In business there are several ways you can win. You can be head and shoulders above everyone else. Your competition can be total screw ups. You can gain a defacto monopoly by political legerdemain. Or some mix of all of them. Case in point –

In just over two weeks, Emmy-winning AMC drama Mad Men is slated to begin its fourth season on the basic cable channel. But with negotiations between its parent company and AT&T U-Verse over carriage fees, the cable and internet provider might force subscribers to relocate their premiere parties to the apartment of someone with Comcast.

It’s not just AMC that faces being dropped by U-Verse. Female-oriented channel WE tv and the Independent Film Channel could also face the firing squad if AT&T can’t reach an agreement with parent company Rainbow Media before July 25.

This is similar to the situation faced by Cablevision last March when its pricing squabble with ABC resulted in customers missing a bit of the live Oscars telecast.

Source

It is crazy that a channel customer should be losing any access to the entertainment over some internal provider-carrier squabble. That is fighting over who washes the dishes kind of silliness. And the customer be damned thank you very much.

The better model is the carrier is paid by the subscription of the consumer not by the channel provider. No squabbles occur. In fact under that scheme the two parties work in concert to maximize subscription rates. The whole effort become customer focused rather than channel focused as it is now on cable.

And that is why the likes of Netflix and Hulu will be winners in the space.

Ok lets get something straight. We here at ThirdPipe are FOR a Net Neutrality requirement for carriers. But the current ‘Net Neutrality’ option winding its way thru the halls of the FCC is NOT Net Neutrality. Its nothing but a power grab by the Beltway Bandits to squelch dissent.

Oh but it gets worse. The economics of its do not bode well either —

The study, authored by Charles Davidson and Bret Swanson, forecasts that the nation would hemorrhage 500,000 jobs in a best-case scenario were broadband reclassified as a Title II telecommunications service. That just so happens to be an objective currently under pursuit by members of the Federal Communications Commission (FCC) with support from backers of “net neutrality” policy.

The forecasted job losses are likely to make for unpleasant headlines for the FCC at a time when jobs and the economy remain paramount in the minds of most voters and legislators.

“Especially at time when the national economy is attempting to recover from a major and enduring downturn and private sector job creation remains a concern, the destabilizing impacts of the FCC’s proposals place the nation’s economy at even greater risk,” the study reads.

Telecommunications companies have for months now warned that a formal adoption of the FCC’s reclassification proposal could hamper innovation and infrastructure investment, and observers say this study could provide them with fresh ammunition in the fight against reclassification and net neutrality.

“If this Title II regulation looks imminent, we have to re-evaluate whether we put shovels int he ground,” AT&T chief executive Randall Stephenson said earlier this month in an interview with the Wall Street Journal.

From 2003 to 2009, broadband service providers invested, on average, an annual $30 billion for deployment, which created or sustained some 431,000 jobs. Were that level of investment to dip by a conservative 10 percent in the wake of reclassification, 502,000 jobs would disappear and the nation’s GDP would shrink $62 billion. At 30 percent, the study projects the U.S. GDP would drop by $80 billion, for a loss of 602,000 jobs.

Following suit of their Republican colleagues, a growing chorus of senior Democrats have in recent weeks expressed opposition to the FCC’s regulatory rewrite, asking they instead pursue a legislative solution. Cross-chamber whip counts reveal at least 285 legislators disapprove of the measure.

Flush 500k jobs? Sure could. Do the major Telcos have that many jobs? No. But what is not known by many in the beltway crowd is that a large percentage of the Outside Plant work is today done by contract firms. They would be the first to be laid off on the street if the current proposals are adopted. But even at the Telcos there would be follow on layoffs in the management ranks. Why keep an outside plant manager or a facility supervisor if nobody is laying any FIOS cable? They too would be on the street.

The Net Neutrality move is as bad as the DISCLOCE Act in many ways. But to lose a half a million jobs to boot? Somebody get a broom. The FCC needs sweeping out.

The white paper is located here.

Sorta, as in right now its register, then get an invite. Its not a bad strategy either. Run a test case with a small body of users to get the kinks out. A method I would heartily support.

But the question I have is it it worth $10? For the money you get –

• Access to more shows from the major networks.
• Access to the past seasons archives.
• It will be viewable on more devices (iPod, iPhone, Samsung devices, Sony PS3, Xbox, your PC)
• All of it available in HD.
• Oh, and you still have to watch all the ads. The price of entry does not spare one from this.

Now ole Fuddy-Duddy here says maybe its worth $10. Fact if they would ditch the ads I would give a serious thumbs up. I would also suggest they consider bringing in other partners like USA Network as well. Finally I could really care less that HuluPlus runs on an Xbox or PS3. I don’t game.

But with a little jiggering of the content. Dropping of the ads. Then getting some of the channel partners like HBO on board in an ala carte fashion this could fly. There is only one problem. HD already exists over the air and that ole trusty Tivo is still there with the FF button. So questions boils down to does access to the archive of shows worth the $10.

My last Ah-Ha. Does HuluPlus set the new price model for broadband content? Personally I think it does. Not because I think the content is competitive as what $40/mo cable provides. No, its a market perception thing. Once the public gets it in their mind that $10 is the value proposition the cable Cos won’t be able to shake it. Serious downward pressure waits in the wings.

Now, do the networks have the guts to pull content off the cable providers?

Linky

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.

There a few notes floating around the ‘Net that Google is testing bits and pieces of Google Voice internally. Even rumors that a possible upgrade to GMail may include a Google Voice client popup –

The new feature will allow users to make voice calls over the Internet and it’s likely that it won’t be limited to Gmail. In April, TechCrunch reported that Google “built a Google Voice desktop application to make and receive calls” and that the application is tested internally. Google used technology from Gizmo5, a VoIP service acquired by Google last year.

For now, Google Voice’s integration with Gmail is not publicly available.

A Google Voice VoIP service with land line tie in? The consequences are rather formidable –

• Google probably becomes the instant largest VoIP phone company on the planet. Assuming that they tie this to every GMail account, that is in the cards by default. GMail outclasses Skype by at least an order of 2X.
• The paid for VoIP service collapses? Or the price points become inordinately cheap. Why pay for it if I can get if for free?
• Skype’s propietary signaling format bites them back. What has kept most folks with Skype is market size. If a larger player shows up with open protocols, it makes Skype’s technical decision problematic. That become a huge problem for them as they are now a start up again.
• The Skype-Verizon deal is toast.
• It makes the job of the folks trying to control the Internet that much harder. Hard to enforce net rules is they are precluded 1st Amend. speech provisions, which is what the FCC was supposed to guard in the first place.

As a technology this is not earth shaking, its just VoIP. But if Google follows their usual — free basic, paid premium scenarios — it is a massive realignment of the VoIP space as a business. It would also portend a serious challenge to the big three wireless carriers. A smart upstart could offer a unlimited data plan coupled with Android/GMail/Voice/SMS and blow their competitors voice/data plan pairings out of the water. (Hear me out there T-Mobile??)

This is a dark swan for telecom.

Linky

Update:

You must appreciate the remorse I have when I read this –

When Google acquired Gizmo5, a Skype competitor, in November Google Voice users rejoiced – presumably they’d be getting a much needed soft phone on the desktop for users to make and receive calls through Google Voice.

We confirmed that the application had been rewritten and was being tested internally at Google in April. Some Google employees continue to use the app, we’ve confirmed.

But don’t expect it to launch publicly any time soon, we’ve heard from multiple sources. Why? an internal religious debate about desktop software.

Google founders Larry Page and Sergey Brin don’t want Google to be in the business of creating software outside of the browser, say our sources. And that’s consistent with Google’s product launches over the last several years.

Of course it ignores the efforts that Google is putting into developing their own Chrome browser, Chrome operating system and Android operating system, as well as a variety of mobile apps – all are software that installs on computers or mobile devices.

But there may be a hard line when it comes to pure desktop apps like Google Voice. So the team has been sent back to the drawing board to try to make a workable soft phone that will work entirely within the browser using HTML 5.

So the upshot is, it ain’t gonna happen this year or next. Damn! Apparently part of a religious war internally. Personally I think this is a bad move on Google’s part. There is only so much you can do with Search. But with telephony, when you can do it big, there are all sorts of avenues where not only is search manifest in telephony use but it provides yet another source of revenue apart from search. Smart companies diversify income streams.

I need a scotch…..

Linky.

Update II :

Ok, so my scorecard was only half right! The upshot is, Google Voice is out of the Labs and into the wild! Wow. Integrated with Google Mail? Nope. I want that, but the fact that I can freely sign up for Google Voice without the invite is a good start.

Will be a busy weekend. Have a few clients that want this integrated into their websites. Loving it. The current release of GV won’t however put Google in the MaBell business however. It depends on an existing phone line to operate. But merely as a call director it has many uses for lots of people.

To be fair, the lede is a little misleading. The perp in question that made the threat is a contractor to Verizon. But like we say here on Third Pipe — ‘You are Who you Hire.’ –

Al Burrows of Las Cruces, New Mexico, sued Verizon Wireless in Santa Fe’s 1st Judicial District Court on April 20, claiming violations of state and federal debt collections laws, as well as “negligent infliction of emotional distress”–for which he wants the telecom giant to pay punitive damages. As of May 25, Verizon had yet to respond to a summons.

According to the lawsuit, last year Verizon bill collectors were making calls “too numerous to count” to Burrows over a relative’s unpaid cell phone bill.

When he hung up on one of these calls, the Verizon rep called him back, and grew “vulgar” and “abusive” in an attempt “harass and intimidate” Burrows.

“In particular, [Verizon's] representative stated that she knew where [Burrows] resided and said ‘I am gonna blow your mother fucking house up.’”

A suit is pending so VZ is in the closed clam mode. But you know, get a few of these kind of actions and it destroy’s the brand. We have seen stuff like this in VZ’s name from collectors, field reps, salesman, etc. They need to tighten up the contractual relationship of who they associate with.

HT: Sante Fe Reporter

YouTube, the place where the 10min vid is king. Not much prime time going on there of course. But if you count views, well then program directors at ABC, NBC, CBS better listen up –

America’s Funniest Home Videos may have pioneered the YouTube concept, but as the site reaches the five-year mark, its audience size is no laughing matter. YouTube’s viewership now exceeds that of all three networks combined during their “primetime” evening time slot, with more than 2 billion views per day, Google announced Sunday.

Granted, YouTube’s numbers come from worldwide views, while ABC, CBS and NBC broadcast their primetime channels within the United States. But this is a significant milestone nonetheless, and hints at an eventual tipping point when the internet could become the world’s dominant video-delivery system, Mark Cuban’s predictions aside.

Google also trumpeted some other key stats: People upload over a day’s worth of video to YouTube every minute; the average user spends only 15 minutes a day on the site, which YouTube would like to increase in part by renting full-length films; and YouTube has broadcast live sports to more than 200 countries.

To celebrate its fifth birthday, YouTube asks the site’s users to upload videos of how the site has affected their lives, some of which will appear on a specially curated channel. In addition, celebrities including Conan O’Brien — whose best next career move might be to become official curator of YouTube — marked the occasion by posting a playlist consisting of their favorite videos (view his above).

Should the networks really be worried about being overtaken by YouTube? Yes and no. They own their content, YouTube has professed a wish to lengthen viewing times. Licensing currently-airing full-length network television shows (in addition to the older shows they currently license) would be a great way to do that. And the networks are in a more favorable negotiating position than the record labels were when they made similar deals, due to Hulu (ABC and NBC) and CBS.com already attracting large audiences for that content.

Perhaps a more serious threat to the networks is that YouTube is changing our viewing behavior, and that our viewing habits on the computer will soon migrate to the living room.

That last bit about changing viewing habits has already happened in our household. We have not had cable for almost a year and to tell you the truth, we don’t miss it.

Linky.

Alcatel is pondering the development of a 100mbps over copper technology. Its possible for 100mpbs over 1KM. It is DSL after all –

Alcatel-Lucent has developed a prototype technology that could dramatically increase the speed of data communications over the copper wires that make up the majority of the world’s telephone infrastructure. The technology combines three existing techniques, known as bonding, vectoring, and DSL phantom mode. It can reach speeds of 300 megabits per second at a distance of 400 meters from a communications hub, and 100 megabits per second at one kilometer.

Squeezing more speed out of copper connections is an important goal for telecommunications companies in the United States. They want to compete with the 50-megabit-per-second speeds offered by cable providers, but DSL connections transmit data through telephone lines–a fundamentally different technology from that used by cable companies. Alcatel-Lucent’s technology could help these companies extend high-speed Internet access before next-generation fiber-optic networks become widely available.

The first two components of the prototype system, vectoring and bonding, are standard ways to increase the speed of DSL broadband connections: vectoring cancels out noise in a DSL line, and bonding treats multiple lines as if they were a single cable, which increases bandwidth by a multiple almost equal to the number of cables involved. Neither technique is widely used in the United States, but they are deployed to a limited extent in both Asia and Europe, where high urban density makes them more economical.

source

Intriguing yes? Here’s the rub. In many areas of the US, from a remote CO to a end user can be 20 miles. Worst case being that in some cases its over barbed wire. (Yes Mildred, that still exists in some locales.) So for grins lets say that as a DSL service this scales to 10mbps at 10 miles end user to remote CO.

Given that assumption is this worthwhile? Yes in reason. Obviously the Telcos would wish to offer this in high density areas as they could compete with FIOS without the attendant cost of new outside plant installs. Keep in mind that AT&T tried something very similar with a copper based Uverse that did not work out so well.

In practice where does this fit? High density, natch though the market in the urban centers is getting very competitive. The even better fit is the existing suburban neighborhoods where the copper is already in the ground. The issue is price. Would the public see the value of a 10mbps service at say $30/month? Could the Telcos provide it at that price and have margin? That’s where the rubber meets the road.

Much of the wireless industry has been resisting pretty strongly the idea of giving up the voice channel as a revenue stream. Fact what they are resisting is the concept that voice is just another piece of data. For example, almost a year ago Apple disapproved a Google app that permitted VoIP on the iPhone at the insistence of their AT&T transport partner.

Ok, but then what can you do about this? –

More time laughing with friends.
Less time in front of a computer.
Take free, unlimited Skype-to-Skype calls and IM on the go with your BlackBerry® or Android™ 3G smartphone from Verizon Wireless.

Yeah, its a shill quote right off the Skype site. But that is not what matters here. What is, is the fact that Skype/Verizon are putting a shot across the bow of every other vendor out there as it relates to voice minute charges.

Now of course there is a down side. That Skype call is now a data rated call. Which if you look at Verizon’s data rate plans is not a bargain in comparison. So for the consumer it is not a block buster cost saver. But this opens the door that voice is just another chunk of data. I would be inclined to look at T-Moble’s unlimited data plan for this Skype service. Get one of their Android phones and see what happens….

But the door is opening. Might take a year or two for folks to catch on but eventually there will be a data rate war in the wireless arena as voice channel services are dropped by consumers.

Has Art Brodsky lost his grip? His posting over at Public Knowledge has to be one of the lamest lines of defense ever offered as a basis for over turning the Rule of Law. Kindness of Strangers be damned!

Mr Brodsky starts with using the Ides of March reversal technique –

Of course, the story isn’t all that simple, is it? Because the hidden story of Comcast’s glorious victory is that if Comcast were smart, it wouldn’t in the first place have brought the case, which challenged the FCC’s authority over the company’s high-speed Internet service. Some in the telecommunications industry, perhaps even huge companies with three letters in its name, urged (begged?) Comcast not to take the FCC’s ruling to court, because of the possibility that Comcast could actually win and, potentially, win big —which is what happened.

The reason that the Telcos like the arrangement Art is that it extended their LATA boundary relationships into the non regulated digital environment without so much as a legal skirmish. And what’s this dismissive alluding but not naming? Its AT&T, VZ, Sprint. Don’t be so damn coy.

But where is the standing on damages to the industry that Mr. Brodsky intones? He offers two — Depend on the Kindness of Strangers, and Waiting for Godot. In the former case he charges that depending on the big firms for telecommunications advancement has led us on a downward spiral in terms of global competitiveness. There is some truth to that but not the whole truth. For who is the hand maiden leading the spiraling down the drain but the FCC itself. Then in the latter case we have this –

We can’t depend on unelected bureaucrats to deal with topics as essential as broadband, because the result could be “excessive and burdensome regulation” on those humble, hard-working telephone and cable companies who unfairly change the rules without any reason at all.

And to you I say, NO we cannot trust bureaucrats with damn near anything including telecommunications. If for no other reason that the concept of the Lack of Sufficient Knowledge on a continuing basis.

But thru all of Mr. Brodsky’s missive is this gem –

… Practically speaking (even if there is a very slim legal opening), broadband is free from regulation – a nirvana that the telecoms industry might once upon a time have gratefully accepted as its due, but now looks upon it with some trepidation because now the door has swung wide open to a full-scale discussion of bringing Internet broadband access services back under reasonable regulation.

Two counts here. Brodsky’s ox has been gored by this ruling yet now the door has been swung open for reasonable regulation? By what variant of a pharmaceutical does he come to this conclusion? Its an election year fella. The chances of a Democratic Congress taking this up is slim to none. Plus if the tea leaves are right the Republican Congress next year won’t have the cycle time to touch it either. The second is under proper procedure, the FCC being a creature of Congress should make the necessary request for an expansion of its authority by the proper means, not some gerrymandered legal trick with a wink and a nod. But Mr. Brodsky the FCC DOES NOT possess the authority to overstate its intended alloted powers. Or do I assume you are willing to abrogate the rule of law to achieve your statist aims under the color of consumer protection. How Stalinist.
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