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Tag: cable companies

  • Cable Companies Shocked At Obama’s Neutrality Stance

    Cable companies are pulling together in response to President Obama’s “stunning” Net Neutrality stance.

    The president recently called for much greater government regulation on the internet as a common “utility”.

    Fred Campbell, former head of wireless communications at the FCC and now executive director of free market tech group Center for Boundless Innovation in Technology, weighed in. He said that applying extremes like Title II to the internet would create “legal uncertainty at home and encourage the efforts of totalitarian regimes abroad to tighten their control over the internet – the 21st Century’s mass media communications system.”

    Ted Cruz raised eyebrows when he posted this to Twitter shortly following the president’s remarks:

    The National Cable and Telecommunications Association, which represents cable companies including Comcast and Time Warner, said it was “stunned” by the president’s remarks.

    “The cable industry strongly supports an open internet, is building an open internet, and strongly believes that over-regulating the fastest growing technology in our history will not advance the cause of internet freedom,” said NCTA president Michael Powell. He is also the former chairman of the Federal Communications Commission (FCC).

    Powell added, “We are stunned the president would abandon the longstanding, bipartisan policy of lightly regulating the internet and [call] for extreme Title II regulation,”

    Lobby group Broadband for America said that Obama’s endorsement “of 1930’s era Title II classification would lead to unprecedented government interference in the internet, and would hurt consumers and innovation.”

    What do you think of Obama’s recent statements? Do you agree with the “stunned” cable companies or Obama himself?

  • Aereo TV Service Threatened by Supreme Court Case

    In a case which alludes to the 1984 Betamax case, the pseudo-TV service Aereo is being threatened by a lawsuit from major cable companies. On Tuesday, the Supreme Court will start hearing arguments from both sides.

    Two years ago, Aereo was brought to New York City. The concept of the company was simple, yet brilliant. Utilizing thousands of tiny, thumbnail-sized antennas, Aereo would allow customers the opportunity to view public network broadcasts on their computer, phones, or tablets through a subscription service. At the Aereo headquarters, each subscriber would be assigned their own, individual antenna by which they would receive the television broadcasts. Not only can subscribers to Aereo watch the broadcasts live, but they can also watch them at a later date due to the cloud-based DVR services offered by Aereo.

    Essentially, Aereo’s service provides public, free, network television broadcasts, through tiny antennas, to those who do not have or do not wish to have a TV or antenna set-up.

    The complaint with Aereo from the cable companies and broadcasters is that the company does not pay a retransmission fee to broadcast said channels.

    If Dish or DirecTV or Time Warner or any other cable company wants to transmit local, network television to its customers, it has to pay a retransmission fee because the Copyright Act of 1976 states that these cable companies provide a form of “public performance”, i.e. the companies show the broadcasts en masse to millions of patrons.

    The major cable companies and broadcasters feel as if Aereo should have to pay the same retransmission fee.

    “Aereo has built a business out of retransmitting broadcast television to members of the public without seeking authorization from or paying compensation to copyright holders… It is settled law that third parties must pay for the rights to transmit performances of copyrighted works to the public,” stated Washington Appellate Lawyer Paul Clement, the man representing the major broadcast companies in the suit.

    Aereo’s lawyer, David Frederick, believes otherwise, however: “When an Aereo user plays her personal recording of a broadcast work and views its images and sounds over the Internet, the ‘performance’ she transmits and receives is that playback – not the broadcaster’s prior performance… Because Aereo’s technology cannot be used to transmit content other than from a user’s personal recording, it does not transmit the performance embodied in petitioners’ broadcasts… Nothing goes into or comes out of Aereo’s equipment except in response to a user’s commands.”

    http://www.pbs.org/newshour/rundown/supreme-court-agrees-hear-arguments-internet-tv-service-aereo/

    While the case may seem fairly cut and dry, it is the lack of legal precedence or proper legislation which makes this case so interesting and confusing. Only six cases with relevance to Aereo’s case have been documented in Supreme Court history, and the rulings have been so diverse that there is no discernible pattern as to what the decision might be: “There’s nothing that ties the Supreme Court’s hands in this case, which makes it doubly intriguing,” explained Shyamkrishna Balganesh, assistant professor at the University of Pennsylvania’s law school.

    Making the case even more intriguing is the divide among even like-minded justices. Ruth Bader Ginsberg and Stephen Breyer, both Democratic justices appointed by Bill Clinton, are expected to side with opposite parties due to the vagueness of copyright law – Ginsberg is expected to side with the Copyright Act of 1976 due to her intimate knowledge of the subject, while Breyer is expected to side with Aereo due to his lenience toward intellectual property rights.

    In the end, the decision as to whether or not Aereo will be allowed to continue is one with immense implications for the future of digital media. If it wins, Aereo and future services could change the way in which consumers watch TV forever. If it loses, cloud-storage services, such as DropBox, could face legal issues in the future due to copyright violations.

    Regardless of the outcome, Aereo has pushed-in all of its chips: “There’s no plan B,” stated Barry Diller, the man whose company backs Aereo. “If we lose, we’re finished. I can’t see any path forward.”

    Image via Facebook

  • Consumers Union Speaks Out Against Comcast/Time Warner Merger

    There are plenty of reasons to be opposed to the proposed merger of Time Warner and Comcast. The deal would see the two largest cable companies in the U.S. combined into one giant cable company covering much of the country.

    From a consumer standpoint, cable companies are already non-competitive, with most of the U.S. split up into regional monopolies where consumers have one choice for truly high-speed internet. Though Comcast has tried to spin the transaction as a potential win for consumers, it isn’t clear how those customers. might benefit from a larger company operating their cable TV and internet service without real competition.

    For content providers the deal might be a nightmare, with a larger Comcast able to almost name its own prices for retransmission fees, putting to rest the fights seen in the past.

    Business and political leaders have already loudly announced their support or opposition to the merger. Today the Consumers Union officially announced its opposition to the deal.

    The organization believes, of course, that the new mega-company would have no incentive to provide customers with either better service or lower prices.

    “Under this proposed deal, two huge companies would become a behemoth,” said Delara Derakhshani, policy counsel for Consumers Union. “This has the potential to be a very bad deal for consumers. This industry is notoriously unpopular with consumers due to poor customer service, not to mention ever-increasing bills, and a deal this size doesn’t exactly convince us that things will get better. It’s hard to understand how this kind of concentrated market power, which would account for almost three-quarters of the cable industry, is going to benefit consumers. It raises several red flags about the power and influence that one company would have on the marketplace, and the impact it would have on your wallet and the choices you get. We’re counting on regulators to take a very hard look at what this enormous merger would do to competition, customer service, and bills that continue to climb year after year.”

    Though the Consumers Union wields some power in consumer buying habits (especially for cars) the organization’s opposition to the Time Warner/Comcast merger is unlikely to affect the eventual outcome of the deal. This is partially because cable customers already don’t influence the competition-averse cable industry and partially because the companies involved simply don’t care.

    Image via Comcast

  • Disney and AT&T Announce U-verse Agreement

    Disney and AT&T Announce U-verse Agreement

    The Walt Disney Company and AT&T today announced that they have ironed out a long-term distribution agreement. Disney’s sports, news, and entertainment content will continue to be distributed on AT&T’s U-verse service. The deal includes programming from ESPN, ABC, and the Disney Channel.

    Part of the agreement includes new programming, including a group of “authenticated” (read: locked with digital rights management) channel-like products that can be accessed through the U-verse website or through mobile apps. Branded “WATCH” ESPN, ABC, and ABC family programming will be available through the service.

    “The renewal with AT&T U-verse – our seventh top ten distributor agreement in just over two years – extends the value of the multichannel subscription model with the addition of new networks and services from The Walt Disney Company,” said David Preschlack, executive vice president of affiliate sales and marketing at Disney. “Viewers are increasingly living in a multi-screen world, and with this new deal, they will enjoy such benefits as live access to content via the WATCH Disney and WatchESPN services across platforms.”

    Indeed, the multichannel subscription model is alive and continues to impede innovation in television programming. While trying to develop new TV models and technologies that incorporate the internet (and could possibly provide a la carte programming for consumers), both Apple and Intel have discovered just how monolithic the current cable model is.

  • Intel TV Service Delayed by Cable Companies

    Intel‘s new push into the cable TV arena could be delayed significantly, if cable companies have their way. The Wall Street Journal is reporting that Intel’s plan to offer cable TV over the internet is on hold until content-licensing agreements can be ironed out with cable companies.

    Citing unnamed “people familiar with [Intel’s] plans,” the journal reports that the new cable service might be available by mid or late 2013.

    Content negotiations with cable companies are rumored to have been a stumbling block for Apple’s HDTV device as well. In September 2012 it became clear that a fall launch of the Apple TV set would not pan out. Cable companies were rumored to be insisting that Apple devices be rented to consumers through cable companies, and that they have a hand in the development of the software running on the device – a point on which Apple almost certainly won’t budge.

    For Intel, the holdup could be the company’s plans to offer TV channel subscriptions a la carte, rather than exclusively in bundles. Cable companies have enjoyed content monopolies for years, shoring up less-viewed channels and niche programming with the package deals. By once again preventing cable TV from catching up to technology, the companies risk losing out to a burgeoning world of content networks and studios popping up online.

  • Apple HDTV on Hold as Cable Companies Balk

    Last month it was reported that Apple was in talks with cable companies over changing the current cable TV model with the upcoming Apple HDTV. Rumor had it that these talks were unlikely to yield results due to the cable companies’ hold over their content, and that an Apple branded HDTV would not be seen this year as a result.

    Today, those rumors are confirmed, and it turns out that cable companies are even more paranoid about controlling their content than was commonly believed. Bloomberg cites a “person familiar with [Apple’s] plans” as saying analyst predictions of a fall release for the Apple HDTV were premature. It seems none of them took the cable companies’ stubbornness into account.

    According to Bloomberg, there were two huge stumbling blocks preventing the negotiations from being successful. One was that cable companies insisted the Apple device be rented to consumers through cable providers, the way poor-quality DVRs and cable boxes currently are. The second is that cable companies wanted a say in the user interface software running on the device. Apple’s user interface. Given their history and business model, the user experience with an Apple product is obviously not something the company is prepared to negotiate on.

    This demonstrates that even a company such as Apple, which changed (some would say saved) the music industry and revolutionized the tech industry in the past decade, can have the technology and design acumen to improve TV but still be stopped by entrenched, decades-old industries that refuse to embrace their growing obsolescence.

  • Apple TV Set Could be Delayed by Cable Companies

    Rumors of an Apple TV set have been flying a for over a year now. In recent weeks, some excitement for the product has even been built by rumors that the product is already being manufactured.

    Whether or not that is actually the case, it is known that the “iTV” is on the way, and it’s is well-known that Apple is currently in talks with cable companies over distributing their content. An analyst who recently spoke with Apple executives has said that the outcome of those talks, unfortunately, could mean the difference between a sooner iTV release and a later one.

    Fortune today quoted a memo by Pacific Crest analyst Andy Hargreaves, stating that an iTV is “extremely unlikely in the near term.” Fortune quotes Hargreaves’ memo:

    Relative to the television market, Eddy Cue, Apple SVP of Internet Software and Services, reiterated the company’s mantra that it will enter markets where it feels it can create great customer experiences and address key problems. The key problems in the television market are the poor quality of the user interface and the forced bundling of pay TV content, in our view. While Apple could almost certainly create a better user interface, Mr. Cue’s commentary suggested that this would be an incomplete solution from Apple’s perspective unless it could deliver content in a way that is different from the current multichannel pay TV model.

    Unfortunately for Apple and for consumers, acquiring rights for traditional broadcast and cable network content outside of the current bundled model is virtually impossible because the content is owned by a relatively small group of companies that have little interest in alternative models for their most valuable content. The differences in regional broadcast content and the lack of scale internationally also create significant hurdles that do not seem possible to cross at this point.

    It’s clear that Apple intends to revolutionize the TV industry the same way it did the music industry. To do this, though, Apple is going to have to break up the huge multi-channel packages cable companies currently offer. These are the same packages that keep many less-watched cable channels on the air. When a-la-carte viewing and pricing finally does come into effect, the cable industry will inevitably contract.

    Whatever Apple is offering cable content distributors, they would be wise to take it, as it could be their only lifeline to a new business model. A contraction of the cable industry would be better for it than a future where it doesn’t exist, replaced by individual channels creating, marketing, and selling their own content. As entertainment shifts steadily toward streaming and social content, time is running out for cable companies to change direction on their own.

  • Netflix Beats Cable for Customer Satisfaction

    A new study has revealed that customers rate Netflix Watch Instantly higher in customer satisfaction than premium broadcast TV. The study, from market research and consulting firm Parks Associates, cites the low cost and high viewing flexibility of Netflix streaming as part of the reason for the service’s popularity.

    “Consumers can pay for a month of Netflix for about the same amount as for two pay-TV VOD movies,” said Brett Sappington, director of research at Parks Associates. “Parks Associates research shows consumers know the quality of the OTT service is not comparable to pay-TV quality, but the cost-benefit comparison is enough to affect their purchase decisions.”

    The study shows that 16% of U.S. broadband customers consider using a streaming video service such as Hulu or Netflix when watching an on-demand movie. This makes perfect sense, as one month of Netflix Watch Instantly service costs as much as only a couple of video-on-demand (VOD) purchases. The study also shows that 17% of people watching premium TV channels, such as HBO or Showtime, also consider streaming services as an alternative.

    “Netflix is competitive against VOD and premium channels because it has a decisive edge in cost,” said John Barrett, director of consumer analytics at Parks Associates. “Its greatest weakness is picture quality, but there are times when the consumer will sacrifice quality for other considerations. Pay-TV providers need to develop alternative services that counter Netflix’s advantages in cost and flexibility.”

    Cable services have been overpriced since before internet streaming services existed. Many, if not most, cable channels are full of low-quality, niche programming. Only a few channels, such as ESPN and HBO, could make money charging individually for their high-quality content. Yet cable companies force subscribers to subsidize packages of hundreds of channels. It is taking the massive disruption of Netflix and Hulu to finally break the hold U.S. cable companies have had over TV, and still those companies are digging in their heels by failing to innovate, improve customer choice, or lower their prices. The U.S. Department of Justice only recently noticed the steps cable companies are taking to maintain the status quo and choke out the competition brought by streaming services.

  • FCC Proposes New Rule That Could Hurt Boxee Sales

    FCC Proposes New Rule That Could Hurt Boxee Sales

    The FCC is proposing a rule change that could alter how Americans watch television forever.

    That might be pushing it a little too much, but the FCC is proposing a change to a provision in the Cable Television Protection and Competition Act that requires cable companies to to provide unencrypted basic tier cable.

    The rule change, obviously supported by cable companies, would enable the encryption of basic tier cable. This means that people who jack in and get free cable from local providers would be required to get a set-top box.

    The rule change could make it so that people who previously relied upon free cable would be hit with service charges and the need to buy a set-top box. Public Knowledge has petitioned the FCC to at least allow a “transition period” and require cable companies to give low-income families free set-top boxes to ease them in to the new regulation.

    That’s not the main issue though – Boxee would be hit hardest with this new rule. They recently offered a Live TV stick for their set-top box that allows users to jack into local stations. The company said that 40 percent of their users use the Live TV stick to stream local content. That alone makes Boxee the most compelling device for people who want to cut their cable. Seeing that makes it obvious why cable companies would support this new rule.

    Boxee put together a presentation to the FCC that argues against the proposed rule as it would hurt them and any other startup wanting to innovate in the field of television. Their main argument is that encryption would harm competition and require everybody to subscribe to cable companies for even basic tier cable.

    Boxee also brings up the good point that encryption would render TV tuners useless, which are used by many PCs and HDTVs to stream over-the-air unencrypted local cable.

    It’s strange to see the FCC even contemplating a rule like this as they are one of the few government agencies that seems like they’re on the side of the consumer since they were the group who proposed net neutrality rules.

    They could make a decision on the new rule within the next few weeks. Boxee encourages their users to contact the FCC on their behalf to stop this proposed law from taking effect.

  • Netflix, Hulu Users: Usage-Based Internet Is On The Way… Or Not?

    Netflix, Hulu Users: Usage-Based Internet Is On The Way… Or Not?

    The Internet sky is falling, says the Internet. But that isn’t exactly true. Not yet, at least.

    An analyst with Sanford C. Bernstein & Co. in New York, Craig Moffett, was quoted in Bloomberg yesterday for predicting that at least one of the major cable operators, probably Comcast Communications or Time Warner Cable, will initiate a usage-based payment scale next year for Internet-loving customers. He anticipates the change in billing plans due to the growing number of Internet users watching more and more movies through services like Netflix and Hulu. As more cable subscribers cancel their service and defect to watching videos online, cable companies are looking for ways to minimize the attrition of customers. Through a usage-based service plan, all of those Netflix and Hulu flicks you’ve been watching online will start to be reflected in higher bills if you watch enough of them.

    But don’t go updating your Netflix plan to resume receiving DVDs via mail just yet.

    One, this pot has boiled once before. Time Warner had a go at testing “Consumer Based Billing” in 2009 but nixed the plan after the public made it patently clear that they disliked this idea. In their statement after the fall-out, Time Warner stated “that it is working to make measurement tools available as quickly as possible. These tools will help customers understand how much bandwidth they consume and aid in the dialog going forward.”

    Yeah, because customers can’t wait to pay more to use the Internet just to find out how much bandwidth they consumed while plowing through the final three seasons of Lost.

    Ultimately, it’s likely this strategy from the cable companies will be regarded as an attempt to wrest back their subscribers that have migrated to the Internet in search of their viewing pleasures. In an editorial he wrote for the Wall Street Journal earlier this year, Netflix General Counsel David Hyman said changing to usage-based billing services “is bad news for consumers and threatens to slow down the innovation powering today’s Internet economy.” Added to that, consumers have grown accustomed to free Internet since… well, since the Internet. An effort from cable companies to apply a limit on how much customers can use the Internet based on how much they pay – even if those customers could technically afford it – is likely to go over about as well as the last time a company tried this.

    Despite the gloomy prediction that our land of Internet-y milk and honey may soon come to an end, the Bloomberg piece did conclude with a spell of optimism:

    Cable’s best option is to find ways to profit from the online shift, said Moffett. If the companies were to lose all of their video customers, the revenue decline would be more than offset by a lower programming fees and set-top box spending, he said.

    “In the end, it will be the best thing that ever happened to the cable industry,” Moffett said.

    So tell us: would you be willing to pay for your Internet use based on your amount of usage?