On Friday morning, Tom Tauke took to Verizon’s blog to post thoughts on the rumored FCC decision reversing the bureau’s suggested dismissal of cable’s complaint about the telco’s “retention marketing”.  NCTA President Kyle McSlarrow drafted a response here and on Verizon’s blog.  The back and forth went on late into the night with Kyle posting his final word after 8pm.

Due to the relatively unprecedented nature of this direct, and public, debate between major industry players, a lot of people took notice.

Sidecut Reports called it a tussle that only telecom policy wonks could love.

Maybe it’s a tussle that only telecom policy wonks could love, but if you are at all involved in the regulatory sphere you’ve just got to love that the battle of the corporate titans has now moved, Web 2.0 style, into the blogosphere, with Verizon and the Cable companies now using blogs to take pokes at each other…  If you are really interested in the argument, follow the links and join the conversation. We are going to spend the rest of the day worrying whether or not direct competitor blogging means that pundits are out of a job — again!

From the Technology Liberation Front:

Verizon’s Tom Tauke and NCTA’s Kyle McSlarrow take to fisticuffs in their comments (well worth reading and remarkably… candid) on the Verizon Policy Blog after Tom asked “Will Cable and FCC Thwart Consumer Choice?”

Dave Zatz at Zatz Not Funny writes:

In the talking typing heads policy battle currently raging across the blogosphere, I hereby declare the NCTA as winner. I actually have very little interest or knowledge of the topic at hand, however there can be only one… and Verizon’s lobbyist is still ending sentences with two spaces, while Cable’s lobbyist linked his rival’s blog. (Bonus 1/2 point to Cable for using WordPress, though they haven’t upgraded to 2.5.* yet.)

Perhaps the most salient point, and possibly the briefest, was made by Insight Communications CEO (and NCTA Executive Committee Member) Michael Willner (a blogger himself) after Tom and Kyle suggested taking the debate offline.

NO! Resist going back to the old Washington ways!! Don’t settle this in a beltway gin mill. This is the 21st Century and we all want a front row seat!!

We wouldn’t consider it.  When Kyle launched this blog, he spelled out its purpose clearly.

But we didn’t start this blog just to tell you all that. We launched this blog to talk about telecom policy. Today’s vibrant public policy discussions are driven by conversation and debate taking place online, so we hope this blog will contribute to that dialogue. We’ll be talking about proposed legislation and regulation at the federal, state, and local level. We’ll voice our support for changes that would lead to a better, more competitive technology landscape. When we think legislation is unnecessary or detrimental, we’ll talk about that, too. And, while we will certainly express our views, our goal is to have a dialogue… So, we’ll… invite people with whom we may not agree to engage in debates across their blogs and ours. We’re looking to cross post ongoing exchanges in an effort to provide you with the kind of information that helps you decide for yourself.

This was obviously an example of that, but this is only one salvo in a much broader and ongoing discussion and debate over telecom issues.  Keep your eyes peeled, there’s more to come.

(On two sidenotes, you can find NCTA’s statement on the FCC Decision here.  A sidenote to Dave Zatz: We’re big fans of WordPress, but haven’t upgraded due to a dependency on one plug-in that hasn’t yet upgraded.  Hopefully we’ll find a 2.5 compatible plug-in soon.  I’m working on it.)

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[Ed. Note: This is in response to a post on Verizon’s Policy Blog, by Tom Tauke.]

Tom, I have great respect for you but your blog this morning was a little over the top.

“Thwart consumer choice?” C’mon, Tom. This is really about Verizon trying to thwart competition . . . again.

Here is what is really going on. For the first time in history, Verizon’s entrenched incumbent position in the phone marketplace is being challenged successfully by cable competitors providing digital phone service, a relatively new marketplace development that gives consumers more choice, better value, and — according to J.D. Power and Associates — provides consumers greater satisfaction in every region of the United States. Not to put too fine a point on it: Verizon is losing customers.

Naturally, you’ll do everything you can to retain them. I get that. But, the law is very clear: Verizon can market to its heart’s content 362 days of the year to its customers. However, when customers make a decision to leave you, you are obligated to honor their decision to request that their phone number be transferred to their new provider, and respect their privacy by porting their current number within 4 days without harassing them with marketing retention calls. Congress, on a bipartisan basis, and the FCC have previously recognized that integrity in the number porting process is essential for true competition to flourish.

You are right that this is about consumer choice . . . but when consumers have made a choice, they deserve to have their choice implemented. That’s why there are rules preventing you from undermining that choice by invading their privacy.

You also call this an “intriguing” development. You refer of course to a decision that has not yet been announced (although there have been press reports). I agree that it is “intriguing.” First, this is a rare “restricted” proceeding. That means no one is supposed to speak to anyone at the FCC about this proceeding unless all parties to the complaint are present. It’s “intriguing” that someone in the FCC apparently leaked a decision that apparently goes against Verizon. And it is “intriguing” that the leak was apparently choreographed in a way that gives Verizon a shot at debating this in the press and the blogs.

One solution we should all agree on is to reduce the “porting interval” – the period of time it takes to shift a phone number from the losing provider to the winning provider, regardless of whether it is a shift from a phone provider to a cable provider or the other way around. That’s what consumers really want and deserve. And, the temptation for mischief is reduced. I invite you to work with us to ensure the FCC actually makes a decision soon to shorten the ridiculously long 4 days that consumers are forced to tolerate for simply making a choice in favor of the competition.

One other thing: you make the usual “apples to oranges” argument that because cable is engaged in win-back marketing when a cable video customer decides to switch to FIOS service, Verizon should be able to market during the porting interval for phone service. Oh, and you also throw in the same old tired refrain of “rising cable prices.” Are you really unaware that Verizon’s video service is priced about the same as cable providers? Did you miss the press release where Verizon announced perhaps the greatest video price hikes in the country last year? And, of course, what you also leave out is that a FIOS customer won’t cancel service until Verizon has already wired up the house and is ready to turn on (or has turned on) the service. So, it’s a done deal at that point. Of course the cable company may try to win back the customer. But it’s not doing it with inside information.

Intriguing? You bet.

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As Time Warner cable this week begins their trial of tiered Internet pricing in Beaumont Texas, the blogs are aflutter over the various caps Time Warner has proposed.  Time Warner’s plans start with caps at 5 gigabytes and go up to 40 gigabytes. Going over the cap will cost $1 per gigabyte.  Time Warner is also bringing transparency to usage by giving customers a gauge that will allow them to monitor their bandwidth consumption the way cell providers allow you to track your minutes.

Despite all this complaints about Time Warner’s trial and claims its caps are way too low have been ringing around the Internet.

Exactly how much bandwidth do you consume?  It’s hard to say as the number various from user to user.  However, Plus.net put together a nice little graphic showing you what a single Gigabyte gives you - including 4 hours per day of web browsing, 10 song downloads per week, e-mail, Internet radio usage, etc.

What does all that equal?  Well, NCTA member BendBroadband operated with a tiered structure and found that 91% of their customers consumed less than 10GB per month.  BendBroadband found that 99.5% of their users consume less than 100GB per month and now uses that as their cap.

Somewhere above the 91% consuming 10GB per month, and the .5% consuming more than 100GB lies the heaviest Internet users.  Estimates in various studies suggest that 5-10% of Internet users consume half or more of all bandwidth.  Much of that traffic - though specific estimates vary greatly - consists of P2P (peer to peer) connections exchanging files.   A study by SafeNet, Inc. suggests the overwhelming majority of P2P traffic may also be illegal content:

But 90 percent of P2P downloads are still of illegally copied content, according to David Hahn, vice president of product management at SafeNet Inc., which tracks the networks.

Hahn said 12 million to 15 million people are file-sharing across the world at any one time, mainly on the BitTorrent and eDonkey networks. The attraction of file-sharing is not just that it’s free - there’s also content available that can’t be had by legal means, like TV shows that haven’t aired in Europe.

Absent an exact figure of P2P usage, and whether or not you accept SafeNet’s 90% estimate, one thing is undeniable - a small percentage of Internet users are placing a burden on other users.  That is one reason a number of P2P applications providers are working to identify ways to make P2P a better and more efficient means of distributing content.  We believe that is a worthwhile pursuit, which is why NCTA and various cable companies are participating in a “P2P Best Practices” effort led by the Distributed Computing Industry Association.

In many of the articles written about the Time Warner experiment, detractors point to the number of movies than can be downloaded as a specific reason the cap is too low.  An average movie downloaded legally from iTunes is around 1-1.5 GB.  A 40GB cap would allow you to download more than 30 movies per month (or one a day) if that’s all you did.  Most people, however, don’t consume one movie per day, let alone 30 per month.

Mark Cuban, one of the founders of Broadcast.com and a web pioneer, points out the folly of this argument in a post on his blog yesterday.

Its been amusing to read all the blog posts with the math telling all of us just how many standard def or high def movies tiered subscribers will be limited to. You can have 2 or 3 of your favorite SD TV shows per day, or X number of HD movies per month. Say what? 

I have news for all of you that want to dedicate their internet connections to downloading movies. There is a new and exciting development. Its called an Application Specific Integrated Video Service (ASIVS). What is an ASIVS ? Its a computer dedicated specifically to downloading and playing both standard definition and high definition video. You connect it to a network that is dedicated to delivering GIGABITS PER SECOND of high quality video with ZERO buffering. It’s amazing, it always works and connects right to your standard def or High Definition TV, easily. Most of the systems I have seen have a pretty good programming guide and scheduling system and they will let you download AS MUCH VIDEO AS YOU WANT, limited only by the size of its hard drive!!

If you haven’t heard of the ASIVS, its because most people call it a DVR.

If downloading TV shows is so important to you, add a DVR to your cable or satellite service for 5 bucks a month and download all you want. If you want to watch those shows on your laptop, connect the composite video out in your DVR to the composite in on your laptop. Same with movies.

Can’t download movies illegally, tough.

The internet is a great resource for unlimited quantities of video. Downloading video is an internet given right. Using the internet to fill up your PC turned DVR at the expense of the performance of every user around you is not.

Mark’s right on the money with this.  Using the Internet to download video is your right and prerogative.   Using your Internet connection to consume all the available bandwidth and degrade your neighbor’s Internet experience simply isn’t.

As for Time Warner’s caps, are they too low?  Time Warner will soon find out.  They have described this as a test and will determine whether the model works and whether the caps are sufficient.  Unlike many of their critics online, Time Warner is unwilling to pronounce something a failure before even giving it a chance to prove itself.

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We’re all down in New Orleans right now for NCTA’s annual conference The Cable Show. One of the things that we and the press do during this time is assess where the cable industry is right now.

• Interview with NCTA President & CEO Kyle McSlarrow, with a focus on public policy
• AP story on the growth of cable and new services
• Optimism of the cable industry on the eve of the Show

You can follow activities at the Show on The Cable Show blog.

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Insight Communications CEO Michael Willner recently launched a new blog discussing his company’s take on telecom policy. In the time the blog has been up, he has tackled issues from cable investment in wireless technology to customer service, and from a la carte to network management.

Yesterday’s post, titled Confessions of a Network Manager (Part I) takes a look at the consumer friendly reasons for network management practices. It’s a good read, and like much of his writing is a candid look at why operators manage their networks, why that’s good for you, and even a frank discussion of why companies would not want to talk openly about specific practices.

Network management is not your enemy — it is your friend, even if you’re a P2P enthusiast. Without network management, everyone’s online experience would melt down to a completely useless exercise. It would reduce the Internet to a chaotic free-for-all as if you built a 10-lane superhighway and didn’t have any traffic laws in place to keep the traffic moving.

The fact is, network management is absolutely necessary throughout the Internet, from the ISP’s all the way through to backbone providers. It happens everywhere on the Internet. And it’s a good thing that it does.

Bandwidth, throughout the Internet, is a shared asset. Accordingly, we all have to learn to live with one other as good neighbors. You don’t go to Joe’s Barbecue, an all-you-can-eat buffet restaurant, and proceed to eat all the food. The goodies are affordable because they are offered under law of averages and a shared economic model. If my brother-in-law, Norman, and a few of his buddies showed up every night, Joe would either have to raise the price for everyone or start charging by the pound.

I guess, to some extent, we created this debate ourselves. Many of us, myself included, didn’t really want to talk about how we managed our networks to keep the traffic flowing smoothly. We simply did it. Frankly, I believed that if we were totally transparent about it, certain people would figure out ways to defeat the rules of the road, making our management practices harder and more intrusive than we were wanting them to be.

Much of his writing is similarly inviting and personal. If you’re not reading it, you should take a look.

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For about a year now, NCTA has been shining a light on the DOCSIS 3.0 specification. Thanks to channel bonding, cable operators will be able to offer wideband service to consumers, with speeds exceeding 100 Mbps downstream. About a month ago, we noted the first deployment of DOCSIS 3.0 in the U.S.

A new article in CED Magazine (”DOCSIS 3.0 arrives“) takes a look at deployments by Videotron and Comcast.

After a year-long trial, [Canadian operator] Videotron is serving up two tiers of the wideband service with speeds of 30 Mbps and 50 Mbps. The slower “Ultimate Speed” costs $64.95 a month while the faster speed checks in at $79.95 a month.

Currently, Videotron’s Ultimate Speed services are available to 112,000 homes in Quebec, with the goal of offering the service to Videotron’s entire footprint of 933,000 homes by next year.

The article notes that, although Videotron didn’t need to do so, some operators may need to use Switched Digital Bandwidth to free up additional DOCSIS channels.

Comcast also picked a system where it wouldn’t need to clear room for more spectrum when it unveiled its first wideband deployment last month in the Minneapolis/St. Paul area with speeds of 50 Mbps on the downstream and 5 Mbps on the upstream.

The service is available to residential customers for $149.95 a month while small to medium-sized businesses can get the increased speeds for $199.95 a month.

Some operators are apparently planning on deployment in 2009.

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NCTA has been drawing attention to the DOCSIS 3.0 specification for almost a year now. You may have seen the video of Comcast’s Brian Roberts demonstrating wideband at The Cable Show in Las Vegas last year.

Big news this week as Comcast launched wideband service in the Twin Cities on Thursday. It’s a new extreme high-speed Internet residential and business service featuring up to 50 Mbps download and up to 5 Mbps upload speeds. Comcast will be launching to about 500,000 homes in the Minneapolis-Saint Paul area. In addition to the new hi-speed tier, Comcast is also increasing upload speeds for its residential Performance and Performance Plus service tiers for no additional charge. For example, the 6 Mbps/384 Kbps Performance tier will increase to 6 Mbps/1 Mbps and the 8 Mbps/768 Kbps Performance Plus tier will go up to 8 Mbps/2 Mbps

As I posted previously, Brian Roberts mentioned DOCSIS 3.0 rollout during his CES address a few months ago. Plans are to roll out DOCSIS 3.0 to about 20% of Comcast’s markets by the end of the year.

There was coverage on Ars Technica, Engadget, Gizmodo, and the NY Times‘ Bits blog, but I was intrigued to see this post, which seemed to be from one of the first business customers to sign up for the service.

My experiences thus far have been amazing. When we first started to use it after the install, I broke into a huge grin as pages loaded instantly and I ran a 345MB update which hit my downloads folder and completed in what seemed like two minutes (it actually downloaded so quickly I forgot to watch it and time it). I’ve been achieving ~40mbps down and 3.4 to 4.1mbps upload speeds on average (which, of course, are dependent upon so many variables like internet traffic, server load and so on) so multi-use of our broadband connection has become more useful.

Nothing like first-hand reports.

Just to review a few fundamentals, DOCSIS stands for Data over Cable Service Interface Specifications. Cable operators right now use one 6 MHz channel slot to deliver high-speed data service. DOCSIS 3.0 describes a methodology for channel bonding, which allows you to combine 2, 3, 4 or more DOCSIS channels to increase the speed and throughput of the high-speed data service. The bonded channels do not have to be contiguous.

If you’re a cable customer, all you really care about is faster speeds. But the impact is broader, since DOCSIS 3.0 means better bandwidth utilization, improved video quality, enhanced security, better reporting to manage traffic, and enhanced tools to detect plant problems.

A couple weeks ago, I mentioned cable’s own digital transition, and that shift of channels from analog to digital that frees up channels that can then be bonded to provide faster Internet access. In addition, it will allow cable operators to eventually provide video over DOCSIS services, also known as IPTV. For bandwidth efficiency, 3.0 allows operators to dedicate and isolate a video downstream to any and all users who want to watch it at the same time, in a simulation of the way linear TV works.

So, the full impact of of DOCSIS 3.0 is still to come.

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While every customer service industry deserves intense scrutiny, many pundits have chosen cable as an easy target and use naive (and wrong) analyses to declare that consumers are somehow getting ripped off.

In a recent posting touting his new book, Gotcha Capitalism: How Hidden Fees Rip You Off Every Day and What You Can Do About It (accompanied of course by a web ad telling readers where they can buy the book), MSNBC Technology Correspondent Bob Sullivan jumps to a few erroneous conclusions that cry out for a response. While the juicy rhetoric in the column probably achieves Sullivan’s number one goal of selling more books, the juvenile analysis of why consumers are spending more for cable service today than a decade ago certainly fails Economics 101.

The simplest – and in fact true – explanation of why cable customers are spending more today is that they are subscribing to a video service that is dramatically different (and much better) than in 1998. Consider that in 1998, cable was an “analog” only service that offered 75 channels, period, end of story. Today, cable offers hundreds of channels in both analog and digital with high-definition, video on demand, digital video recorders and other interactive features that consumers love. And, besides a video package, millions of consumers now subscribe to cable’s “triple play” bundle which adds broadband Internet and digital phone service to their video package.

A great way to judge the value of a product is a simple “use vs. cost” analysis. That simple analysis for video service is something called Price Per Viewing Hour (PPVH) which measures how many hours a customer watches TV versus how much they pay for it. The good news for consumers is that cable’s PPVH decreased by 15.4% between 2001 and 2006…that is, the actual cost per hour of watching TV has dropped.

One more point — it’s ironic that Sullivan first complains about rising prices then later talks about the “addictive” power of cable. He claims this addictive power is somehow preventing consumers from exercising self control by subscribing to a different video provider. But 35 million consumers have broken through cable’s alleged mind trap because that is the number (steadily growing in fact) that now subscribe to one of the two national satellite video companies or the two telcos (Verizon and AT&T) that now are offering video service.

These facts may not make great headlines or sell many books, but consumers deserve to know the real story.

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There are a few interesting nuggets to mull over from last week’s show. It really did feel like the first time that cable played a major role at CES. Heck, we’re not the only ones in that position; just as Comcast’s Brian Roberts was the first cable executive to address CES, General Motors Chairman and CEO Rick Wagoner was the first auto exec to do so. It’s great that we’re in the game, but it begs the question of what we do next.

Will Richmond had a post about how content players and consumer electronics companies will deal with their intertwined future:

…both industries recognize that we are moving into what I would call the “experience era” for video. That’s to say, success with consumers is going to rest more on these industries’ ability to deliver superior experiences which integrate content and technology in new and compelling ways. Rather than oohing and ahhing about their new TV’s picture quality or how hilarious a certain episode was, going forward consumers will increasingly cite “how cool” something is.

“How cool” are code words for “how compelling is the experience”. The new currency of video hipness will require that when I invite friends to my house and want to show off, I need to have more than just a honking-big screen or a digital collection of old programs - those will be commonplace. Instead, the experiences are what will matter. Things like seamlessly accessing broadband content on my TV, interacting with it — along with other viewers — from my couch, and moving it around my house for playback anywhere, in a snap. Delivering these types of experiences (and more) is the new competitive bar that content and technology firms should be aiming for.

Cable is currently offering choice, value and convenience, by which I mean lots of viewing options, hi-speed data access, hi-def pictures, time-shifting options, attractive bundling options, and so on. I guess for some people what once seemed extraordinary can become commonplace.  But there is even more in the works. While I won’t go into detail here, cable does have some “cool” new things coming up that should prove to be pretty compelling.

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The performance by Flight of the Conchords at CES had not been available at Comcast’s CES website. They’ve rectified that and you can now catch Jemaine and Bret in action. Skip to about 12:10 left in the clip.

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