Last week it was discussed at length how the investment community would like the public to believe that the shift to low cap and high overage broadband pricing is “inevitable.” We also discussed how cable industry lobbyists would like the public to believe that such a shift isn’t about making more money, it’s about helping the poor. Not only is the metered billing push absolutely about making money, it’s about artificially constricting the pipe to protect uncompetitive carriers and TV revenues from Internet video. But instead, there’s a very concerted effort afoot to portray this shift as necessary, inevitable, and even altruistic.

Most consumers prefer the simplicity of flat rate pricing, and understand that ISPs are perfectly profitable under the flat-rate pricing model. They also understand that this is a pipe dream forged by never-satisfied investors, and once implemented ends with ever soaring per gig fees and ever shrinking usage caps.

The PR campaign continues this week, with Hewlett-Packard’s Joe Weinman claiming at GigaOM that not only is such a pricing shift “inevitable,” but that it’s a shift that actually originates with consumers, not investors or ISP executives. Weinman starts out on the wrong foot immediately, by confusing “pay per use” with low cap and high overage pricing models:

For the record, I like unlimited Internet access just as much as anyone else. However, such plans appear to be on their way out, and here s why. As explored in “The Market for Melons”, pay-per-use is not an evil plot by greedy robber barons, but a natural outcome of independent, rational consumer choice. Consider a town with an all-you-can-eat (flat rate) buffet and an a la carte (pay-per-use) restaurant. Smart shoppers on diets will save money by patronizing the a la carte restaurant, whereas heavy eaters will save money by visiting the buffet…. Bottom line: it is not the proprietors driving this dynamic, but the customers themselves acting out of pure, rational self-interest

Except for the thousandth time, ISP’s are not interested in real pay per use plans because the majority of their users (who simply check e-mail a few times a day) would downgrade to $5 tiers and cost carriers billions. What ISPs are proposing is flat-rate pricing with costly per gigabyte overages (completely detached from any real-world costs, which for ISPs are fixed or dropping) layered on top. Meanwhile, the suggestion this is a consumer driven push is absurd. This is an investor driven push for obvious reasons, and you have to wonder if Weinman saw the consumer reaction when Time Warner Cable proposed charging consumers up to $5 per gigabyte then insisted such pricing was for their own good.

Weinmen offers up a second post in which he hallucinates a laundry list of supposed benefits that will occur from this change in pricing paradigm. Most of them revolve around technology platforms designed to aid this monitoring and metering of usage and billing, which we’ll go out on a crazy limb and guess is precisely what Weinman is selling at HP. Unfortunately, Weinman begins his sales pitch just like the cable industry traditionally has by pretending this is an inevitability consumers want, and that such a pricing shift is financially necessary. Neither are true.

Link to the original article…

First cable companies insisted that people canceling TV service weren’t real. Then, as companies began noticing the last two quarters that people were actually canceling TV service due to cost, they began insisting those consumers really don’t matter all that much (which is only true when looking at the relatively massive size of some companies). The reality is that you can’t continue to impose rate hikes twice a year and not see some consumer response; the cable industry just doesn’t care because they feel these consumers are little more than a statistical blip.

The seriousness with which cable companies take consumer concerns about high prices is reflected in the way they continue to gleefully impose rate hikes on not only cable TV but DVR rentals and other services. When they do try their hand at the unfamiliar idea of lowering prices, the end result is often somewhat insulting, like Time Warner Cable’s new entry level cable tiers that offer no consumer value and are loaded with restrictions like the inability to bundle it with additional services, or even use a DVR.

Following in Time Warner Cable’s footsteps, Charter is illustrating what they think about cord cutters and those struggling financially, by sending out notices saying they’ll be hiking the price of, well, everything:

effective with your January Statement pricing will be adjusted for TV Install fees: New Primary Outlet Installation and Reconnection will be adjusted from $29.99 to $39.00; Change of Service Special Trip from $23.62 to $30.00; Additional Outlet with Initial Install from $9.87 to $9.99; Additional Outlet with Special Trip from $29.86 to $39.00; Labor Charge (formerly Hourly Service Charge) from $34.85 to $39.00; Inside Wire Service Call from $35.00 to $45.00; Ancillary Equipment Install with Initial Install from $5.99 to $9.99 and Ancillary Equipment Install with Special Trip from $27.15 to $35.00.

Public Access Fee will change from $0.52 to $0.55, Franchise Fee will change from $1. 13 to $1.17. Basic Service Tier from $12. 85 to $16.21 an increase of $3.36; Expanded Service Tier from $48.14 to $44.78 a decrease of (-$3.36). Customers in a promotion will not see this immediate price change; however, new pricing will apply at the end of your promotional period.

While Charter jacked up the price of essentially everything, they did reduce the price of their “Expanded Service” tier from $48.14 to $44.78. However, they actually increased the price of their entry-level “Basic” service tier $12.85 to $16.21. Why? As Charter customers in our forums correctly note, Charter was seeing more customers downgrading to their cheapest TV tier due to the economy, so they raised the price and lowered the price of the next level tier in the hopes they’d upgrade. Cable’s borderline disdain for cash-strapped customers couldn’t be any more clear, and it will be a historical cornerstone when the story of the inevitable (but glacial) Internet video (r)evolution is told.

Link to the original article…

Clearwire’s third quarter earnings were very positive in the sense that the company added a whopping 1.23 million new subscribers during the quarter. On the other hand, cash continues to be a concern as the company continues deployment and preps Mobile WiMax launches in Los Angeles and San Francisco starting in December.

The company posted operating losses of about $540 million during the third quarter and Clearwire CEO Bill Morrow means that this is going to result in some operational streamlining:

While we continue to exceed our subscriber and operational goals, we have not yet secured future funding and prudence dictates that we take appropriate cash conservation steps to reduce costs. We continue to pursue all options for future funding including debt, equity or a potential sale of excess spectrum or other assets, and we remain cautiously optimistic that we will resolve our short-term funding needs in the near future. We continue to believe that our unmatched spectrum portfolio and our all-IP based network will keep us extremely well positioned in the dynamic and burgeoning market for mobile data.”

Clearwire says they’re going to cut back sales and marketing spending, delay commercial Mobile WiMax launches in Denver and Miami, and reduce their workforce by about 15%. Clearwire insists these efforts should reduce costs by $100 million to $200 million this year and the same amount during the first half of 2011. Despite some very deep pocketed sugar daddies (like Comcast and Intel), questions have long lingered about Clearwire’s financial ability to get their network completed. Stacey Higginbotham at GigaOM notes that Clearwire is $2 billion in debt, with several checks coming due soon.

Link to the original article…

According to the latest J.D. Power and Associates Residential Television Service Satisfaction study, consumers are “notably less satisfied” with TV services than last year. That isn’t surprising given the relentless and often bi-annual rate hikes imposed by satellite, telcoTV and cable TV providers, which resulted in new and notable cord cutting last quarter. According to the study, Customer satisfaction with the cost of television service averaged 541 out of 1,000 in 2010, down 14 points from 555 in 2009.

The study measured satisfaction with TV services in four regions (East, West, North Central, South). AT&T U-Verse and Verizon FiOS ranked highest among TV providers, though the cable companies ironically rank higher on residential phone service.

Overall, customers continue to be annoyed with price hikes, which are courtesy of the endless dance of death between broadcasters (who continually hike programming costs) and TV operators (who pass these costs on to consumers along side hikes and new fees of their own). Consumer annoyance has been amplified by a sour economy, and mirroring recent concerns from the investment sector, JD Power notes that these hikes can’t continue indefinitely:

“It’s apparent…that TV providers must better communicate their price-value proposition, as customers are increasingly voicing irritation with the amount of their monthly bill. Seventy-four percent of customers who say they definitely or probably will change TV providers in the next year cite price as a major reason to switch.”

Consumers (for now) continue to pay for services despite these hikes, which is obviously good news for TV providers. But despite changing state laws to ease telcoTV entry into the sector (many times at the cost of consumer protections, local rights, and increased deployment), TV price reductions promised by lobbyists never arrived. Carriers instead engage in non-price competition, and focus on creating the illusion of value through added services that are often half-assed (see AT&T’s Hulu clone, for example).

The TV sector is begging for disruption and the entry of inexpensive, simple, a la carte Internet video options. There’s an endless flood of articles insisting that Internet video isn’t a threat, but that’s largely thanks to the fact that broadcasters are constricting TV streaming licensing for fear of cannibalizing TV revenues, resulting in limited alternatives for consumers. If these endless carriage disputes continue, cable operators may eventually balk, and broadcasters may open their eyes to alternative delivery opportunities.

Link to the original article…

As part of their franchise agreement with New York City, Verizon was required to deploy FiOS services to every home in New York City by 2014 though the agreement allows Verizon lawyers to wiggle over, under and around those obligations should Verizon not see the kind of service uptake they’d like. According to Verizon, they’ve now passed about 1.8 million homes and businesses, or 58% of the roughly 3.1 million households in New York City.

Verizon says they’re ahead of their agreement to pass 54% of NYC premises by the end of this year. Of course while Verizon is moving forward with FiOS deployment in several cities where they’ve signed franchise agreements, they’ve frozen overall FiOS expansion elsewhere.

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As noted the other day, Charter Communications has decided to add a new $1 “Broadcast TV Surcharge” to user bills, in order to offset the cost of network affiliates demanding higher carriage rates. Despite being simply the cost of doing business, the company is tacking the fee below the line to keep the advertised rate the same.

Worse perhaps, Charter tells Stop The Cap that “Charter Price Guarantee” and contract customers (who are supposed to have their rates locked) will also see the hike:

A Charter representative we contacted claimed the company will impose the fee on all customers, including those on contract, because of a clause in the terms and conditions which says, “The guaranteed price does not include the cost of installation and equipment, any applicable franchise fees, taxes or late fees, or costs for other ancillary services that you may order.”

Except one user e-mails us their latest bill with a notification of the new fee, and it claims contract customers and price guarantee customers won’t be impacted at least until their contract is up. We’ve reached out to Charter to clear this up but have a feeling Charter misspoke, given that promising customers a fixed rate then imposing a rate hike disguised as a below the line fee would be valuable fodder for class action attorneys.

Burying the cost of business in below the line fees so they can jack up consumer bills (but leave advertised rates the same) is bad enough.

Link to the original article…

Given their decision to milk copper and stick with VDSL, AT&T is continually juggling last mile bandwidth capacity, managing user demand for HDTV streams, broadband and voice using compression and prioritization (as in: reducing your Internet speed if your entire house starts watching HD programming). Aside from their inability to match cable’s 50-100 Mbps service speeds, the company has done fairly well at this balancing act offering top speeds of 24/3 Mbps, while also offering 3 HD streams.

Those three streams will soon be four:

Speaking at the event, held in Newport Beach, California, Stankey tried to dispel early concerns about whether AT&T had enough capacity to fuel its IPTV service, announcing that the company intends to introduce four HD streams per home by the end of the year, up from the current three, thanks to a combo of more efficient compression and more bandwidth.

As noted in July, that additional bandwidth is coming courtesy of VDSL channel bonding, which allows AT&T to offer slightly more bandwidth at an additional 1-2,000 feet from the VRAD using additional copper pairs. However, AT&T’s putting that additional bandwidth toward video, not user data speeds. AT&T says being unable to meet cable speed tiers faster than 24 Mbps down 3 Mbps up is ok, since most people don’t buy it anyway:

While AT&T has found the capacity to beef up its managed IPTV service, Stankey downplayed the company’s positioning against DOCSIS 3.0-based cable modem services, which typically outpace U-verse’s top tier. He questioned whether there’s much demand for D3 speeds. “The fact of the matter is we sell 18- and 24-meg products. The bulk of our customers choose not to buy that,” he said, noting that most see the value in AT&T’s 6-Mbit/s tier.

Stankey omits AT&T’s specific weakness at offering upstream bandwidth (their website likes to do that too), or the fact that millions of distance-constrained or un-upgraded AT&T customers only have the choice of 6 Mbps, which is magically why so many AT&T customers choose it.

Of course today’s power user is tomorrow’s average user – and come tomorrow – AT&T’s still going to have to find a way to increase speeds further. Barring getting into rocket pigeon connectivity, they’ll either have to finally bite the bullet and install last mile fiber (which investors won’t approve because it requires waiting for returns), or keep their fingers crossed that some of these ultra-fast DSL variants being cooked up in the Alcatel Lucent labs (though still distance constrained) arrive sooner rather than later.

Link to the original article…

In March of 2009 Charter Communications filed for bankruptcy and emerged from Chapter 11 in November of last year minus about $8 billion of Charter’s then $21 billion debt load. Things continue to normalize for the troubled company, Charter announcing they’ve been relisted on NASDAQ under the symbol “CCMM.”

“To resume trading on NASDAQ is an important and meaningful milestone for Charter,” said Mike Lovett, President and Chief Executive Officer in a statement. “Through the hard work and discipline of the entire Charter team, we’ve made significant strides to enhance our products and services, expand our commercial business, and continue to improve customer care.”

I’m personally a Charter customer, here’s to hoping they continue to improve their offerings and service.

Link to the original article…

Clearwire has kept their promise of bringing Mobile WiMax to New York City before the end of the year. Mailings are being sent out to customers informing them that Clear service “is finally available in New York City” for an initial offer of $35 a month for the first two months. The flyer amusingly offers a city of 8 million a free USB modem (usually $115) if they’re one of the first 20 to sign up for service. New York City is still only listed as a “a future Clear city” in Clear’s coverage map, and the company has yet to issue an official release, though these kinds of unofficial launches are not uncommon for the carrier.

Link to the original article…

Verizon has made no secret of their interest in expanding beyond broadband and eventually becoming a company that offers you, well, everything including home automation and security services. To that end, Verizon this week has invested in home automation outfit 4Home, and in January at CES, Verizon and 4Home will be showing off home automation services that will work over Verizon’s upcoming LTE wireless broadband network.

Of course maybe before Verizon gets into smart refrigerators they can offer FiOS users that 802.11N-capable router they told us was supposed to arrive last month? We’ve asked for an update on that, but in the mean time you can check out some of what 4Home offers here.

Link to the original article…

Frontier Communications, fresh off their $8.5 billion acquisition of millions of Verizon DSL and landline customers, has been downplaying the fact the company isn’t offering speeds that can successfully compete with cable in most markets. While Frontier CEO Maggie Wilderotter has been promising these customers a “fast future,” the company really isn’t in a financial or technical position to actually offer it. In an interview with the Oregonian, Wilderotter continues along this vein, insisting the company offers fiber to the home “all across the country”:

Oregonian: Frontier wasn’t heavily in this kind of cable TV, super-fast Internet business before the transaction. Why did you want these markets?

Wilderotter: Oh, nonsense. We deploy fiber to the home all across the country. We don’t call it FiOS. We call it high-speed Internet. For our customers, the technology doesn’t matter. What matters is access, speed and capacity.

Which sounds great, except for the fact that it’s not true. Frontier doesn’t offer fiber to the home anywhere, outside of the 100,000 or so Verizon FiOS customers they acquired in the Pacific Northwest. In fact, the fastest speed Frontier’s capable of offering is 10 Mbps, though many users are closer to 1.5 Mbps. Frontier could follow in Verizon’s footsteps and offer bonded ADSL2+ to some users, but those speeds are distance-constrained, and for many users will top out at 15 Mbps downstream.

In other words, the technology very much matters, and pretending that DSL and fiber are the same thing (which for whatever reason the Oregonian doesn’t feel the need to challenge) is downright bizarre. That said, at least somebody wants to serve these previously neglected Verizon customers, and Wilderotter proceeds to insist they won’t be continually hiking prices on users like Verizon or Comcast. Of course if your network upgrades are going to be of the make believe variety, that’s an easier promise to keep.

Link to the original article…

Apple today unveiled their new Apple TV device, which as rumors had suggested costs $99, tops out playback at 720p and is focused on renting TV episodes for a dollar or new films for five dollars.

There’s no hard drive in this incarnation, with everything streamed via either 802.11n Wi-Fi or Ethernet connectivity. The unit also comes with Netflix streaming service embedded. As rumors also suggested, broadcasters are still afraid of cannibalizing their traditional TV cash cow, so Apple scrapped a more interesting subscription-based TV service for this fairly standard rental model, which only features content from ABC and Fox.

Great price, great option if you were looking for one that has no internal storage is basically a “rent only” device; however it is not for me.

Link to the original article…