Comcast

Comcast’s TV Everywhere: Credibility with advertisers

Comcast says that it’s no more than 60 days from rolling out TV Everywhere throughout its service area. The project is in trial now and has already signed up 24 networks to supply content. We believe this is a critically important model for streaming video because it has credibility with advertisers, and these guys are the critical ingredient in any video strategy.

We still believe that TV Everywhere would benefit from some non-aligned authentication source, or from a system of federation run by the networks that contribute the content. Still, even in its current form, it offers the first chance at dodging the problem with ad sponsorship in online video—the “too-few-eyeballs-for-interest” problem. This makes streaming content an incremental viewing source to traditional TV.

Comcast appeals FCC traffic management order

Comcast has decided to appeal the FCC’s order for the cable giant to stop metering P2P traffic, even though Comcast ceased that practice even before the FCC order was issued. The goal of the company is to test the FCC’s net neutrality principles, which since they were not contained in an FCC rulemaking/order, are likely not to have force of law.

The move, which is supported by some other ISPs, may well backfire on the industry because an FCC decision that did not, in fact, have enforceable net neutrality principles (which the agency has long said it did) would certainly result in the introduction of legislation. That might be far more restricting, and it might open other issues as well.

We said when this order was issued that Comcast would be foolish to appeal it, and Comcast appears to have been just that.

FCC could enter cable bandwidth management fray

Comcast has, as we had predicted, asserted to the FCC that its voice service is not carried over the Internet or Internet access infrastructure, and is therefore neither subject to their traffic management policies nor to the FCC’s four principles of net neutrality.

They’re right, of course. Cable, or PacketCable specifically, divides the data path, and broadband Internet and Comcast VoIP do not share capacity. The question now is whether the FCC will decide that it doesn’t matter whether the stuff is separate or not. We think such a decision would be the regulatory equivalent of junk science: It would imply that common carriage on any facility imposed the regulatory burdens of the most regulated service on all services.

These are not logical times, however, and regulations are never logical. The biggest risk here is that the FCC would do something that would overturn the original 2005 decision that broadband was not a “telecommunications service” and thus was not subject to unbundling provisions of the Telecom Act. That was a highly speculative ruling that stood largely because the RBOCs bought AT&T and MCI, who were bankrolling opposition.

Vuze, the online video company, has also asked the FCC to look into the Cox plan for bandwidth management. This shows that cable company needs to control bandwidth use, primarily uplink bandwidth for P2P, but also streaming bandwidth will be increasingly colliding with the over-the-top (OTT) players’ desires to pump content at no incremental cost. The shared-media nature of the cable plant is the industry’s biggest risk, as DOCSIS 3.0 is the biggest asset, and moving to DOCSIS 3.0 is useful only if content doesn’t just expand to fill the new pipe too.

The Internet access traffic management flap, net neutrality and reality

Google is releasing a set of tools from its Measurement Lab that are intended to help consumers figure out if their ISPs are doing them wrong with traffic management. The new tools capitalize on the flap created by the Comcast-FCC war on bandwidth management policies.

At the same time, Cox is saying it will be implementing a traffic priority handling system that unlike Comcast’s “level” approach will preference “real-time” traffic in congestion periods. This, they feel (and we agree) is consistent with the FCC’s 2005 four-point net neutrality position (which isn’t an FCC order and thus doesn’t have regulatory force anyway).

All of this is critical for the industry because the notion of unlimited, virtually free, access bandwidth is a hopeless dream. That means that either heavy users are going to be made to suffer delay, or users overall will suffer. The Google move, the Comcast flap, and all of the noise are simply providing cover for the imposition of usage caps, and that would potentially reshape the online landscape, particularly video.

Don’t think Congress will fix the problem with “net neutrality” either; you can’t legislate broadband expansion and the stimulus decision not to address it on a broad scale says Washington won’t pay for it either.

Cable advertising standards and programs

Cable companies’ efforts to create a uniform national ad market are moving forward even as some in the industry hope for an Obama FCC decision to permit further mergers and acquisitions. At the moment, the market share cap imposed on cable prevents further consolidation, and cable operators feel that this may be limiting cable’s potential to create a uniform ad strategy.

The “Canoe” initiative is being supplemented by the SCTE 130 ad platform standard that is likely to be the common mechanism for interactive advertising in cable from 2009 onward. The move is seen as essential in making cable TV more competitive with the Internet, but it will also likely put pressure on the telcos.

Comcast traffic management: Sign of the future?

Comcast’s response to the FCC on its traffic management policies seems to promise a future where operators may be moving to metered capacity or to pay-for-excess plans like those already adopted elsewhere. The network operators who provide broadband access to the Internet have, for years, complained that applications were being created that drove their traffic up and generated no compensatory revenue. YouTube is the most popular example. The most immediate problem for cable operators, however, has been the P2P and server activity that congests the narrow, shared, uplink cable provides. The interesting fact is that solving this problem and creating a broader pay-as-you-go strategy for traffic in either direction creates a similar strategy, and we believe access operators are preparing to begin to turn the tap overall unless they can figure out how to monetize.

Comcast financials improve - in some ways

Comcast turned in a better-than-expected quarter (at least better in some ways), showing good growth in its triple-play and Internet offerings, but a decline in growth for digital cable. ARPU increased slightly, also a good sign. The success appears linked to the fact that AT&T and Verizon have not been able to roll out their services as fast as analysts had feared, giving Comcast more time.

We have noted that our own experience with FiOS shows the service to be excellent, but the time required to get it deployed in homes, measuring from when the fiber run begins, is as much as six months. Shortages of critical STBs have also hampered sales.

One interesting note from the Comcast report was that capex declined, which helped the bottom line. This decline, we believe, is a spending timing factor to improve this quarter’s numbers. We believe that Comcast will have to increase capex in 2009. The question now is whether Comcast and the cable companies can outspend the telcos given the pressure on telco voice revenue and the likely “digital pop” cable companies will secure in 2009.

Comcast to face net neutrality sanctions

Reports out of Washington D.C., suggest that the FCC’s Martin will recommend a sanction against Comcast for violating its net neutrality principles, but it is not clear (since those principles were not an “order” in a legal sense) whether the decision will have any teeth. Comcast, furthermore, has already changed the way it manages traffic, focusing on users and not applications. The move by the FCC is thus popular with consumer advocates and meaningless, but it may show that the FCC will come down harder on deep packet inspection (DPI)  for gleaning behavioral data from ISP streams.

Comcast to buy Plaxo

Comcast is buying social network and photo site Plaxo, and plans to integrate it into Comcast’s offerings, perhaps even creating a set-top box that could be used to “tune” to Plaxo sites and view pictures. The move is one of several recent steps taken by content and network firms to gain access to web properties for exploitation, and it seems to show that the whole sector is now looking for positive symbiosis among a variety of customer-reaching strategies, perhaps to stave off price competition. In Comcast’s case, we believe it is a step to attempt to hold profit and revenue in a market where satellite and RBOC competitors are generating significant pressure

Comcast to test faster cable speed in Qwest territory

Comcast will be rolling out a DOCSIS 3.0 trial in Minnesota, with the top download speed 50 Mbps (5 Mbps upload). The service will be the first deployment of the faster cable modem standard, and the interest level will be high since DOCSIS 3.0 is the only architecture that can rival FTTH in performance. However, it’s interesting that Comcast is deploying in Qwest’s territory; the operator has only DSL in contrast to its eastern rival Verizon, whose FiOS can also offer 50 Mbps in some areas. We note that DOCSIS 3.0 is still a shared-media technology with less capacity available per user than FTTH can support, and the upload speed for cable is much lower than for FiOS (which now offers 20/20 symmetrical and 30/20 asymmetrical in some areas).