Like others in old media cable companies and media content producers are in a race – a race for survival in a world that they show just about every day that they don’t understand. A perfect example of this is a joining of Comcast and Time Warner to their cable content to the web but under restrictions that are designed to maintain, or increase, the revenue streams for their programs.

Their thinking is that if they provide “television” shows of their choosing from their various networks or cable suppliers under a subscription basis, and as long as you are already a cable subscriber, you will be willing to fork over extra money to watch those shows from the web. This will over course require some sort of authentication method to guarantee that non-cable subscribers will be able to see those same shows on the web.

With the pervasiveness of broadband and easy availability of tools that allow web video to leap onto your television, cable companies see that their video distribution pipes are becoming less relevant. So they want to control how you watch premium content online and want to impose fees via an authentication system.  Time Warner and Bewkes have been championing this concept — essentially an authentication system that requires viewers to have cable, telco or satellite subscriptions in order to watch certain premium content online or on other platforms. Bewkes recently said he wanted to launch the system during the second half of 2009. (NewTeeVee has just published a great FAQ on TV Everywhere.) Time Warner spun out its cable business as a separate company. Time Warner owns premium services such as HBO.

Source: Om Malik – GigaOM :: Comcast, Time Warner Team Up to Control TV on the Internet

Authentication. Hmm … I wonder how many times we have heard this battle cry before?

How many different DRM methods, which really is authentication under a different name, have we seen come and go in the last few years. They arrive with much trumpeting and fanfare proclaiming a new era in safe media that can’t be pirated by those nasty consumers out there that want to be able to use the media they pay for as they wish. Then just as quickly those great new methods fail leaving those nasty consumers with unusable media as the authentication engines are turned off.

No matter how many time or how many different ways old media tries authentication, or DRM, won’t work for one simple reason – they no longer control the exclusive access to their products. In the past if you wanted to watch a television show, listen to music or watch a movie the only access you had to that content was through corporate controlled access points. These might have been a television with a cable box, a radio station dictating the playlist, a store selling CD or a movie theater picking what gets played.

The only problem is that now these old media content providers are discovering that just because you make the content it doesn’t mean you control the distribution of that content anymore. All it takes is one person with a TV capture card and access to that show is now Internet wide. Sure it’s illegal but when you place onerous restrictions on content access there are those who will rail against it. As hard as old media might try to control their content the harder the consumer will fight against that control, and today they have tools that are as good as old media’s.

But this is only one reason that old media wants to bring its content to the web because not only can they make increased profits from that addition web distribution but they also increase their profits from the additional demands on their pipes. We have seen an attempt recently to bring back speed and data caps on broadband access. Comcast likes to suggest that even at their top tier no-one would likely every go over those caps of 250 gig but it only takes some simple math to show the bullshit of this idea.

I asked Comcast CEO Brian Roberts if the content being streamed as part of this new effort would be free from the 250GB-a-month bandwidth quota his company has started imposing on this customers.

His answer: No. You’re not going to get close enough to hitting the monthly quota anyway, he said, so why worry? We (and many of our readers) disagree. We feel that while 250GB might look very generous today, it isn’t much when you start streaming or downloading HD-quality video.

Source: Om Malik – GigaOM :: Comcast: TV Everywhere Will Eat Into Your Metered Broadband

A quick check of the file size for a DivX version of an hour long HD television show (which is actually only 40 minutes or so if you’re lucky) can run anywhere from 1.5 Gig to 2.0 Gig. If you move up in video format quality (H.264, HD .ts, HD-DVD, Blu-Ray) you will start seeing file sizes ranging from 2 Gig to over 5 Gig for a regular one-hour television show. All these files sizes count against download cap you might have.

So assume you want to watch your regular television show via the web and on an average of two show a night, 7 days a week, and 30 days a month you would watch a total of 60 shows. Now your watching all these in HiDef at 5 Gig a show only to find yourself now at 300 Gig for the month – you’ve gone over your cap for which you will be charged extra on your Internet bill.

So on top of that nice extra subscription that companies like Time Warner and Comcast what to charge you for the privilege of watching regular television on the web you stand a very good chance of blowing the bottom out of your Internet access bill. For what?

As much as companies like Time Warner and Comcast like to think that their are in the content providers driving seat the fact is – they aren’t. Just as authentication has failed for other types of content providers on the web. In the end the consumer will decide how they want to access their content on the web and if past experience is any indication this is just another attempt that will fail.

Related posts:

1. A New Future For Time Warner
2. Comcast Invests In P2P Start-up
3. Last Minute Deal Keeps Viacom Content on Time Warner Cable

Broadband providers are always crying the blues and how they need to institute things like caps in order to provide fair service to all along with how expensive all this stuff takes. Every time they do though very smart people who have a solid understanding of the business, and the business of numbers, point out how much FUD is being spread around.

Nate Anderson at Ars Technica has just done that with an excellent post that breaks down the money being made by these self-same companies that are crying the blues. In the post Nate takes each of the major players and takes a look at how they are in fact making a lot of money while at the same time some are even cutting back on investment in broadband. It is well worth taking the time to read the whole post but here’s a short breakdown of some of his points.

Comcast

• Revenues for Internet access is up, jumping from $1.57 billion in the first quarter of 2007 to $1.75 billion in the first quarter of 2008 to $1.91 billion in the first quarter of 2009.
• Expenses for “High-speed Internet” have consistently fallen from 2007. It cost $142 million to deliver Internet access in the first quarter of 2007, $138 million in the first quarter of 2008, and $120 million in the first quarter of 2009.
• Comcast had an operating cash flow margin of 39 percent in the first quarter of 2009, up from 37.8 percent a year earlier and 37.4 percent in the first quarter of 2007.

Time Warner

• also posted very good number for the first quarter
• Overall revenues were up five percent from a year before.
• When broken down by category their Internet business did much better – 11 percent higher.
• Time Warner indicated that its Internet expenses had dropped by about 12 percent, even as revenues increased.
• By the first quarter of 2009 Time Warner substantially cut its capital expenditures, from $846 million a year ago to $769 million for the last three months.

Cablevision

• Internet revenues are up
• The company has already spent most of its money for its DOCSIS 3.0 upgrades.
• Cable television (includes data, voice, and TV packages) was 29.5 percent higher in 2008 than it was in 2007.
• Its business Internet service, Optimum Lightpath, operating income was up by 129.8%

AT&T / Verizon

• Both companies have reported healthy growth in their broadband business, especially among the U-Verse and FiOS services.
• AT&T’s wireline business increased by $300 million in broadband revenue

The end line

When it comes down to it all these broadband providers hare making a lot of money providing sub-par services when compared to the rest of the world. When they do decide to allow us to have comparable services they charge completely outrageous fees. Users are being treated as nothing better than a trough where these dollar flush pigs can constantly gorge themselves.

Unfortunately about all we can do is howl at the moon because they don’t give a shit past doing only what they have to in order to keep questionable government regulators happy.

Related posts:

1. Now this is how you do broadband
2. Many Americans Refusing Broadband Internet, Congress Tells FCC To Figure Out Why
3. Metered broadband will kill online video

Time Warner has announced that it will spin off AOL, on the same day as reporting a big plunge in revenue in the troubled division.

Time Warner has made an initial filing with the Securities and Exchange Commission that it intends to spin off AOL, although notes that no final decision has been made. Time Warner said in a statement “Although the Company’s Board of Directors has not made any decision…the Company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner’s stockholders, in one or a series of transactions.”

Revenue at AOL dropped 23% in the first quarter of 2009, off the back of a 20% fall in advertising, and a 27% drop in its fading internet access business. Cost cutting did not match the decline, although AOL still managed to report a $150 million profit after before Depreciation and Amortization, a drop of 47% over the same quarter in 2008.

Related posts:

1. NY Times: print revenue down, online up
2. Understanding the fall of Newspapers in revenue numbers
3. New York Times ad sales down 28.4%

Our current crop of broadband providers, companies like Time Warner, Verizon and AT&T, have it pretty good. Their lobbyists often out number local government representatives they are calling calling upon on behalf of the big providers these companies hold what amounts a monopoly on access. We have seen Time Warner recently pull their roll-out of real broadband speeds because people complaining so loudly about their tiered packages being rolled out that Time Warner had to postpone implementing them.

In short they hold our broadband access by the nuts and they will do anything to keep it that way. This is sad to see in a country that supposedly prides itself in its perceived desire for innovation and drive for success. Instead of innovation though we have companies that fight tooth, nail and political manipulation in order to see that their status quo stay the same.

Never mind that more and more communities around the country are beginning to fight back these powerful companies do everything that they can to squash innovation and stop world class broadband access dead in its tracks. To the big cable and telco broadband providers the whole municipal broadband movement is an enemy that they will fight against, whether it be in the courts or local and state legislatures.

This is exactly the fight that Wilson; and a growing number of other small communities in North Carolina, is now facing. This community in North Carolina is one of 44 publicly owned fiber networks serving more than 60 communities that has decided that they can do a better job of providing their citizens with high-speed access than the big providers either won’t or say isn’t economically feasible at this time. Wilson is doing just that and at higher speeds and a lower subscription cost to their service’s subscribers.

In the case of Wilson Time Warner; who has been providing cable service to the community for 30 years, charges customers $240 per month for their premium cable TV and broadband services. through Time Warner’s Roadrunner service; the name of the division that handles broadband accounts, they typically offer speeds no higher than 10Mbps. They recently increased this speed in Wilson to 15Mbps – due they say to competition.

However through Wilson’s public company; Greenlight, that handles their equivalent ‘triple-play’ services customers get the same 300 TV channels, High Definition signal, pay-per-movies, DVR boxes and all the same phone services customers will see broadband speeds starting at 10Mbps. Not only that but unlike the choked back upload speed that Time Warner provides the Greenlight customers see almost an equal speed of 10Mbps for uploads.

For a breakdown in the differences of services being provided here is a chart of services courtesy of Indy Week

Time Warner’s reaction to this competition?

They gathered up all their lobbyists and headed to Raleigh, North Carolina’s state capital, and proceeded to try and the movement hobbled and for all intents and purposes too onerous to implement. At this point the push for the Local Government Fair Competition Act has failed to pass but that doesn’t mean it won’t be coming back up again in future legislative sessions.

The reason for fighting movements like the one happening in Wilson is as quoted by Fiona Morgan of Indy Week having to compete against public money

"We don’t believe it’s a good idea for public entities to compete with private business because it’s inherently not a level playing field," said Embarq spokesperson Tom Matthews. "We’re going to be competing against purely public money."

On the other hand communities like Wilson are going this route because companies like Time Warner won’t provide the services that more and more people are coming to consider a necessity – a utility – in today’s world. As companies like Time Warner continue to control access it is the state and local legislators that are being called to task by the people that they represent

If you have any doubt about whether broadband is an issue that matters to people, ask state Rep. Bill Faison. A House Democrat representing Orange and Caswell counties, Faison said the No. 1 constituent complaint he hears is a lack of access to broadband.

"I can’t go to a public meeting anywhere in Orange or Caswell without someone coming up to me and saying, ‘We’ve got a problem with Internet and here’s what it is,’" Faison said. "No one comes up and says, ‘We’ve got a problem with Medicaid,’ or ‘We’ve got a problem with the wildlife commission.’ No one complains about the Department of Transportation not fixing a road in front of their house. They all show up and want high-speed Internet.’"

Source: Indy Week

So far Wilson’s business model; at 54 percent of subscribers, is above the national industry standard of 30 to 40 percent. For Greenlight, the break even point of their business is the low end of the industry standard which after four years of service they have more than surpassed.

Is this kind of community driven movement for world class broadband access a threat to the major companies like Time Warner?

You bet it is but isn’t that what being an innovative country all about – finding ways to improve upon the proverbial mousetrap. Or, in this case being able to have the same kind of access to the Internet that other countries have without having to hand over a pound of flesh for substandard services and all in the public eye.

Related posts:

1. Now this is how you do broadband
2. Broadband lies and increased profits
3. Many Americans Refusing Broadband Internet, Congress Tells FCC To Figure Out Why

Back on April 14th I wrote a post about Time Warner implementing metered broadband in certain test area and how I thought it was a bad idea. I wasn’t the only one to write about and in the resulting furor it seemed as if Time Warner had reconsidered the whole idea, even if only temporarily. As everyone was patting themselves on their backs it appears that Time Warner went onto Plan B.

Because of all the bitching Time Warner has also decided to reconsider its deployment of super-fast broadband in San Antonio and Austin, Texas; Greensboro, N.C.; and Rochester, New York. As Time Warner said to Stacey Higginbotham in an email reply

A Time Warner Cable spokesman says the cable company was planning to roll out DOCSIS 3.0 upgrades as part of its consumption-based broadband trials, but it’s now “reevaluating whether or not the trial cities are among those places” scheduled for DOCSIS 3.0 rollouts. As for rolling out next its next-generation cable network, Time Warner has been making vague statements but so far hasn’t laid out any definitive plans.

So in other words you don’t let us cap your asses we won’t let you have really cool high speed broadband like most of the rest of the world. Nice play Time Warner – nice play.

Related posts:

1. Time Warner Cable Customers: Say Good Bye to Nick, MTV and Comedy Central
2. Last Minute Deal Keeps Viacom Content on Time Warner Cable
3. Cable Company Looking At Web-TV Technology

Stacey Higginbotham at GigaOm yesterday received a lot of attention for a post she wrote arguing that that metered broadband suffers a “Twilight Problem” based on a series of calculations based around downloading the movie Twilight. Our own Steven Hodson said that it highlights that “metered broadband will kill online video.”

As I’m lying here typing this, with my son and friend in another room streaming a movie, and my wife lying next to me in bed streaming a TV program, all on one of these “evil” metered plans, I though I might take a look at these “online video” ending statistics.

Higginbotham uses as her example the HD version of Twilight that she clocks in at 3.8gb. I doubt very much if Apple is the most efficient at file delivery (and I’ve argued before that scarcity drives innovation, in this case more efficient delivery) but lets use the 3.8gb as our starting figure.

Higginbotham says that a user on Time Warner’s cheapest plan of $15/ month for 1gb, with $2 for each additional gb will pay a headline grabbing $20.60 in download costs.

Sounds scary doesn’t it. Only two tiny little problems: first, she presumes people who download movies would be retarded enough to sign up to a 1gb plan to begin with; it doesn’t take Sherlock Holmes to work out that if you’re renting movies online, that you’d be better off on a higher plan. But here’s the even better part she didn’t mention.

That 1gb/ $15 plan only comes with speeds on 768 KB/128kbps. Even presuming that you got precisely the maximum 768kbps on your download (and I’ve never seen an internet connection yet that delivers the maximum it promises), this poor person paying $20.60 for their download would also have to wait 11 Hours 48 Minutes 22.28 Seconds (calculated here) for the file to download. Even allowing for a stream starting while the file was still downloading, you’d still have to buffer it for 9 hours to watch it in one sitting.

This is not to say that there are some severely mentally challenged people out there who would find this acceptable, but for the 99.9999% of the population who rents movies online, this is not going to happen because they wouldn’t sign up for it. Nice headline figure, complete BS in real world application.

Hidden Costs

Higginbotham then goes through and allocates the costs of downloading Twilight based on other plans, simply by allocating the percentage of the cap used by the download against the total cap cost.

There’s a problem with that: it presumes that the cap will be used in full. Example:

we’ll use AT&T’s U-verse rate of $55 per month divided by the 150 GB cap it’s said it will implement. That nets out to AT&T charging 36 cents per GB, which means the bandwidth for “Twilight” will cost $1.37. Adding in that $3.99 rental fee means my vampire fixation will cost me $5.36 to watch without leaving my couch.

The problem is that caps rarely are used in full, particularly at this level. Comcast claim that only 0.1% of their users use more than 250gb per month. One figure quoted regularly (example here) says that the average user uses only 2-3GB per month; obviously that won’t be a person who regularly downloads HD movies, but it’s an important point.

Pinning down average downloads of movies is a statistical challenge; in Australia for example, one major online DVD distributor says its “up to” 5 videos a month. If that applied to downloaded movies in the AT&T example, that’s 19gb per month. If it’s 10 movies, that’s 38gb per month. 20 goes to 72gb, 40 goes to 144gb, so you’d be watching 1.3 HD movies every day downloaded from the net to get up to your cap. Given that for a select few 40 movies a month is unlikely, the real cost of each download is actually higher, because the cost of the download would be the percentage of data used for the month, not the cap.

But the same economics apply for unlimited plans.

The equivalent 10mbps unlimited plan on Verizon costs nearly the same as AT&T’s 150gb capped plan (AT&T is $59.90, Verizon $59.90 without phone, $57.90 with phone without a one year contract.)

The only way you would save with the uncapped plan is to watch more than 40 HD Twilights, or to consume enough bandwidth doing other things (online gaming is surprisingly efficient despite claims otherwise) to use MORE than 150gb.

And yet this is what Higginbotham writes:

Verizon: Since Verizon doesn’t meter or cap its service (or plan to), the cost to watch Twilight only reflects the $3.99 rental fee. A user still pays for broadband (as they do even without a metered plan), but without a limit on data downloads, its impossible to calculate a per-GB cost for downloading content.

You can calculate the cost if you make a presumption about how many movies will be watched and draw a figure for non-movie consumption, not exactly challenging stuff, particularly given the other presumptions. But here’s where it gets better. Lets say you only want to watch your five movies (presumably all in HD), do some regular surfing, maybe some VOIP. Will you still save money with a uncapped plan?

Time Warner offers its Road Runner Standard package for $31.95/ month unbundled, or less in a bundle. It comes with 40gb per month. If you downloaded 5 HD movies, played some games, did some surfing, watched some videos on YouTube, you might just get to 40gb if you were trying really hard. You instantly save $28 over the “uncapped” plan with Verizon.

But is 40gb a month enough? As I’ve written previously, despite living in a house with 3x more internet connected devices than people, waking up to streaming radio on my Chumby, working from home online, including uploads of videos (note in Australia they count uploads to a cap), my son comes home from school and watches YouTube videos and plays online games, and then nearly exclusively we only consume online media of an evening, on a busy month we might hit 50-60gb. On average we do 30-40gb per month. But we’re not average: very few households would have anywhere near the non-stop internet usage we have across as many devices.

The world is not ending, and statistics can always be what you want them to be if you ignore certain facts that get in the way of the picture you are trying to paint, as is the case of the Twilight problem stats.

In an ideal world, there would be no caps; however in a free market where the cost of wholesale access is not unlimited, retail providers are free to pick their models. If people really feel so strongly about the rates being charged, don’t pay for them; if you’re in a large city, you’ll usually have a choice. But note this one thing: a one size fits all isn’t necessarily the superior model for all consumers. Uncapped plans can actually end up costing significantly more, and I’m yet to see a decent argument stating why users who consume the most should be subsidized by those who use little.

Related posts:

1. This is happening: Twilight MMO announced
2. Forget Twilight Reviews: Stewart to Play Man in ‘K-11′!
3. Daughter’s texting cost family $4,756.25 – Damn!

A break down in negotiations between Viacom and Time Warner Cable will mean customers on Time Warner’s cable network, the second largest in the United States, will no longer be able to view Viacom channels from January 1.

Channels to go from Time Warner include (not everyone has all these to start with) Comedy Central, Logo, BET, Spike, TV Land, Nick at Nite, Nickelodeon, Noggin, The N, Nick Jr., TEENick, MTV, VH1, MTV2, CMT and Palladia.

Viacom claims it has been trying to negotiate a fair renewal of its cable channels for months, but claims Time Warner Cable has been unresponsive and unreasonable. Time Warner claims Viacom is asking for exorbitant increases in carriage fees which would have to be passed along to the customer, reports the Huffington Post.

Who ever is to blame, the net result is the same: if you’re on Time Warner Cable, no Viacom content for you from midnight, January 1, reportedly EST so 9pm December 31 on the West Coast. Around 12.3 million customers will be affected by the dispute.

Viacom though isn’t going out without a scene, running the following ad across its entire network to Time Warner customers.

Related posts:

1. Last Minute Deal Keeps Viacom Content on Time Warner Cable
2. Time Warner Cable to try out some social blackmail
3. Cable Company Looking At Web-TV Technology

Yahoo spent time with Time Warner over the holiday weekend, according to London’s Times Online. The paper reports Yahoo’s board is struggling to seal some kind of deal before its August 1 shareholders’ meeting — which, of course, could result in a new board being elected.

The Time Warner talks are focusing on an AOL merger, which is said to be worth as much as $10 billion. Just last week, news broke that Microsoft was trying to work with Time Warner on a joint purchase deal, so Yahoo may be trying to get a step ahead, so to speak.

Meanwhile, Microsoft is now saying it’ll wait till after the Yahoo shareholders’ meeting to move forward with its next proposal — a strategy suggested by none other than Carl Icahn. Both he and Microsoft seem confident a new board could be in place then and a new deal could be struck.

Here’s Microsoft’s official statement on the matter:

In the past week we have had the opportunity to discuss with Carl Icahn the prospects for a possible agreement between Microsoft and Yahoo!.

While of course there can be no assurance of a future transaction, we will be prepared to enter into discussions immediately after Yahoo!’s shareholder meeting if a new board is elected.

Icahn has also written a lengthy letter of his own:

Dear Yahoo! Shareholders:

CARL C. ICAHN

Related posts:

1. Carl Icahn Now Free to Buy Large Blocks of Yahoo Shares
2. He Said, She Said: Yahoo Responds
3. Microsoft Chirps In About Yahoo Conclusion

CEO Glenn Britt tells Reuters his company is building a new wireless cable modem that’ll let customers hook their whole homes up to the net. He describes it as equipment that will “allow you to network everything in your house.”

“Within a relatively short time … it’s going to be very easy to get Internet TV on your big screen TV,” he explained to Reuters at a conference in New York today.

Britt didn’t elaborate as to exactly how the network would work or when it’d be launched.

Time Warner Cable won’t be the first company trying to bring the net to the tube. Netflix released its Roku Netflix Player earlier this month. The box lets you watch video content from Netflix on your television via a Wi-Fi or cable connection. Apple has a similar service with its Apple TV, letting you rent movies and stream other online content through your TV.

Related posts:

1. Microsoft & Netflix Team Up For New Xbox Streaming Service
2. Time Warner Cable to try out some social blackmail
3. Time Warner Cable Customers: Say Good Bye to Nick, MTV and Comedy Central

The media giant announced it’s separating from Time Warner Cable this morning, a move that will bring in $9.25 billion in dividend payments. The decision is also expected to help cut down on the company’s $35 billion debt.

Time Warner’s CEO says he’s looking at several options for his company’s future, including possible acquisitions. He did hint that cable networks could be a strong investment but neglected to name any specific areas of interest.

He also did not comment on what the change could mean for the future of AOL.

Related posts:

1. Last Minute Deal Keeps Viacom Content on Time Warner Cable
2. Time Warner Cable Customers: Say Good Bye to Nick, MTV and Comedy Central
3. Time Warner Cable to try out some social blackmail