In the new issue of Consumer Reports, the cover story is their annual look at TV, phone and Internet service (Here’s a news article about it.). Their description of cable’s position in the marketplace is perhaps the most positive that I’ve seen in CR’s coverage, but I do have a few nits to pick with the article.

The good news is that some cable operators receive high marks from consumers about the service they receive. While some cable companies are not viewed positively, there seems to be a general air against incumbents. In other words, when it comes to video service, the incumbent cable providers are not viewed as positively as newer competitors; however, when it comes to telephone service, cable is viewed more positively than traditional phone providers.

In addition, Consumer Reports’ reader survey points out something that’s been known for some time: Customers who take bundled service are happier with their provider. Since cable first rolled out Internet access and then telephone service – as well as services such as DVRs, HD and digital cable – we have seen the take rates increase dramatically for the new services. Consumers are getting more out of their cable subscriptions, and by bundling Internet access and phone with their video service, they’ve also been able to see savings.

Now for a few factual problems…

The article lumps together the services provided by the phone companies (AT&T’s U-verse & Verizon’s FiOS) as “fiber-optic service.” In fact, while Verizon has widely deployed fiber, AT&T is still using twisted copper pair. You may recall that cable has a hybrid fiber-coaxial infrastructure.

A sidebar of the costs of TV service completely bungles its analysis of the impact of CableCARDs, but more distressingly, the article gets its description of E911 wrong.

Emergency 911 service varies among technologies. Fiber phone service uses the same long-proven location system as a landline phone. New cable-phone and other VoIP 911 services are less universally dependable.

The section on emergency phone use seems to confuse cable’s phone service, which transports your call over cable companies’ privately managed IP networks, with VoIP services such as Vonage, which use the public Internet for transport. The concern is that when a customer calls into a 911 operator, emergency responders should be able to know where the household is located – and that in the case of VoIP calls transport entirely over the public Internet, that may not be possible. Cable operators do not have this problem. As the article notes, phone service from cable or U-verse/FiOS may need to instead rely on a cell phone in the case of a power outage.

In a section on Internet speeds, the article argues that only 1 Mbps is necessary for most customers. That’s not a problem for cable customers, since the average standard speed typically exceeds 5 Mbps, but it seems a little silly to argue that very high speeds, such as cable is offering now through the DOCSIS 3.0 standard, are mostly a “marketing game.” Certainly, not everyone needs 50 to 105 Mbps, but I think 1 Mbps is hardly adequate these days.

I also found it telling that they buried the cord-cutting strategies at the back of the article. You can just rely on an antennae and over-the-air broadcast television, but if you have reception issues, then you’ll be out of luck. You can turn to the Internet, but content is limited there as well, and you’ll still need to subscribe to an Internet connection.

In the end, it seems like consumers are being serviced quite well by today’s vibrantly competitive marketplace.

NCTA has released a new white paper prepared by Microeconomic Consulting & Research Associates, Inc. (MiCRA). The report is entitled Benefits to Consumers from the Transformation of the Cable Industry. In part it is about the cable industry’s transformation from a simple analog video provider to a provider of multiple services over an advanced digital communications platform. But more simply, it’s about the benefits to the consumer of cable’s Triple Play of voice, video and data.

Here’s a typical data point from the report, that shows how far we’ve come over the past decade.

A typical cable subscriber in 1998 paid $27.00 ($37.00 in 2008 dollars) for a few dozen television channels (composed primarily of local broadcast television, local public, educational and governmental (“PEG”) channels, superstations, and a handful of cable networks). In 2008, this same subscriber could purchase a suite of services, for approximately $100 per month, which included digital voice service, high-speed data service, and digital video service offering hundreds of channels of increasingly popular cable network programming, high-definition video quality, and large libraries of on-demand programs.

A look back to the 90s, before our fiber buildout, shows how powerful the impact has been of cable’s improved hybrid fiber-coax architecture. Back in ‘98, only a small fraction of subscribers were taking services like digital video, phone and high-speed data access. For example, there were 1.4 million digital subs in ‘98 (according to SNL Kagan) and there were 40.4 million in 2008.

In analyzing the power of bundling, the report says:

The marginal cost of providing an additional customer with any of the three services (voice, data, or video) is low because of the large economies of scale in deploying a wireline (or fiber-based) network. Moreover, once a customer has subscribed to one service, the marginal cost of providing that customer with a second and third service is even lower.

In addition, these savings can be passed on; according to the report, “[b]undled services are priced between $5.00 and $50.00 lower than the sum of the prices of the components.” MiCRA estimates that that cable’s investments – $129 billion spent in upgrades between 1999 and 2008 – have resulted in about $35 billion in annual consumer benefits. The study shows that the benefits from offering new services and new service bundles are shared across all demographic groups, including lower-income households.

You can find a copy of the entire report on NCTA’s website.