Feds Favor Usage-Based Broadband

2012-06-21 18:03:29

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Is Cable Stifling OTT Video Competition?
The Antitrust Division of the U.S. Department of Justice has launched an investigation to determine if cable operators and other pay-TV providers are using TV Everywhere business models and broadband consumption caps to stifle video competition from Netflix Inc. (Nasdaq: NFLX) and other over-the-top (OTT) providers, reports The Wall Street Journal.Under the authenticated TV Everywhere model, programming from cable networks is being made available via broadband only if the viewer also subscribes to a pay-TV service. As caps go, the probe is reportedly coming into play amid complaints from Netflix CEO Reed Hastings that the caps are unfair to OTT providers and that Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s data policy for its VoD app for the Xbox 360 might violate the terms of its acquisition of NBCUniversal LLC . Comcast has argued that data sent via the Xbox app is exempt from data caps because it's delivered over the operator's private IP network and that it views the game console as just another set-top box. (See Netflix Cranks Up the Net Neutrality Heat , Netflix CEO Keeps Whining About Comcast and Comcast Denies It's Prioritizing Xbox Video .)The cable industry claimed victory Tuesday as the Federal Communications Commission (FCC) unanimously voted to do away with a "viewability rule" in six months that currently requires operators to deliver must-carry digital broadcast TV signals in digital and analog format to customers. The cable industry wants to reclaim analog channels for other uses, such as Docsis 3.0 Internet services and more HD programming. The catch is that operators will have to provide digital-to-analog converter boxes for customers that are currently receiving analog cable TV signals without a set-top box.TorrentFreak says HBO's Game of Thrones has the dubious honor of being the favorite TV show of pirates, averaging almost 4 million illegal/unauthorized downloads per episode during the spring television season. CBS comedy How I Met Your Mother was second, at 2.8 million per episode. HBO has so far resisted the urge to unbundle its TV Everywhere app and let consumers buy access directly from the premium programmer. A recent survey suggests that consumers would be willing to pay $12 for HBO Go as a standalone service.Motorola Mobility Inc. (NYSE: MMI) has tweaked its APEX3000 universal edge QAM ("universal" in the sense that it can handle both QAM and IP traffic at the same time) for the European market by adding support for the Digital Video Braodcasting (DVB) standard. Moto claims the APEX3000 is "compliant" with Converged Cable Access Platform (CCAP), a dense, next-gen architecture that cable's pursuing as it starts to migrate to IP video and looks to put all its services on a single platform. (See Motorola Pushes Ahead on Cable Access and CCAP Market Is Cisco's & Arris's to Lose .)Clearleap has added The Nielsen Co. C3 ratings system to a video and media publishing platform it's pitching to programmers to handle video delivered over-the-top and via more traditional VoD platforms. Introduced by Nielsen in 2007, C3 measures the average commercial minutes viewed during a broadcast, and includes DVR, VoD and Internet playback data over a three-day period. Programmers are turning to C3 so advertisers can better track viewership of shows that are recorded or viewed on-demand.
US Aims for 1-Gig Broadband
Google (Nasdaq: GOOG)'s experiment with 1Gbit/s access in the Kansas Cities has apparently gotten the attention of the White House.President Obama will sign an executive order Thursday to create a national broadband network "operating at speeds of up to 1 gigabit per second," as the news release says, under a newly created non-profit partnership called US Ignite.The network would serve as a test bed for next-generation applications in areas such as education, health care and clean energy -- you know, along the lines of what Google's got in mind for the networks it's building in Missouri and Kansas.About 100 partners are helping US Insight, with some providing in-kind backing, including Cisco Systems Inc. (Nasdaq: CSCO), Juniper Networks Inc. (NYSE: JNPR), NEC Corp. (Tokyo: 6701) and Hewlett-Packard Co. (NYSE: HPQ).Several service providers will contribute pilot programs that test out superfast broadband. Verizon Communications Inc. (NYSE: VZ), for example, will test speeds up to 300Mbit/s in homes, businesses and institutions in Philadelphia, and support apps such as over-the-top video on TVs and portable devices. Comcast Corp. (Nasdaq: CMCSA, CMCSK) said it'll work with universities to test new apps in its lab. The city of Chattanooga, Tenn., has agreed to provide access to its existing 1Gbit/s network.US Ignite is starting off with agreements with 25 cities across the country that will form the initial branches of the national network. This fact sheet (PDF) offers more detail on the initial projects and partners involved.Why this matters The government spin is that the effort will help spark the crummy economy and create a platform to test the limits of, and urge the adoption of, broadband. As everyone knows, the United States continues to be a broadband laggard when compared to the likes of Japan and South Korea. The new project also shares some of the broader goals outlined by the Federal Communications Commission (FCC) 's National Broadband Plan.No guarantees that it'll bring 1Gbit/s to your doorstep any time soon, though!
Feds Favor Usage-Based Broadband
Today's broadband news roundup kicks off with some of the initial reactions following a report by The Wall Street Journal that the U.S. Department of Justice is investigating whether cable is trying to stifle over-the-top (OTT) video competition through the use of broadband consumption caps and TV Everywhere business models that require users to subscribe to pay-TV packages. (See Is Cable Stifling OTT Video Competition? )Sanford C. Bernstein & Co. Inc. analyst Craig Moffett said in a research note that the purported probe could "accelerate the industry's shift to usage-based pricing for broadband," adding that usage-based broadband is already endorsed by the Federal Trade Commission and by the Federal Communications Commission (FCC) 's Open Internet Order. Comcast Corp. (Nasdaq: CMCSA, CMCSK), by the way, is getting ready to test a new policy that would charge for extra once customers exceed their monthly caps. (See Comcast to Raise Caps, Test Overage Fees .)Moffett also predicted that the proceeding, even if it causes the DoJ to end broadband capping policies, could be bad for OTT video wannabees, as it "is likely to slow the pace of innovation and reinforce the closed nature of the cable infrastructure," and actually hinder the likes of Apple Inc. (Nasdaq: AAPL) or Google (Nasdaq: GOOG) from getting access to cable video feeds. Netflix Inc. (Nasdaq: NFLX) has been vocal about how caps discriminate OTT services, but Moffett believes that if a shift toward more usage-based billing by ISPs could be more damaging to the video streamer: "Be careful what you wish for," he warned. (See Netflix Cranks Up the Net Neutrality Heat .)Cable operators contacted by Light Reading Cable declined to comment on The Wall Street Journal article, but National Cable & Telecommunications Association (NCTA) spokesman Brian Dietz did issue a statement that cable's new offerings "represent accepted and legitimate business practices as well as sound network management. All the industry's actions are intended solely to ensure consumers get the highest value for their subscription."Free Press Policy Director Matt Wood had the opposite opinion, holding that the probe will be good for consumers and OTT providers, predicting that cable will have a hard time justifying "its use of these arbitrary data caps." He argued that Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s decision to exempt traffic delivered by its VoD app to the Xbox 360 "proves that these caps have nothing to do with congestion." (See Comcast Denies It's Prioritizing Xbox Video .)Will Richmond, the president and founder of Broadband Directions LLC and a leading video industry analyst, blogged that the DoJ's focus on broadband cap policies is misplaced. The organization, he writes, should be focusing instead on sports programming and the "multi-billion dollar annual subsidy that non-sports fans are required to pay due to current cable network bundling practices."Knology Inc. (Nasdaq: KNOL) said two leading proxy advisory firms -- Institutional Services Inc. and Glass Lewis & Co. -- have recommended that shareholders vote in favor of the company's US$1.5 billion merger with WideOpenWest Holdings LLC (WOW) . Knology has scheduled a June 26 meeting for stockholders to vote on the proposed deal. (See Whoa! WOW Buys Knology for $1.5B .)But the path isn't entirely clear. Knology shareholder Sheila Lewis is suing Knology, claiming that the deal undervalues the company, reports Bloomberg, noting that WOW's bid was 34 percent more than Knology's average three-month closing price before The Wall Street Journal reported on February 28 that the companies were in merger talks.The Internet Corporation for Assigned Names and Numbers (ICANN) received 1,930 applications for new generic top-level domains (.com, .net, and .org are among the most commonly used today), and it appears that Dish Network Corp. (Nasdaq: DISH) is trying to lock up a couple (.dtv and .direct) that might elicit a response from satellite TV rival DirecTV Group Inc. (NYSE: DTV). Among other notables, Comcast wants .xfinity and .comcast, and Netflix is trying to secure .netflix.
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