.

A history of past troubles can be found in several news video reports below the break.

… Continue Reading

Every Time Warner Cable division has different policies for installations, service calls, and disconnect requests.  Some charge for technician visits, some do not.  In southern California, Time Warner Cable is trying to reduce the expense of “truck rolls” — technicians visiting customer homes, to handle Road Runner installations.

The company announced Wednesday it would provide free Easy Connect self-install kits for broadband service.  Mailed at no cost to customer homes within 24-48 hours, the kit contains a cable modem, connectors, and instructions on how to set up and configure Road Runner service.

Time Warner Cable technicians will continue to install Road Runner for a $19.95 installation fee.  Company officials believe many customers will be able to hook up service themselves, which will ultimately save the company time and money assigning a technician to do the installation.