The battle between IPTV and cable providers is about to begin as this Wired article intones. —

The stage is set for a showdown between television networks and cable/satellite TV services, thanks to the internet. It won’t happen overnight, but your monthly cable or satellite bill could eventually be replaced by a monthly bill from Hulu, an online service that streams TV shows on demand.

For $10 a month, viewers will reportedly have access to a wider selection of shows than the free, ad-supported version Hulu currently offers. The service would work on PCs and specialized devices such as the iPad, videogame consoles and set-top boxes. The company plans to test a version of this “Hulu Plus” subscription, an expected development, with select users as early as this month to find out whether they’ll will bite, according to sources cited by the Wall Street Journal and All Things Digital.

In order for consumers to pay for a video service like that, it will need to be reasonably comprehensive. So it’s no accident that the same week Hulu’s subscription plans came to light, a Bloomberg report surfaced that the company is talking with CBS, Viacom and Time Warner’s television studio divisions to add their shows. That would be on top of a line-up that already includes “Fox, NBC Universal, ABC, ABC Family, Biography, Lionsgate, Endemol, MGM, MTV Networks, National Geographic, Digital Rights Group, Paramount, PBS, Sony Pictures Television, Warner Bros. and more,” including Wired.com.

Source

There is one piece that I believe will not bode well —

Cable and satellite are classic middlemen. When the internet meets the middleman, the middleman tends to disappear — or at least be replaced by a thinner middleman. We’ve seen it with record stores, classified ad-dependent newspapers, video-rental stores, bookstores and any other business that delivers something that the internet can deliver more efficiently.

If you look at the Supply Chain Collapse that have gone before, in industries like retail, trucking, warehousing, etc, there is no such thing as a thinner middleman. There were only dead middlemen. There is a twist to this scenario however. For IPTV to work one has to have a fat pipe. That means Cable, FIOS, or WISP as a provider. So the carriers may not be dead but they certainly will be wounded. So how does this all play out –

• Hulu launches the premium service. Expect the cost to rise to $15-20 end game. More providers will want to get in on the act which will raise the cost.
• Expect cable costs to collapse. That $40/mo you have been charged will wilt under the shift that is about to occur.
• But that cost savings will not go without a price. Expect the Comcasts of the world to respond to this by cutting services. All those cut portals that require maintenance by high priced talent will be shelved. YOYO will be the name of the game.
• We will finally see a shot at ala-carte services. It would be a no brainer for Hulu to provide ‘The Indie Channel’ at a $1 a month. They give you a key on subscribing that is entered into your HTPC. Hulu keeps the key current as long as you are subscribed. When you drop it they cease the update and the channel stops working. That capability is the real nail in the coffin of cable tv.
• Expect in some corners to see a large shift away from network produced product to lower priced indie production. Able to tap into Hulu, these indie producers could create short run series. The model is already there with shows like Burn Notice and Royal Pains.

The content choices are going to explode here very quickly. The beauty is you may only pay for what you want. Out of a million choices you may only subscribe to 40 channels for $15-30/mo or less. I can’t wait.

It also makes Verizon’s choice to go with a Cable-like pricing model the wrong move. They should have derived the FIOS pricing on the cost to deliver the pipe as a data only service. Just like they have done for the last 150 years. Like the knight in ‘Indiana Jones’ related — “He chose poorly.” Indeed they did.

Verizon has quietly scaled back its aggressive fiber deployment in favor of DSL over tired old twisty pair. The take rate for the company’s premium priced FiOS service has slowed. While I have not been able to find a break down by service, I’m certain the slowest products are pay TV and voice.

We have been repeatedly told that bigger pipes and direct fiber connections are impossible in America because of far flung population. Never mind the fact that the cost if installing a fiber or twisted pair loop to a residence are nearly identical. John Timmer of ARS Technica provides a current update contrasting fiber service in Hong Kong vs New York City. Both are extremely dense population centers. Both are outrageously expensive. Both have archaic laws regulating new construction and public utilities with plenty of red tape to slow the process.  I’ll even bet the New York city fathers will insist that Hong Kong’s infrastructure is more primitive and its government more corrupt. So why is it that the average Hong Kong resident has a 100MBPS direct fiber connection available at a price lower than Verizon’s cheapest DSL offering? And how can it be that a great many New Yorkers can’t even get FiOS at any price?

Hong Kong Broadband Network announced the initial results of its “Awesome Speed. For Everyone.” sales, which offer a symmetric 100Mbps fiber connection for the hefty price of US$13 a month. In the two months it has been offering it, customer growth has tripled compared to the earlier months of 2009. Clearly, the company has found it relatively easy to roll out or purchase fiber in Hong Kong’s dense urban environment, and is attempting to recoup its investment in infrastructure by attracting lots of people to its service using low prices.

To get half that download speed (and one-fifth the upload) with Verizon costs $140 a month, assuming you bundle it with local phone service. It also requires a one-year commitment, and Verizon has recently raised the early termination fees so that anyone quitting ahead of that year will now owe the company $360. These would suggest that the company plans on recouping its costs through fewer customers that pay far more. (ARS Technica)

My belief is that the Verizon suits do not see access as a serious business. The entire FiOS business model is based on selling subscribers a “triple play”. More consumers want access without overpriced VoIP service and pay TV. If you only want access, Verizon’s suits think DSL is all you deserve.  If we had real competition over the last mile (equal access to the copper infrastructure), Verizon would have to deploy fiber to have a shot at continuing to charge a premium price.

No matter how you spin them, numbers don’t lie. American consumers are paying the world’s highest prices in growing numbers to get Verizon’s FiOS service while V’s  fixed line voice and DSL businesses are crashing. Moral to the story: people want a big, fat unrestricted pipe, and they will pay more for it even in hard times.

So why is it only a select few of Verizon’s customers can even get FiOS? There is no excuse for every urban / suburban market to not have access to fiber but one: A duopoly that has bought and paid for the federal government that regulates them.

Verizon said 282,000 homes added FiOS high-speed data in the fourth quarter, and almost 1 million added it in 2008 for a total of 2.5 million subscribers out of almost 10 million homes passed. Those additions helped make up for losses in Verizon’s DSL business, which lost 68,000 DSL-based connections in the most recent three-month period after losing 96,000 during the previous quarter.

Verizon’s consumers also continued to drop their landline telephones, but not as rapidly as some had feared. In the fourth quarter, Verizon lost 3 percent of landline subscribers, up slightly from the 2.8 percent loss in the same period last year. In 2008 Verizon lost 12.2 percent of its landlines leaving 20.96 million still connected; it lost 10.8 percent of them in 2007. (Gigaom)

A post Halloween tale from the Verizon Crypt of Woe. The tale involves naturally around the billing system. They can’t clear the previous owners services to have David service running when he moves in post closing. The FIOS billing extensions didn’t work when I was there and still doesn’t on the edges. –

The fact that Verizon can’t setup an order without the previous service actually stopped is pretty ridiculous. t doesn’t allow for any leeway, like in my case. But ok, not the end of the world, I’ll call on Friday morning and get everything setup for that weekend for installation. Friday morning rolls around, I speak to the same rep. Service has stopped, but it will take 24 hours to process, and since they’re closed on the weekend, I’ll have to wait until Monday. Ok, that sucks, but again, understandable situation.

Monday comes around, and this is where the insanity really starts to begins. I call to setup service, but I’m told that it cannot be done because something happened in the system and our order is not “flowing” through correctly…Ok…They tell me they’re working on it, and will let me know once it has been resolved so I can get everything setup.

I call every day for a week, I still get the same excuse. The previous owners order is not clearing out properly, which is not allowing my order to flow through the system properly. They have submitted a ticket to their IT team, and that was pretty much the only thing they could do. They listed the ticket and the order as urgent, and from a management level request.

The fact that it can take a week for an IT team at a multi-billion dollar company over a week to figure out how to clear an order out of a system is insane. I even mentioned the idea, why not just cancel our order, put a new one in, and maybe it will work. The rep tells me that will not do anything because the problem lies with the previous owners service.

Fari Ebrahimi, you are a piece of work. You birthed this baby and it is still a cripple. But then its not your problem anymore is it? You made sure you slide out from under this millstone before it crushed you.

Be positive David! At least VZ hasn’t tried to burn your house down!

Linky.

From Wired comes a report that AT&T’s 2nd quarter new installation results have cratered. What I mean by cratered is a drop of 90%. Give a read –

Att AT&T posted its second-quarter report this morning, and boy, was it a doozy.

The company added a modest 46,000 broadband subscribers during the quarter, a screaming decline from 491,000 additions in the first-quarter 2008; and down sharply from the 400,000 subscribers added in the second quarter 2007.

We’re not sure what the problem is, but there are two possible explanations: Either people are less willing to pay more than $30 per month for broadband service; or people are less willing to pay AT&T for broadband service.

Well that’s troubling. It will be interesting to hear what Verizon’s results will be. My gut says a combination of factors are in play here. 1) AT&T has plumbed all of its existing LATA territories. 2) Rap on poor service and subpar speeds. 3) Inept marketing. 4) and Finally, the economic conditions. Look broadband as the Duopoly sells it is treated as a premium alternative to off the air broadcasting services. In that guise, in the consumers eyes it gets labeled ‘Entertainment’, not ‘Information’. So when the times are tight the luxuries are turned off. What is happening to Starbucks is probably going to happen to some segments of broadband as well.

Yes Dear Reader, we are back to the Third Pipe argument of selling the consumer plain dumb pipe. So long as you wrap yourself in the ‘Entertainment’ category you the provider run the risk of being kicked to the curb. Give us transport only options, no mail, websites, or other goofy services like ‘The Fan’. Residential data cable, we buy the modem, $15/month. FIOS speeds, same conditions, for $30/month. Oh I can hear the roars, but our staff levels! RIF them. You were going to do it anyway and lumber on with crippled services. Dispense with the Land of OZ mentality. It will only garner you more bad press.

On a related note. Readers if you know of a good provider in the Plano Texas area that provides a good price for T1 or SDSL at 768kbps I would like to hear from you!

Linky.

Dear FCC and Congress: Tell me again how the marketplace has become competitive enough to dump local loop unbundling. Darth V’s FIOS product faces so little competition in either speed or price, that they’ve been able to incrementally bump prices on a regular schedule. The average big bundle FIOS customer pays around $150 for what can be had for $40 in Paris. Before we start hearing excuses, France has a more antiquated legacy infrastructure, more labor union control of business, higher taxes, higher salaries and a shorter work week.

Discussing this morning’s earnings, Verizon CFO Doreen Toben told investors, analysts and reporters on a conference call today that FiOS users can expect a new round of price hikes this quarter. “You may recall we increased prices for selected products in the first quarter last year,” said Toben while discussing FiOS (see transcript (pdf)). “We anticipate increasing prices once again in certain products and bundles in the second quarter this year.” Which FiOS products and bundles was not specified.

Verizon has consistently nudged up the price of FiOS broadband, especially for customers who refuse to sign up for long term contracts or add additional bundled services. Standalone broadband service jumped $5 in many markets last fall, while double and triple play bundles have consistently increased anywhere from $5 to $20 since FiOS was launched (depending on the product market). (Broadband Reports)

The Consumerist has the inside scoop here. The ‘memo’ came via fax from someone who purports to be on the inside at a Verizon contact center. Sadly that person maybe looking for work shortly as logs are kept of all communications at VZ facilities. But if what is being offered his is even half true then the mess in both billing, operation, and marketing is more than we have alludded to here, and here.

Apologize for the quality of the doc but the original was murky.

The key point it appears is that offers are sometimes bogus from the start because the marketing is off on the timing. Other cases the VZ agents are uninformed of the current PROPER offers. Misapplying one offer invalidates another that the customer may rightly or wrongly be qualified for. Another words meltdown.

Some of the issues are simply people not talking. That was my experience in that company. Marketing was successful if they met their target audience numbers, be damn if the CSR’s were alerted in time. The problem I suspect relates to Billing. The ‘Bobs’ in the company were not into gathering requirements. Not only that they essentially just wrapped the potholes that are NOCV with components of COFEE. Worse yet the programming staff would, rather than go thru bug testing push that off to UAT to correct [not their job by the way]. Then they would just consider the project ‘complete’.

Shayagan, Fari, you listening? That’s your tarbaby that is getting ready to explode. I wonder if some hot shot NJ AG might want a notch on his belt.

It looks like the world is not Verizon’s oyster. At least not down in Tampa right now. All sorts of operational issues are cropping up for the carrier.

Sam Miller came so close to tossing his Verizon cable TV box to the curb outside.

After signing up in November for Verizon’s $99 a month deal for FiOS cable TV, Internet and phone service, Verizon was still sending him bills for $130 or more. He called to complain each month, but eventually his bill was stacked with $265 in extra fees.

One time he called Verizon, “they told me we didn’t have an account. I told them they could pick up their stuff at the curb,” Miller said. By calling random phone numbers at Verizon, he eventually found a helpful marketing clerk in a branch office to untangle his bill. He still hasn’t gotten the free TV for signing up — that’s going to take months.

“The TV picture reception is noticeably better,” Miller said. “It just seems like they grew so fast they could not keep up with customer demands.”

Unfortunately for Verizon, Miller is not alone in having complaints.

As Verizon signs up thousands of new customers a month in the Tampa Bay area, company officials say they’re working to correct problems with customer service: firing some sales workers, retraining the rest, and restructuring how they deal with customer complaints.

Then there is this fella in in NY who seems none too entertained by his FIOS service. [Content warning ahead]

I find it interesting that NOW Verizon is having problems with FIOS. Much of this was test bedded in Keller, Tx two years ago with a great deal of success. The TBO article seems to allude to operational issues not technology. But tech issues are cropping up.

Linky.

Well I picked on AT&T in a post below. Verizon’s turn in the barrel. Verizon had a satisfied customer in FIOS till he signed up for FIOS TV service. Part of the sad tale below –

For a detailed history of all the problems I have experienced with FiOS since March 2007, see my full review of the service at dslreports.com: according to technical support, I have 55 unique support tickets under my name, the majority of which are related to problems with FiOS TV.)

Since March 2007, I have been forced to use the “nuclear option” - contacting Verizon’s “Presidential Appeals” department - on two separate occasions, as their first-level technical support was unable to resolve anything in a timely manner. So far, the appeals department is 0 for 2 - each time, the problem was not resolved.

I contacted the presidential appeals department because HBO video on demand would not function properly; signs of tiling would appear every few minutes. Numerous technicians were dispatched and were unable to resolve the situation. Several weeks passed before the representative working for the appeals department came across an internal Verizon document stating that this was a “known issue” and a fix would be implemented in August 2007. To this day, this has not yet been fixed; according to a Verizon employee who posts on the FiOS TV message board, a fix is supposedly still being tested.

Weeks later, I was forced to contact presidential appeals for a second time when the normal levels of support were unable to resolve issues with the image quality; once again, several technicians were dispatched but were ultimately unable to resolve the issue. At one point, in an act of desperation, the local group decided to replace most of the components up to and inside the home. The measures were ineffective; the problems continued. A local manager was eventually dispatched out to the home; he claimed that the sub-par image quality was a result of “electrical issues” having to do with the wiring inside the home. End of discussion, case closed. (A visit from an electrician several weeks later would show that this claim was incorrect.)

The litany of his complaints is detailed in this DSLReports thread. Sadly, one of the reasons that Verizon took the plunge with fiber was to be able to reduce costs. Unlike copper, fiber is unaffected by most environmental issues. But this guys tale seems to indicate that though the fiber line is less vulnerable, the ancillary support equipment is not. Nox Nix?

HT: Consumerist

[Piling on Update]: Looks like VZ Calif has pooped the pooch. 74k customers can’t retrieve voicemails — link.

When we last left this saga, a Verizon FIOS customer had the opportunity to see another customer’s billing. Alas so did the other guy! It appears that Verizon does have a kind spot in their heart for not being made fool of –

A little under two weeks ago, we made a long-standing issue that we had with Verizon public. The fact that they had ignored our request to fix a huge oversight that resulted in our private FiOS account info to fall into the wrong hands for over 8 months was starting to upset us just a tad. We knew that if we shared it with you, our readers, that Verizon would have no choice but to respond quickly. At least, that was the hope.

Well, sure enough, after the story was picked up on The Consumerist as well as made it to the front page of Digg, we received a phone call. Then an email. Then another phone call. Then a couple more emails. Verizon Damage Control had stepped in.

Most of the phone calls and emails came from different people at Verizon, but the main idea was that they would be sure to fix the problem quickly. Later on in the evening, though, I got a call from a Verizon exec named Jeff. He had a tech, named Eric, on the line with him. The call came in at 7:00 PM, and we stayed on the phone for about an hour. Jeff and Eric were committed to making sure the issue was solved during that call, no matter how long it took.

It did take a while, but the end result was that I could now log in to the Verizon control panel and see my information, as opposed to the information of someone else who lives in the same city. Even better though, was that this guy who lived across town no longer had real-time access to my information. I specify “real-time” only because I will never know if he decided to take screenshots of my personal data, but I am optimistic on that end of things.

So, now that it was fixed, I said that something needed to be done about the 8 months that I was given the run-around, as in that time, I had spent over 20 literal hours on the phone with FiOS tech support, sales, retention, and anyone else I was put on hold in order to be transferred to. Another Verizon rep, Michael, made sure I was taken care of on that end. A couple of days later, we received a phone call that our account would be credited with 10 months of free service. We are on the highest plan Verizon has for FiOS customers in our area, that being 30/15. So the credit came out to almost $1500.

So a “Thank you” goes out to Verizon. Not only did they fix the mistake that had been lingering for so long, but they also went the extra mile in compensation us for our troubles.

A great story till that last sentence. The compensation was nice, but in reality, that was saving their butts money. Had this fellows accounts been jiggered by a con man, Verizon having ignored the case for 8 months would have been had for whatever the gentleman’s lawyer could squeeze out of them. But it would have had considerably more zeros. Kudos to Verizon for finally getting it right. Kudos to the customer as well, I personally would not have had that much patience.

But I do have to ask — Why does it take a VP to sit on the line to solve this problem? Was that you Charlie Forehand? Doing a level 4’s job of handling orders yet again at a VP salary. Shayagan should compensate you accordingly.

Linky.