Since this has been a busy week, it seemed like a good time to provide an update on the broadband stimulus implementation process. I’ll refer you back to this earlier video from NCTA President & CEO Kyle McSlarrow and our White Paper; we think a strong broadband infrastructure is a good thing and we think the use of grants to promote broadband is a good thing, but we also think the funds ought to be used efficiently and we think the process ought to be fair & transparent.

On Monday, James Assey, Executive Vice President of NCTA, participated in a Roundtable on Nondiscrimination and Interconnection Obligations.

As part of the stimulus package, funding was included to “establish a Broadband Technology Opportunities Program for awards to eligible entities to develop and expand broadband services to rural and underserved areas and improve access to broadband by public safety agencies.” NTIA and RUS, the agencies that are implementing BTOP, are holding a series of public meetings, and Monday’s event was part of this. In broad terms, “Nondiscrimination and Interconnection Obligations” refers to how networks interact with each other and exchange traffic.

That’s a whole lot of background to set-up the statement that Assey delivered, which can be accessed on our website, along with a summary.

On Tuesday, NCTA Associate General Counsel Steve Morris spoke on a panel at another public meeting. Andrew Feinberg at BroadbandCensus.com provided coverage:

The statutory guidelines provide a good start in determining standards, said Morris. Morris invoked President Obama’s call for a transparent process, and said it be governed by a merit-based system of seven objective measurements to be shared between NTIA and RUS.

Job creation and preservation should be first and foremost among the selection criteria, Morris said. Preference should also be given to those applicants that can complete build-out within the statutory time periods, and that are able to maintain projects afterwards.

Infrastructure should be built out first the “last mile,” Morris said. And programs that target schools, libraries, and other “public interest” institutions should be ranked ahead of those that don’t, he added. Further considerations could be cost per capita and relative expense compared to other forms of communication, he said.

On Wednesday, NCTA responded to a Request for Comments on the FCC Report On Rural Broadband Strategy; those comments can also be found on our website. Essentially, we called for complete interagency communication and coordination; transparency; a set of coherent and clearly defined goals; an update of the FCC’s universal service and pole attachment policies; and an initial focus on extending broadband facilities to unserved areas and underserved populations.

Also this week, Representatives Joe Barton [R, TX-6] and Cliff Stern [R, FL-6] sent a letter to NTIA, RUS and the FCC about the broadband stimulus funds. You should read the letter, but some of the key points are:

• Stimulus funds should go where broadband mapping has been completed
• Funding should go to the unserved over the underserved
• We should stimulate demand rather than supply
• These efforts should be technologically & competitively neutral
• We should fund economically efficient projects

Today, we started trucking equipment over to the Washington Convention Center here in D.C. A crew will start setting up our Broadband Nation exhibit over the weekend (see this previous post).

Broadband Nation is our 20,000-square-foot interactive exhibit at The Cable Show.  This exhibit will demonstrate the many ways in which broadband technology has changed the way Americans live, work and play.  It’s a hands-on opportunity to experience a wide variety of innovative new technology products and services available both now and possibly in the future for the home, school, and office, as well as specialized applications for medical centers, schools, and retail and entertainment outlets, among others. Broadband Nation seeks to capture in tangible ways how broadband has, and will, alter the everyday life of Americans; the exhibit will provide a good rationale for the broadband stimulus funding.

Next week, there will also be a couple sessions at The Cable Show that will focus on this issue.

• Wednesday, April 01, from 3:00 – 4:15 p.m., the session “21st Century Communications Policy: The Role of the States” will feature a conversation with State Public Utility Commissioners examining (like it says in the title) the states’ role in this process.
• Friday, April 03, from 11:00 a.m. – 12:15 p.m., the session “If We Build It, Will They Log On: Barriers to Broadband Adoption and Use” will look at how to drive adoption of broadband applications within the medical, education, safety and environmental/energy sectors.

Stories about “cord cutting” seem to be all the rage right now, but many of them are overlooking some pretty basic – and readily available facts – which suggest that consumers may enjoy online video but they certainly aren’t ditching their set-top boxes by the truckload (just the opposite).

But, before getting into some of the basic facts which show that cord cutting really isn’t happening – at least not how it is being described in many stories – it would be foolish not to acknowledge that more broadband users (including me) are looking at more and more video online, and that is one trend that will continue.  As a cycling enthusiast, I’m even considering a subscription to www.cycling.tv.  But will my desire to watch a few cycling races or other videos online replace the diverse cable package that my family enjoys?  Not a chance.

And that’s because most of the content online doesn’t match my viewing preferences (and the vast majority isn’t age appropriate for my kids) and the experience is marginal at best when compared to the HDTV in my family room.  And even though I work in the cable industry, I don’t think my personal experience is different than many others.

Our blog has touched on the cord cutting topic before (see here, here, and here) but recent data and the ongoing media coverage make it worth revisiting.

First, keep in mind that cable is the nation’s largest broadband provider so the more consumers that need a higher speed Internet connection to watch video online, cable is probably your best option.

But when examining if cord cutting is truly happening, I would recommend reading a recent Daisy Whitney column in TV Week with a headline that says it all, “Where Are Cord-Cutters? Signing Up for Cable, Satellite.”  The takeaway – in the 4^th Quarter of 2008, video subscribers increased by 441,000. And for all of 2008, Sanford Bernstein analyst Craig Moffett reports that video subscribers rose by 1.3 million subscriptions, and he says, “cord cutting remains the province of urban myth.”

When it comes to TV viewing, Nielsen’s Three Screen Report also demonstrates that consumers are watching more video than ever, now up to 151 hours per month on TV alone.  Viewing of online and mobile video is also growing, but it’s only up to 3 hours per month online and 4 hours per month on mobile phones and other devices:

Viewers appear to be choosing the ‘best screen available’ for their video consumption, weighing a variety of factors, including the quality of the screen experience, convenience, availability of the video, and the ability to watch according to the consumers’ schedule. In the majority of cases, consumers choose to view video through the traditional means – live viewing of television in the home.

So, the data looks pretty clear yet we keep seeing headlines about Internet TV becoming the new mass medium.  I guess the point here is to use caution (and facts) before coining the next trend.

On Thursday, NCTA responded to the Senate Commerce Committee in regards to a Consumers Union complaint about cable’s migration to a digital platform. The CU has questioned the impact of our migration on the simultaneously occurring digital transition for broadcast signals. In the letter, we sought to specifically address the Consumers Union allegations that our migration is an attempt to surreptitiously game the broadcast transition to fleece our customers.

My co-author Paul has written repeatedly on the distinction between cable’s migration to a digital platform and the broadcasters’ transition to digital broadcast. While the two share one common element – the movement from increasingly obsolete technologies to delivery methods that greatly increase consumer value – they are two completely different events.

You can refresh your understanding of the differences between the two by reviewing any of the following posts.

• Clearing up the DTV Transition
• The two digital transitions
• Separating the two transitions
• Once more – there are two transitions…
• More DTV Confusion

Without dwelling on the point, cable’s migration away from an analog platform to digital began years ago, in the mid 1990’s. Since 1996, cable has spent $130 billion dollars to create a robust platform not only for digital delivery of video, but to also provide valuable services like high-speed Internet and telephone service. We have been upfront about our plans to migrate our delivery to digital and the fact that 60 percent of cable customers now have digital is a pretty good indication that consumers also like it.

Cable operators could have simply set a date, contacted their customers and said, “On this date, you’ll need a box. If you don’t have one, you won’t get cable.”  Instead, we took a gradual, phased approach to the upgrade in an effort to cause minimal disturbance to our customers.  We recognize that no matter how carefully we manage the switch to digital some customers will be inconvenienced. Even a gradual shift to this new technology will cause some disruption.  However, the industry has done all it can to be upfront about the process, and to ensure that the unfortunate overlap of our ongoing migration and the rapid shift in broadcast technologies do not harm our customers.

Many of the complaints about our move from analog to digital center around the fact that customers will be required to obtain a set-top box, while they do not currently need one. This is true.  Note that all of cable’s competitors – satellite video services, Verizon, etc. – run on all-digital platforms and require every subscriber to obtain a set-top box.  By contrast, many cable companies plan on retaining at least some analog services.  No box will be needed to receive those services.

In contrast to cable’s digital migration, the DTV switch will occur on a flash-cut basis on set date, February 18, 2009.  The DTV transition was handled that way out of necessity – needing to free spectrum for emergency services and others – there has been a fair amount of confusion and fear of possible disruption. We have worked tirelessly to minimize the effects of that rapid change on consumers. We joined with the National Association of Broadcasters, the Consumer Electronics Association and a host of other organizations to educate consumers. We have aired public service announcements valued at hundreds of millions of dollars, and used many other tactics to help ensure that the American people are not inconvenienced by the cut over from analog to digital broadcasts.

The fact that a hard date was set for the DTV transition just as cable’s migration began accelerating does not mean that the two events are related.

Like the DTV shift, however, ours is also being done out of necessity. Our companies have millions of customers who are looking for faster Internet, less expensive phone service, increased hi-def viewing options, and more video-on-demand content. To meet that demand, it is critical for cable operators to free up the space consumed by analog channels.

Technologies like DOCSIS 3.0 – cable’s wideband Internet service – make use of the freed analog space. For example, for every four analog channels, DOCSIS 3.0 channel bonding can deliver 160 mbps – typically 10-50 times faster than current cable Internet service. In video terms, for every channel delivered in analog, cable operators can deliver 6 digital channels.

Analog channels, viewed through that lens, end up costing cable operators more in terms of lost opportunities for other services. They become more expensive to maintain, and that expense increases rapidly.

Think about it this way. Horse-drawn carriages were once a popular method of getting around. As people adapted to the new technology of automobiles, things began to change. Different types of road construction may have increased wear on parts. Parts for the old buggies may have been harder to obtain, or more expensive. The technology simply outpaced many consumers who were loyal to what they knew.

This migration is no different.

Today’s telecommunications platform requires hardware to connect. The cable industry (through CableLabs) has worked with the consumer electronics industry to develop technology to allow you to connect to digital service without a STB – first with the one-way Digital Cable Ready sets and now the interactive tru2way televisions. The first sets with this technology are already for sale in Denver and Chicago.  We are confident that consumers will find tremendous value in the digital services you will be able to get using these devices.

While there will, as mentioned, be some customers who are inconvenienced during our migration, cable has done all it can to keep the number impacted, and the disruption they experience, to an absolute minimum. Cable continues to feel the pressure of competition from both satellite and the phone companies. Our customers have choices, and we do not take that for granted. We work every day to provide great products with great value, and strive to keep every customer happy.

In a recent GigaOm post, Stacy Higginbotham suggests cable’s concern with white space devices is a response to the new broadband competition they would provide to cable.  Michael addressed NCTA’s ex parte filing earlier this week, but it’s important to understand what has happened in the longer history of the white spaces debate.

Cable’s concerns have been based solely on technical issues.  Cable has been very patient in this process, extending over several years.  We first raised our technical concerns at the FCC in the white spaces proceeding four years ago. At the same time we have reached out continuously to the white spaces proponents for constructive solutions.  In 2007, we submitted a detailed technical study which described our interference concerns.

The important thing to keep in mind here is that cable has no white spaces. While various proposals and ex parte advocacy filings have been submitted in this proceeding, none have addressed the implications of TV band devices operating on the same frequencies used by cable. None have focused on the potential disruption of customer viewing of cable programming.

This inattention has persevered despite detailed filings by NCTA demonstrating the high likelihood that unlicensed personal/portable TV band devices, as currently proposed, will interfere with cable service. The Commission’s own findings in lab tests a year ago confirmed the serious risks of “direct pickup” (DPU) interference to cable-ready DTV receivers.  Now, early reports of Commission field tests further demonstrate that the risk to cable consumers is very real.

A second problem is the high risk of interference to rural cable headend antenna reception.  Cable systems in rural communities often rely on tower-mounted, high gain directional antennas to receive broadcast signals.  Many of these headend sites are outside the station’s predicted Grade B contour.

NCTA has urged the Commission to take full account of the unique hazards to cable before it approves unlicensed transmitters on TV white spaces frequencies.

We think this is a straightforward problem that needs to be addressed.  We continue to support efforts to open up additional spectrum for the delivery of new wireless communications.  However, the customers we serve have every right to expect this to be fixed before that happens.

NCTA last week filed an ex parte letter with the FCC regarding the so called “white space” devices and interference with cable systems. While much of the media coverage of these devices has focused on interference with broadcast signals, an often overlooked aspect is the negative impact they can have on cable systems.

The good news, however, is we believe there are steps that can be taken by device manufacturers and the FCC to mitigate those concerns and bring these devices to market. The use of white spaces holds promise for new wireless services. And while we support use of this innovative technology, the FCC must first ensure that no harm is done to millions of cable customers.

White space devices, for those unfamiliar, identify and use unused TV channels for transmission of data. They identify the TV channels in use in a given area, and use the unused TV channels within that area for data transfer.

Broadcasters and makers of wireless devices such as microphones are concerned that the devices may not properly identify used TV channels and cause interference with everything from over the air television reception to concert hall sound systems. Testing currently underway gives a certain amount of legitimacy to this fear. Some devices improperly identified every frequency as being in operation or improperly identified frequencies in use as not in use.

Beyond these issues, however, cable subscribers have unique interference issues that can arise from white space devices, and they have gone largely unreported.

For instance:

• Cable television systems have no ‘white spaces.’ Cable systems use all of the channels in the broadcast television band for the delivery of programming and other services to their customers. As consumers with TVs connected directly to cable (without a set-top) tune up and down the dial, they may experience significant interference as they tune past channels utilized by white space devices.
• The proposed unlicensed TV band devices pose a significant threat to cable’s reception of distant over-the-air television programming at headends. If white space devices operate between a distant broadcast facility and a cable head-end, the device may not recognize the distant signal, and prevent the cable headend from receiving the signal at all.

In many cases, the most serious concerns about white space devices as they impact cable have more to do with the power of the devices. Higher power “fixed” white space antennas could impact consumers with cable ready TVs as far away as three miles from the antenna.

The use of white spaces is just one of the innovative solutions that cable and other industries are exploring to provide consumers more access to content when and where they want. These efforts are exciting but we should ensure that any new technology shouldn’t interfere with the right of consumers to enjoy the services to which they already subscribe.

To help resolve some of these technical challenges, we have proposed some steps that will mitigate the interference from this new technology. These solutions include:

1. Restrict the operation of portable devices to a maximum of 10 mW and prohibit transmissions in the VHF channels given the high probability of direct pickup interference to TV receivers.
2. Prohibit operations, at a minimum, on channels 2- 4.
3. Restrict the operation of fixed devices to at least 400 feet from the external walls of residential buildings.
4. Prohibit operation of fixed devices in VHF channels.
5. Require spectrum coordination before operation of portable devices on channels adjacent to those being received at headends.
   1. Of the suggested methods by which fixed and portable devices might automatically determine channel availability, it appears that auto-location (GPS or equivalent), combined with regular access to a reliable database containing geographically-indexed lists of available channels, has the potential to provide the flexibility and reliability required to protect headend reception.

By incorporating these recommendations on the operation of white space devices, we believe the benefits of the technology can be balanced against the probable impact it will have on millions of cable television customers.