I’ve often postulated here that the cable guys are feeling threatened by streaming video. New web only original programming is becoming more common, and is taking some viewers from their closed systems. They’ve been heavy handed about “managing bittorrent” claiming it consumed 80% of its capacity to deliver illicit content. Not only is the claimed 80% out of line with reality, but the fact is legitimate programming from services like Revision3 and Joost are delivered via bittorrent and traffic is growing as more viewers discover them. In the last year, the cable guys’ premium content providers have begun to offer ad supported streams free to anyone with broadband access. People like consuming content on demand as opposed to on a schedule, prior success of the VCR and Tivo proves it. With greater convenience, more programming will eventually find a larger audience. With content going directly from producer to consume , the long term viability of the closed content distribution system model is not viable. In other words, the cable guys’ 150 channel set top box business will be on life support soon.

Naturally, the cable guys are not going down without a fight. While publicly, they have stated network management and tiered service levels are needed to evenly distribute scarce resources, it’s only a small part of the bigger picture:

….given the fact that the company (Comcast) previously promised that it only managed traffic during times of congestion, only to have those claims disproved, we might have to take the term “network congestion” with a grain of salt. Also unsettling is the fact that the company hasn’t revealed any further details about what constitutes a high-bandwidth user and how limited those users will be during times of congestion. If Comcast chooses to roll out this type of technology, it will have to be upfront with its customers about what the exact limitations are. And given the company’s secrecy throughout the Bit Torrent fiasco, I wouldn’t hold my breath for that kind of transparency.

So, we’ve established that while technically “neutral,” both Time Warner and Comcast’s new network management techniques are not without their share of issues. There is still, however, one very large elephant left in the room: the fact that both Comcast and Time Warner are cable television providers. And as we all know, despite the industry’s constant invocation of the P2P bogeyman, at present, the largest bandwidth hog is actually streaming video. Clearly, the emergence of online video is something that cable video providers find very threatening and by capping off bandwidth usage, they’re effectively killing two birds with one stone; discouraging users from using their Internet connections for video while increasing the efficiency of the network. Is this anti-competitive? It sure seems like it. But is it anti-neutral? Technically, no. While Time Warner and Comcast both deliver video and Internet service via the same pipe, the two services live on separate networks. (Public Knowledge)

I am sorry to repeat myself so often, but if the cable guys had any real competition, none of this would be happening.

Well Time Warner mght want to hold off on turninig off the UseNet servers. They got a bigger fish to fry. The City of LA just slapped TW with a nice fat law suit for bad service and failure to comply with the contract terms that won them the territory.

The Los Angeles city attorney’s office plans to sue Time Warner Cable Inc. today, alleging that the company caused “major havoc and distress” when it became the No. 1 pay TV provider in Southern California two years ago.

City Atty. Rocky Delgadillo said Wednesday that Time Warner violated state law by making false and misleading statements to subscribers. The 25-page lawsuit, a copy of which was reviewed by The Times, claims the company violated its franchise agreement with the city by having subscribers spend hours on hold with customer service representatives and allowing excessive repair work delays.

“Hundreds of thousands of Los Angeles residents were ripped off,” Delgadillo said in a statement. “Time Warner must be held accountable for its promises.”

Which begs the question of the Lede. How is this different than Dallas, Houston, Beaumont, etc? Lack of interest by the powers that be is the only rationale for the difference. But regardless this should be an interesting lawsuit to watch.

Linky.
Legal brief.

The evil eye is getting sly in bandwidth rationing measures. For the those of you that are not familiar with the Usenet, it’s basically a giant distributed collection of bulletin or message boards covering every subject from fan clubs to art to obscure Os’s. It runs on thousands of servers that constantly replicate posts to one another. Most users don’t even know the Usenet newsgroups exist, but they are of vital importance to the hard core geeks, collectors, and many other special interests. Files are also traded on the Usenet, so Time Warner’s evil eye probably expects to see some reduction in bandwidth usage. I suspect the file traders who do not leave TW will just subscribe to a third party Usenet service and continue sharing. Outside of savings from ending the operation of a few servers, it’s doubtful Time Warner will see any benefit.

An internal tipster drops me a line to note that Time Warner Cable/Roadrunner will be eliminating newsgroup access. The newsgroup ax is expected to fall before the end of the month, and my source says that an official announcement should go up on the Roadrunner website sometime around the sixteenth. (Broadband Reports)

We’re always the first to report when the cable guy actually keeps a promise, just as we criticize them when he behaves badly. This post is a first, as I am reporting for both reasons. The promised metering in Beaumont begins Thursday.

On Thursday, new Time Warner Cable Internet subscribers in Beaumont, Texas, will have monthly allowances for the amount of data they upload and download. Those who go over will be charged $1 per gigabyte, a Time Warner Cable executive told the Associated Press.

Metered billing is an attempt to deal fairly with Internet usage, which is very uneven among Time Warner Cable’s subscribers, said Kevin Leddy, Time Warner Cable’s executive vice president of advanced technology.

Just 5 percent of the company’s subscribers take up half of the capacity on local cable lines, Leddy said. Other cable Internet service providers report a similar distribution.

“We think it’s the fairest way to finance the needed investment in the infrastructure,” Leddy said. (Google)

The press release goes on to say that metering is common in other countries. This in true in places like Canada, where there is virtually no competition. It is not true in MOST western countries. Time Warner already offers several service levels that in effect establish some limit on downloads. This is supposedly aimed at the top 5%, but the Time Warner sited “average” usage of thousands of pages and emails per month are for static content, not the rich media content of today’s net. It’s a safe bet that many “average” users will be seeing a few surprises in their future bills.

Since no one is providing a better / faster / cheaper service in Beaumont, this was inevitable. The fact is that if Time Warner had any real competition in, they would be investing in a more robust pipe instead of investing in a system to count and ration each customers downloaded bits.

The Wall Street Journal’s Vishesh Kumar only tosses a few softballs at Time Warner Cable’s new CEO in this interview, but it does give us a feel for the managerial mindset of the newly  independent company.

His soon-to-be-independent Time Warner Cable will be freer to pursue broadband and telephone services. But there are challenges: in the spinoff, the company will take on an additional $10.9 billion of debt to pay a massive, one-time dividend, 84% of which will go to Time Warner. (Wall Street Journal)

He continues to be outspoken on premium content going free for ad supported TVoIP delivery. We hope for the sake of his shareholders he works a bit harder on enabling TVoIP with a fat pipe than to reamin focused on the losing battle of trying to control content delivery.

Here’s more proof that the content and access businesses don’t mix well under the same corporate roof.

Time Warner is splitting off its cable services division, the company said Wednesday.

Time Warner currently owns around 84 percent of Time Warner Cable. The media giant, which has been struggling of late, has been rumored to be discussing merging the AOL division with Yahoo.

“A complete structural separation of Time Warner Cable, under the right circumstances, is in the best interest of both companies’ shareholders,” CEO Jeff Bewkes said in a release. (Cnet)

This blog wasn’t here when the Time Warner entered the cable business, but I can assure you the entire Third Pipe team agreed it was an unworkable marriage.

Management at Time Warner and AT&T have either been smoking something or are confident existing government policy will kill any broadband competition in their geographic markets. The funny thing about government regs is that industry and the buying public always find a work around. One example: when CAFE standards pretty much outlawed large cars, even larger SUV’s became the fastest growing automotive business.

Time Warner Cable and AT&T offer top speeds of 20 megabits and 10 megabits a second, respectively. These services typically cost from $50 to $60 a month. Both companies question whether consumers need higher speeds right now.

Time Warner Cable and AT&T argue that the money needed to upgrade their networks for higher speeds can be better utilized on other projects. How much such upgrades would cost isn’t clear. Verizon is spending $23 billion over several years to build its FiOS network although that network also offers TV and phone services.

Cable operators don’t have to spend as much to boost speeds. Comcast is using a technology developed by an industry group to inexpensively tie together several pipes it uses to shuttle data to customers into one big virtual pipe in order to deliver the higher speeds. This technology, known as Docsis 3.0, won’t require Comcast to rebuild its network to boost speeds.

The philosophical divide will have big consequences for the camp that gets it wrong. If customers end up flocking to the superfast connections, Time Warner Cable and AT&T will be caught flat-footed without a high-end offering. And not only is broadband service the highest-margin service sold by phone and cable companies, it opens the door for providers to sell both TV and phone service. That could be an issue in markets where consumers have a choice of an ultrafast connection or a fast, but not as speedy, service. Time Warner Cable and AT&T overlap with either Verizon or Comcast in a substantial portion of their markets. (Wall Street Journal)

While we don’t give investment advice, I can’t see a very bright future for either of these companies’ broadband businesses. Then again, the future of all communications and exchange of all media is in broadband, so the shareholders will be losing value soon under the current managements’ mindset. Competition will appear!

This is the second time that VZ has ran off to the courts with their ball [FIOS] complaining. Again, must be something in the water. Any how this is what they are complaining about –

New York (NY) - Verizon is a bit miffed at Time Warner’s new television ads and has filed a lawsuit to get them off the air. Verizon claims the ad misrepresents its FIOS fiber optic service and is seeking an injunction, damages and the posting of an apology ad.

The suit was filed in the US District Court in the Southern District of New York. Verizon claims Time Warner’s ad misrepresents FIOS as requiring a satellite dish to watch video. The same ad shows Time Warner saying that they’ve been using fiber optics for years (thus making the viewer think Verizon is using old technology). However, both companies have been using fiber optic for backhaul lines for several years now.

I guess you pay for all that high priced legal talent you want to keep them busy. But realistically I can’t believe that, sitting there with the superior product their marketing dept can’t come up with something just as funny and more insightful. Come on Verizon, crying in front of a judge is beneath you. Not only that but the marketing guy is cheaper than the lawyer. Make marketing earn their pay. Compete.

Here is the travails of one Time-Warner customers ‘March of the lite brigade’ in trying to acquire his advertised rate and stop losing signal when it rains. Which by the way is a similiar complaint I have with TW. Only in my case we lose signal for a day AFTER if stops raining and something on the line drys out. The quandry –

Advertised speed	10mbps
Real speed in dry weather	1 to 7 mbps
Real speed during rain	<1 mbps
Average speed	2.5 mbps
Computers tried	4
Modems tried	4
Cables laid out	1 original + 3 new sets
Technicians dispatched	12
Time on the phone	>15 hours

and this bit of field tech one liners on excuses –

• Can you sign up my work sheet? My friend is waiting for me to go to lunch
• to have high speed, you need a fixed IP
• 3mbps is fast enough!
• why don’t you sign up for a slower service? That way you will pay for what you have right now
• I removed the old cable, but I don’t have the right drill to put the new one so I cannot finish today
• this is a free world, there are other internet providers. If we haven’t managed to fix it so far, it will continue
• I see the problem, it is the splitter! (a new splitter later) I have no idea why it doesn’t work
• Do you know a website to check the speed?
• it’s the router causing the problem! (I show the router is not plugged in) I have to call my supervisor to see if he knows
• It doesn’t rain anymore, so your internet will be fine!
• Why do you have a router if you don’t use wireless?
• the wireless signal is slower, that’s why it’s slow (no it’s not slower and I don’t even use it)

Most anyone who is a TW customer at a minimum is paying $50/mo on up depending on the service package one signed up for. But you would expect for the money competency and courtesy. NOT the drive away scene out of the keystone cops.

Now in thier defense, this stuff is complex in the details and every interior setup is not under their control so every scenario is different. But what this customer is experiencing is under their control. TW’s problem resolution process cannot do root cause analysis; its all canned process. Nor are their field techs graduated on competency with pay scales to match. That’s called pay for performance. Were they doing providing PfP they might have rolled two techs max. One to ascertain the boundary of the chokepoint another to resolve it.

As it is right now TW, Comcast and other cable providers could be open for class action. So I put it to the cable consumers — is there ANYONE who is getting 10mbs on a consistent basis as a subscriber? Will you please stand up and identify yourself.

Please read the whole thing.

[Follow Up]

Being curious I went and did a speed test from my node. Best I was able to get in the Metro area is 5.1mbps down. Here are the stats for the carriers in my area –

The fastest anyone seems to be getting based on agregatted results from those that did a speed test is a little over 7mbps from Comcast. That’s 27% off the advertised rate. And it appears that no one has received the advertised rate even as a spike.

Its sad.

Funny thing about an un-competitive market like the one we have for broadband and wireless communication in the USA. The companies in the game still go to war with each other, but the wars are like mafia turf battles, with little or not real benefit to consumers. We may be seeing the beginning of a wireless turn battle. The cable guys have long been looking for a new way to retaliate against the telcos for invading thier pay tv turf. Wireless may be the ticket.

According to unnamed sources, the companies are discussing a plan to provide funding for a new wireless company that would be operated by Sprint Nextel and Clearwire. The new company would use network spectrum and assets from both companies to form a nationwide wireless network using WiMax.

Last summer, Sprint and Clearwire announced they’d be working together to build a nationwide network. In November, they terminated their agreement, but each company has said separately that it is talking to the other about ways to work together. For months, rumors have floated around that Sprint would spin off its WiMax network, known as Xohm, and combine it with Clearwire’s network.

The Journal said the companies are now trying to raise $3 billion to create the joint venture. Comcast, the nation’s largest cable operator, would put in about $1 billion, while Time Warner, the second largest cable operator in the country, is willing to pony up $500 million, the Journal said.

Bright House Networks, a smaller cable operator, is also supposedly in the talks and could contribute around $100 million to $200 million. Intel might be contributing $1 billion, and Google could throw in a couple of hundred million too, the article said. (Cnet)

It would be great to get Xohm completed. Too bad it may be under the thumb of the cable guys. It’s kind of like bringing the local Don in.