On Rad's Radar? - IPTV Archives

A CDN With Channel?

2011-03-29T02:46:21Z

Highwinds is a CDN player out of Florida. The only reason I know them is that I track tech funding in Florida. Highwinds had a booth at the Channel Partners Expo, which made me scratch my head. Why?

CDN is really a channel opportunity. CDN is a content delivery solution for media companies. Level3, Akamai and Limelight are slugging it out with VZ for that business.

Two things made a lightbulb go off in my head. One Highwinds bought Bandcon last year. Calling Bandcon a CDN player is funny because the branding was about cheap bandwidth reseller like its peers (who have all since gone away too).

The other was that Highwinds is now offering all the services that Level3 and others offer: collocation, network and IP. So its bring in revenue time for Highwinds - any revenue cuz our VC's are hungry.

Comcast Making Waves

2010-11-30T02:01:03Z

Big peering fight between Comcast and Level3.

"On November 19, 2010, Comcast informed Level 3 that, for the first time, it will demand a recurring fee from Level 3 to transmit Internet online movies and other content to Comcast’s customers who request such content. By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content. This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation’s largest cable provider." Level3 is calling this a video surcharge So L3 is pulling out the Net Neutrality card.

Meanwhile, Comcast writes that the trouble stems from Level3 sending it 5x the traffic it sends to Level3. If this is the case, then it requires a commercial negotiation. It requires more than peering; it requires the purchase of transit.

Most of the blog post from Comcast sounds a little too much like a former Ma Bell CEO screeching that Google wants it for free. In this case, I guess Level3 wants it for free. Wants what exactly? Well, video traffic. Video traffic on the Internet is increasing steadily. "A recent study found that at peak times, Netflix represented 20 percent of Internet download traffic in the United States," from a NYTimes article. It just so happens that L3 carries a lot of traffic for its partners like Netflix, Google/YouTube, and more: 9 of the top 10 U.S. cable companies.

What Comcast is really saying is that Comcast customers are downloading 5x times the video that they used to. So Comcast's customers are watching way more video, like Netflix and Hulu, and not buying VOD or PPV or premium cable. Comcast is just trying to make up for the revenue.

The major ISP's are all part of the Duopoly. They have to squeeze someone, because they are already squeezing the consumer.

Comcast customers would have a lousy experience if L3 fought this longer, but so too would L3 customers.

Rob Powell says that he saw this coming and it has nothing to do with Net Neutrality. It may not, but the principle is worrisome.

Susan Crawford thinks that it's bad timing for Comcast as the FCC considers its purchase of NBCU.

"Comcast, the largest broadband provider, largest pay-TV company, and third-largest telephone company in the country, distributes communications services to more than a third of the country. Today, Comcast's existing overwhelming market power was on display in major public battles with (1) Level 3 and (2) cable modem manufacturer Zoom," writes Crawford, a law professor and former tech advisor to President Obama.

She missed the carriage dispute with DISH Network, whereby DISH dropped 3 Comcast regional sports networks. Could it be that Comcast is getting "too big to fail"? I'm not anti-business. I'm anti-monopoly.

Certainly content customers have the upper hand. It used to be about eyeballs, but now its about content. The cablecos develop content and have delivery systems in place for that content. Telcos are mainly just dumb pipe. It's going to be a very uneven playing field very soon.

For those interested Rob Friedman goes into the evolution of Peering based on this story.

What Have I Been Saying?

2010-10-17T14:49:27Z

Gary Kim writes, "A study of data submitted by 221 small U.S. telcos by Telergee Alliance confirmed trends you would expect: Broadband and wireless are growing, cable TV is flat, and voice is declining. As has been the case for several years, operating costs also are growing while profit margins are shrinking."

So if TelcoTV costs big money, but the market is flat, why spend the money?

There are ways to make the landline relevant again, but it would take some ingenuity. There are bundles that can be packaged that would reduce churn without becoming a price war.

I can't understand how telco TV bundles can get into a price war with cable TV bundles. The only variable is the channel lineup. Maybe I'm old but the TV Everywhere pitch doesn't work for me. I don't like watching movies or sports on my laptop and my cellphone has trouble delivering Facebook and LinkedIn data, how would I watch TV on that network? Plus the small screen. Again old. Remember Slingbox that DISH bought? Wouldn't that have taken off if folks wanted to watch TV Everywhere? Is there TV that is that compelling that can't be DVR'ed?

"As some had expected all along, video entertainment is winding up as a way of gaining customer "stickiness" and preventing churn, but is not contributing to profit, though it does contribute revenue," Kim writes. It's sticky if consumers buy the triple-play or if the service provider offers exclusive channels (or exclusive features like a DVR). But in a triple play world, if the service provider doesn't have at least 2 services with the consumer, that consumer is subject to churn. Also, in 2Q10, overall US TV subscriptions dropped 216K, according to SNL Kagan. Kagan cited the economy, unemployment and poor housing starts as reasons for the decline. I'd put foreclosures and bankruptcies in there too, because when a home is foreclosed there's no tenant for TV. I saw many foreclosures in 2009 that had VZ FiOS equipment sitting idle -- that's an expensive situation.

In a flat market which erupts into a price war, customer acquisition costs increase. Interestingly, Netflix customer acquisition cost is $22! That's a steal.

The telcos will need to learn how to make money from the Cloud. Luckily, IBM is trying to make it easy for them by operating the platform for Cloud services and managed services. The key is finding out what services the consumer base is willing and able to pay for.

There are a lot of moving parts right now - Cloud, SAAS, managed services, Over-the-Top-Video, VoIP, Hosted PBX - and all of them rely on Internet Access. Therein lies the revenue.

So Happy

2010-08-25T03:02:17Z

DirecTV to Stream NFL Sunday Ticket for $350 in 720p HD :)

Now if I could get NFL Network as OTT video, I would be really happy.

Broadband is Flattening

2010-01-12T20:46:04Z

Pike & Fischer survey shows that broadband is flattening. (I wrote a little about this yesterday). This means a couple of things:

One, customer acquisition costs of broadband is going to increase AND margins will shrink, because it also means short term pricing will drop. (Price war coming ... again, just when the Duopoly thought that they could raise rates

Two, more advertising, more contracts, more gimmicks, more dissatisfied customers. (And likely a move to more cellular broadband than terrestrial).

Like NBC, other Fortune 500 companies are slow to realize that you need to deliver what the customer wants to buy -- not try to force them to buy what you are selling. The new economy coupled with broadband and mobility is knocking over industries left and right - see music, movie, newspapers for examples. Why would you think that your company is immune?

Let's not forget that both telcos and cablecos have incredible debt. They also have incredible liability on pension and health benefits for retirees (who will get screwed; bet on it).

But back to flattening broadband signups.

The stimulus has not produced any winners or shovel ready projects yet. In fact, it has the opposite impact: freezing up most of the network expansion to deliver broadband to unserved areas. So as we watch the signups slow down, what will the Duopoly do to convert all of EarthLink, AOL and NetZero's dial-up users to broadband? Do they even know why dial-up users resist broadband?

After that, the Duopoly has to figure out how to get people without computers to buy services from them. I can't believe I am saying this, but VZ FiOS TV might be answer for some people with the new FB, Twitter and photo widgets VZ rolled out for IPTV service. No PC necessary.

As more items become wi-fi enabled like your dvd player, maybe folks won't need a computer. Maybe broadband and an X-box will be enough. You get Netflix, Pandora, YouTube - what more do you need? Your cell phone can FaceTweet. Or maybe the hotel room boxes are all you need - email, simple web-surfing, VOD (video-on-demand).

The key will be penetrating the households without computers. Cable and telco alike need to start brain-storming over that one. (Or hope one of their partners like Cisco come up with the answer for them).

Is Cable-like TV Almost Extinct?

2009-12-11T16:15:14Z

According to Qwest (via GigaOM), Pay-TV won't be around in 5 years. With the tech crowd, Hulu, YouTube, iTunes, NetFlix and other streaming media services are replacing TV. (NYTimes has an article about someone doing that here.) One of my ISP clients has a fat pipe to his house, an HDTV antenna for local channels, and then just uses AppleTV and online content for entertainment.

Why are we reading about this? (Why am I writing about this?) Because the music business was too slow, stupid and greedy to catch on to the Napster craze. And look how that worked out for them? The movie industry is in a similar pickle. And now TV.

Smaller cable companies have problems. DirecTV is stealing their most lucrative customers. Upgrading to 500 channels plus HDTV content is very expensive. Just the set-top box becomes a hurdle. (How do you supply 6000 homes with a $250 set-top box with DVR at $7 per month? Too much CAPEX in a time when it is expensive and difficult to borrow money).

GigaOM showcases one cable company who has decided to run with fat Internet pipe as its future. There's some buzz around IPTV (see VZ FiOS), but the average Joe wants Internet TV -- as in, I want my content when I want to view it.

The former FCC Chief Martin wanted to examine a la acrte cable TV channels, but all studies showed that it would be too expensive. Bundling 500 channels makes it cost effective. It also makes it a pain in the neck for the average viewer who keeps thinking, "500 Channels of junk on. Why am I paying for this?"

Cisco owns ScientificAtlanta, so you would think that the software on these boxes would be easier to use and more intuitive. You would think. But not so much. One reason that DTV and DISH retain users is because their DVR software and guide software are so much better than cable.

I would be happy to dump my cable TV -- but my cable company would just charge more for the same Internet pipe, because they have to take in X amount of revenue per user no matter how many services the user consumes. Crazy business plan really.

Bright House Digital Experience

2009-05-11T16:51:53Z

Our house has been a Bright House Road Runner customer for almost 12 years. And a DISH Network customer for 10. The DVR is dying on the DISH and DISH wants me to pay full price to replace it. Um, no. So I call Bright House (BHN) to upgrade my Internet and home phone package to Digital Cable. It costs about $35 more including HD.

BHN had a contractor out here in 2 hours to install. There wasn't much to install. I have 2 sets of coax runs in my house - one for BHN and one for DISH. All the tech had to do was plug in my set-top box and watch me change some cables out. The box was used. And you only get one box. The other TV's have to be cable ready but get less than 80 channels, no pay-per-view, no guide or channel info.

The DVR is basic at best. It is cumbersome to set schedules up. The DISH DVR was wicked easy with a great search function. I had issues with the DISH DVR software upgrade - like it erased my box - but even that version is better and easier than this hokey BHN DVR platform.

Remote batteries were dead. Set top box kept freezing up and clicking. BHN came out yesterday to swap out the set-top box. The new one doesn't freeze up.

The TV Guide was so slow that as my wife said, It takes 20 minutes to find a show to watch and by then its almost over. (Some channels do have a nifty feature that lets you start at the beginning.) Every channel is in the guide. No color coding to distinguish between subscribed channels, PPV, and unsubscribed channels. So many On-Demand Channels that have to load to show you the available content. (And when you see the content, like Superman Returns for $1.99 which is playing on FX HD channel for free, you get frustrated.) I went through and set up favorites and blocked changes that are useless -- that didn't work sincel all of them still show up. BSN digital TV service is awful. We are likely switching back or going to try DirecTV.

DISH is struggling since it lost AT&T as a distribution channel. Customer servicie has slid in my experience. It is more concerned with gaining new customers than keeping old ones. In today's marketplace that is a dumb deal. Customer acquisition costs are too high.

FiOS is available in my neighborhood, but as anyone that knows me can attest, I dislike VZ immensely. Writing that check for my business POTS line monthly makes me grind my teeth. Plus I have seen too many of my neighbors go from Verizon FiOS back to BHN. Billing - Surprise! - and Customer Service - another surprise - issues. And as the Washington Post writes here, there is a day coming when the RBOC financial house of cards will fall.

Upgrades from 2.5G to 3G and now 4G is expensive.
Handset subsidies.
Almost flat ARPU.
Buying customer growth through acquisitions.
TV is the least profitable of the triple play - so while MSO's went from least profitable to most profitable, RBOC's went the other way.
FiOS and U-Verse build outs;
International backbone upgrades;
Domestic IP Backbone improvements;
new product launches like CDN and managed services;
merger integration efforts;
debt from acquisitions and network builds;
healthcare and pension expenses;
lobbying efforts - federal, state, county and city including for TV franchises;
marketing and advertising expenditures; and
customer acquisition costs in flat markets (TV, POTS, broadband, cellular)

All of these outpourings of big money has to catch up to their earnings statements soon, because there is too much going out. According to BHN, it has taken 500,000 POTS lines from Verizon. At $30 per month, that's $15M per month or $180M in one market.

Sorry for the free flow wrting here. Just giving you my thoughts.

Fairpoint Rural IPTV

2008-12-03T18:37:22Z

Fairport is trialing out IPTV in a New Hampshire town. As DSLR points out, VZ couldn't (or wouldn't) roll out fiber to the New England tri-state region, but Fairpoint thinks it can. How when Fairpoint got stuck with such huge debt over the deal with VZ that the PUC offices of the 3 states weren't certain that Fairpoint could remain solvent.

Fairpoint doesn't have much choice as TWC has launched digital voice service in region causing POTS line loss for Fairpoint. With the economy, some folks (about 25%) are shutting POTS lines in favor of a cellular only option for voice. This also does not help Fairpoint, Embarq, CenturyTel, and Windstream.

Meanwhile, Jim Crowe, telecom visionary and CEO at Level3, pontificates that the overall industry is healthy at the Colorado Broadband Summit. Just some players are sick.