While I typically stick to discussions of policy issues, broadband, and emerging technology, when I see some really good news about cable and our ongoing efforts to improve customer service, I have to talk about it.

Recently JD Power and Associates released their annual rankings of customer satisfaction with both local and long distance telephone service.  The rankings measure five factors to determine overall satisfaction.

• Customer service
• Performance and reliability
• Cost of service
• Billing
• Offerings and promotions

For the the second year, cable companies won all four regions. The latest study proves what we’ve said for some time - cable is your best value for telephone service. You can learn more about cable telephony here.

With the heavy coverage of the Democratic Convention in Denver, I’ve read a few stories that talk about how viewership of the event is off.

For example, there is a chart in the Washington Post today entitled “TV Ratings Drop.” But they mean “network television ratings,” by which they mean ABC, NBC, CBS.  But that’s completely the wrong metric.  In addition to the Big Three and PBS, you can watch convention coverage on C-SPAN, CNN, Fox News, MSNBC, and even BET and TV One.

Here’s the story in TV Week: Cable News Networks Reap Political Ratings. In B&C: Cable Adds Viewers on Day Two. This AP story notes that CNN beat ABC and CBS during the broadcast of Michelle Obama’s speech during the 10:00 p.m. slot. And cable news viewership was way up over 2004, according to TV by the Numbers.

I mentioned this in July, during a discussion of the Emmy nominations,  but it’s always worth noting that people now turn to cable television very frequently to serve their needs for entertainment and information.

When it comes to politics and cable, I don’t think anyone would disagree that C-SPAN is the jewel in the crown. I mean no disrespect to the fine work done by the various cable news networks, but C-SPAN started their coverage of this election (”Road to the White House 2008“) in December of 2004 and has shown somewhere around 5,000 hours of coverage so far.

C-SPAN has been advertised as “Cable’s Gift to America,” since it was created by cable companies as a public service in 1979 (contrary to the mistaken belief by some that C-SPAN is the Government Channel). Over the last three decades, “the political network of record” has now grown to three public affairs television networks, a radio station (also available on XM), and a website — all provided for through the support of the cable industry.

(Let’s recall that, in most instances, your local cable company pays a carriage fee to the programmer in order to bring you your favorite channel. Cable programmers have dual revenue streams — carriage fees & advertising — which is one of the reasons that a la carte would be harmful to them.)

C-SPAN, like other cable programmers, has been moving into the digital arena. As we enter the Academy Awards seasons of politics, with the Democratic Convention starting on Monday and the Republican Convention following the week after, C-SPAN has unveiled the Convention Hub.

This pair of portals (one for Denver and one for Minneapolis) includes a variety of features:

• Real-time tracking of credentialed state and national political bloggers, aggregated on the websites, to enable users to follow the latest online convention news and analysis;
• Video clips from the network’s convention coverage, embeddable, to facilitate use by political bloggers and other convention watchers;
• Linkable access to the complete C-SPAN Video Library, allowing interested users to fully search all C-SPAN video content;
• Live coverage of C-SPAN television and radio networks;
• Blogger Tips and Online Convention Video Finder tools;
• Real-time feeds from Twitter users using the hash-tags #RNC08 and #DNC08

New Media Strategies (NMS), an Arlington-based online intelligence and marketing firm, was brought on to design proprietary software technology for Convention Hub. C-SPAN maintains editorial control.

All this is on top of C-SPAN’s usual excellent election coverage, which will begin each morning with Washington Journal at 7:00 AM (ET) and run through the closing of each day’s floor proceedings. In addition, C-SPAN 2 will bring you events like live coverage of the Republican Platform Meetings and Ron Paul’s Rally for the Republic.

C-SPAN has expanded its traditional television coverage with the technological approaches in order to attract new viewers. C-SPAN’s loosening of copyright restriction over the past few months (embeddable video is new for the conventions) is enabling bloggers to use C-SPAN content in creative ways and helps to expand C-SPAN’s core mission to educate and inform the American populace.

But it’s important to realize that all this coverage may be a gift, but it ain’t free. It costs money to run C-SPAN’s operations and the support of cable operators is a critical part of the network’s success. Despite some criticism (like this), it’s important to remember that C-SPAN is a business, not a government program. This NY Times story makes the case:

In May, C-Span said that it had for first time asserted its copyright against a video-clip site, ordering YouTube to take down copies of Stephen Colbert’s pointed speech in front of President Bush at the White House Correspondents’ Association dinner. Clips of the speech had been viewed 2.7 million times on YouTube in the 48 hours before it was taken down.

“What I think a lot of people don’t understand — C-Span is a business, just like CNN is,” [C-SPAN Corporate Vice President & General Counsel Bruce] Collins said. “If we don’t have a revenue stream, we wouldn’t have six crews ready to cover Congressional hearings.”

There’s a very amusing picture painted of NCTA on Ars Technica, literally Shakespearean in nature.

“Once more unto the breach, dear friends, once more,” cried William Shakespeare’s Henry V in the play so titled. “Or close the wall up with our English dead!” Perhaps in said spirit did the National Cable and Television [sic] Association (NCTA) veep Michael Schooler and Insight CEO Michael Willner march up to the eighth floor of the Federal Communications Commission on the ninth of July to plead the cause of ISP “network management”…

Taken in conjunction with yesterday’s post on DSL Reports, it sounds like we painted a portrait of Biblical apocalypse. NCTA’s own Michael Schooler and Insight’s Michael Willner supposedly warned of “the impending destruction of the Internet by P2P users.” Or else we said “that the Internet would all but collapse.”

Wow! That sure sounds scary. But since neither Karl Bode nor Matthew Lasar was actually at that meeting, they instead apparently based their accounts on a letter we filed. If you read it for yourself, you find that four points were made.

• Network management is necessary to prevent serious congestion.
• Service for customers would be degraded without such management.
• Network upgrades alone won’t solve problem.
• The government should not pre-determine the tools and technology to be used for network management.

So I ask: Which of these four points are in contention? The DSL Reports post even says “Most techs don’t oppose reasonable network management (booting extreme gluttons, some QOS and prioritization)…” So, we can start by agreeing that reasonable network management is a good thing. Without some kind of management, problems will arise.

Let’s look at service degradation. Was complete congestion claimed? The phrase used is “can cause substantial (and sometimes complete) congestion of the system’s upload capacity.” Let’s emphasize three key words: can, sometimes and upload. This is critical, because peer-to-peer applications are the focus of attention.

This goes to the point about simply upgrading a network. A peer-to-peer application looks for users with the best upload connection. Building a bigger pipe does not eliminate the necessity of network management.

Finally, is the federal government really the best body to judge what network management tools are appropriate? I’m not convinced it is. Nor am I convinced that the answer is a big dumb pipe that treats all bits equally, whether it’s a phone call, streaming video, a P2P download, an e-mail, or a Web page request. And anybody who actually understands how networks work wouldn’t either.

Both of these posts claim that we are crying “Armageddon!” for nefarious reasons. But should nothing be done at all? We want to give our customers the best Internet experience possible, now and in the future, and we need network management to accomplish that goal.

The cable industry has consistently demonstrated its commitment to policies that ensure all Americans have access to affordable broadband. This includes:

• Proposals to create a fund tailored to expanding broadband into unserved areas.
• The Broadband Data Improvement Act which would improve federal data collection regarding where broadband services have been deployed in the United States to achieve the goal of ubiquitous broadband availability for all Americans.
• Tax credits or other tax incentives to providers that build out in rural areas that are unserved by an existing broadband provider.
• Reform of the RUS broadband loan program so that funding is targeted specifically to unserved areas.
• Expansion of the FCC’s Lifeline and Link-Up Programs to help ensure that broadband access is extended to low-income households.
• Public-private partnerships to provide broadband in unserved areas.

We recognize that the government can play an important role in making certain that the economic and social benefits of broadband connectivity are extended to all areas of this country. While broadband deployment to every community in America merits the full attention of policymakers, legislation calling for “network neutrality” or government intervention into the operation of networks would undermine the goals of broadband deployment and adoption.

The government’s consistent light regulatory touch since the introduction of broadband has worked. Only that continued regulatory freedom is likely to spur the investment and innovation that consumers have come to expect.

The cable industry is on the verge of making the leap — from “broadband” to “wideband” — with a technology which can enable dramatically higher download and upload speeds. Several weeks ago, for example, Comcast launched a “wideband” service in Minneapolis-St. Paul that offers speeds of 50 Megabits per second. Comcast expects to have wideband available to 20% of its systems by year-end 2008 and to all homes passed by mid 2010.

The efforts of broadband network providers to build larger and faster networks have helped ensure the success of countless numbers of new Internet businesses and applications. Despite concerns about alleged limited access to broadband, use of Internet video on demand has grown at the most dramatic rate. In February 2008, nearly 135 million U.S. Internet users spent an average of 204 minutes viewing 10.1 billion online videos. YouTube represented 34% of those online videos, or nearly 3.5 billion.

For years, net neutrality proponents have argued that without government intervention, broadband providers would stifle competing services and content providers; Internet development and usage would stagnate; and consumers would be unable to use their broadband connections to download video or access other emerging applications. In fact, cable’s investment in broadband has driven innovation and investment in new content and applications at the edge — the exact opposite of what was predicted by advocates of net regulation.

(more…)

The issue of mandatory “a la carte” for cable television service continues to be a hot topic. This is actually a pretty broad and complex topic, so I’d like to break it down a bit.

For some people, when they think of “a la carte,” they simply mean, “I feel that my cable bill is too high and I’d like to pay less.” Just remember than any discussion of price ought to include an examination of value. Is the product or service delivering value in proportion to its price? (For more on the relationship of value to price, see this earlier post.)

But, let’s accept the premise for a second. You think your cable bill is “too high.” Many fans of a la carte are making this calculation.

• Average Monthly Price for Expanded Basic Programming Packages: $42.76
• Average Number of Channels in Expanded Basic Package: 80
• Average U.S. Household Tunes to Channels per Month: 15.7

“So, wait,” the thought goes. “If I pay 43 bucks for 80 channels, but I’m only looking at 15 of them, than the other 65 are wasted. There are channels I never look at. Why am I paying for them? If only I could pay for exactly what I want and nothing more, surely I would pay less.”

Let’s also accept another premise. You like some cable channels. You probably don’t watch them all, and there may be a few you actively hate. But if you get some kind of multichannel video service, it’s because there are channels you enjoy and want to see continue and prosper. So, while you might want to pay less, you don’t want that to happen at the expense of the viewing choices you now enjoy.

There’s the conundrum. Mandatory a la carte won’t satisfy either of these desires. You probably won’t end up paying less and you’ll also endanger the economics of the channels you love.

The Yankee Group recently issued a report entitled “A-la-Carte: The Demise of Television as We Know It.” The Research Recap blog has highlights of the report. It’s important to remember that most cable networks - except for premium services such as HBO, Showtime and Starz - have multiple revenue streams. They make money from cable operators for allowing them to carry the service (i.e., to deliver it to you in your home) and they also get advertising revenue. Both of these revenue streams rely on being in as many households as possible, even separate from the issue of ratings.

If I am the president of the Fly Sneaker Channel, in an a la carte world, I now have to market to each household individually to convince you to buy my channel. So, my marketing costs go up. Plus, I won’t make my advertising revenue, because now I’m in zero households to start and I’ll probably never build up to a very large number except very slowly. You might like my channel; you might want to skim it occasionally to check it or there might be a positive review that makes you want to see a particular program. But because it’s not on your lineup unless you choose to subscribe to it, that won’t happen.

Now read the recap of the Yankee Group’s analysis.

• Under a la carte, programmers will lose their current economic model. Surviving networks will have to charge consumers between $5.00 and $10.00 per channel to overcome the decrease in carriage fees.
• With a la carte, casual viewers go away, decreasing both viewers and advertising revenue. Niche networks won’t have enough reach to survive.
• With mandatory a la carte, the 565 national video programming services and networks will dwindle.

Some networks will not be able to financially survive. Before you say “Good riddance,” don’t assume your favorites will survive. Many networks may not have the money to invest in new and innovative programming, so you may have to kiss your favorite shows goodbye as well. The networks that do survive may have to charge several bucks a month for subscription fees. Odds are you could select very few channels before you’re right back up to the price you’re paying now.

The country is beginning to hear about the coming Digital Television transition. Unfortunately, there are continuing areas of confusion, even (as pointed out previously) among experts. One of the key points that trip up people is that there are really two transitions. Let’s make one thing clear up front. If you get television from a cable operator (or one of our competitors), you probably lump all those channels together: CNN, Fox, Lifetime, ABC, it’s all the same, right? But some channels are from broadcast stations in your area: ABC, NBC, CBS, Fox, The CW. Those other channels, such as MTV and ESPN, are cable channels. The high-profile DTV Transition coming in February 2009 — as full power over-the-air broadcast TV stations switch to digital and turn off their analog broadcast signal — is the broadcast industry’s digital transition. And although cable is playing a role in that, the cable industry is going through its own transition. Let me explain the difference.

The broadcasters’ transition is about digital television, where the picture and sound information is expressed in the form of data bits representing, for example, a “1” or a “0”. You can think of this transition as analogous to the transition from vinyl records to CDs.

Cable operators are also transitioning some analog channels onto digital cable tiers in order to reclaim space. With digital cable, compression technology is used to allow more than one program service to be carried in the bandwidth space normally required for one analog program service. Typically, the signal is sent to the home, decompressed in the set-top box and changed into analog signals for display on the television. You can think of this transition as something like the manner in which you can compress large files for easier downloading, and then you decompress them for viewing.

Your local TV stations are offered in hi-def formats on digital cable, but digital TV and digital cable are two different animals.

As we’ve discussed before, part of the DTV Transition will require that you get a digital-to-analog converter box to continue watching full power over-the-air broadcast TV stations on an analog TV set. If all your TV sets are connected to cable, you won’t need to do anything to continue to watch your local broadcast stations.

However, some popular cable channels are only available on cable’s digital tiers. In addition, other popular cable channels may be moving from the analog tier to the digital tier because channel space is limited. In these circumstances, you may want to move up to digital service from your cable company — and a digital cable set-top box. But don’t confuse cable’s digital migration with the broadcasters’ digital TV transition.

There’s no denying that the Digital Television Transition is a complicated issue. Even those of us who work on it all the time sometimes have difficulty keeping all of the technical details straight. Some people seem confused over whether a box is always necessary to keep watching TV.

Here’s one example. Earlier this week, on a Public Radio program dealing with current technology issues, that subject of the coming DTV transition was discussed:

Host: How do I make sure that my TV doesn’t go blank on February 17?

Guest: What you have to do is look at how TV gets to your TV. If you subscribe to satellite or you subscribe to cable, and in either case you have a box, some kind of tuner or digital video recorder connected to your TV, you don’t have to do anything. Any digital conversion that is necessary is done in that box. At worst, your cable or satellite company will ship you a new box at some point. The tricky issue is people who either…

Host: Have cable without a box.

Guest: Yes. They have a cable ready TV and they just subscribe to basic or expanded basic so that they’re used to the joy of watching TV with only remote control on the coffee table. They may need to get a box where they didn’t have one before because the cable companies - and this is actually separate from the digital transition in a certain sense - they only have to keep providing a very basic set of channels in an unencrypted analog form that you can get with your cable ready TV.

Here’s another example: In the latest edition of the Bose newsletter, there’s the same error. It says that you’ll need to do nothing for the transition if “You subscribe to digital cable TV.” Further down, it states that it is a “Myth” that cable subscribers are ready for the changeover, suggesting that cable subscribers who receive analog service will be left out.

The source of the confusion seems to be that two topics are combined. It’s important to remember that this DTV Transition is only for the over-the-air broadcast industry. Cable is going through its own “digital transition.” Because of that word “digital,” the two often get confused.

What will cable subscribers need to do in preparation for the DTV Transition next February? The current information is that cable customers - whether or not they have a set-top box - will still be able to watch television after Feb. 17, 2009. At the same time, the cable industry has been moving towards a digital platform; as part of that, sometimes operators will move channels from the analog tier to the digital tier, which then needs a digital set-top box for reception.

Bottom line: If you have cable service, you should be fine, with the set-top box as an irrelevant factor. However, if you want to get access to cable’s newer services, such as hi-def TV or digital video recorders, or if you want to see the hundreds of programming choices available through the digital cable platform, you’ll need to have the appropriate set-top box. You can avoid having a box by purchasing a Digital Cable Ready television, but the current sets are only one-way, which means you won’t have access to interactive services. However, the tru2way standard will address this issue.

As always, you can visit the Get Ready for Digital TV site for more information (también en Español).

CTAM, the marketing association for the cable industry, released a study this week that looked at different consumer segments (particularly ones that are influential in the spread of hi-tech), their technology adoption, the decision-making process, and content viewing behavior.

The study drilled in on two influential groups – future shapers and future makers, who collectively represent 30% of consumers. Most people these days have heard of early adopters, a term created by Geoffrey A. Moore in his book Crossing the Chasm, which discussed the gap that exists between those consumers who will adopt new tech products and services early in their lifecycle and the “early majority” users, who are pragmatists and will wait longer.

A Light Reading article on the study explains their significance:

…future shapers (10 percent) are the early adopters of technology who readily spread the word and whose opinions are sought out. Future makers (20 percent) are second stage adopters who will tout the benefits of new technologies. The largest group of consumers is classified as today consumers (40 percent) who wait until technologies are proven before adopting them.

(For more on the significance of influencers, see Malcolm Gladwell’s classic The Tipping Point.)

The CTAM study, Future Shapers and Makers: An Examination of Consumer Segments, conducted by TNS Media & Entertainment, found:

Almost half of today’s technology influencers are choosing television service provided by their cable company over a satellite or telephone company provider. Forty-six percent of technology’s earliest adopters choose cable, while 26 percent chose satellite and 2 percent chose to receive video services from their telephone service provider.

From the article in Multichannel News:

Doing their homework is what sets the future shapers and future makers apart. According to the survey, 67% of future shapers and 59% of future makers are likely to get information about TV services from the Internet, compared to 45% of today’s consumers. The two influencer groups are also more likely than others to obtain information from TV, newspapers, and magazines.

According to the survey, 89% of consumers are concerned primarily with the reliability of the provider, over price

In addition, the study examined the trend in watching video on alternative platforms, such as laptops, portable DVD players or devices like iPods or iPhones. The study found that 37% choose a desktop computer or laptop as their preferred method. You won’t be surprised to learn that younger consumers are most likely to watch programming online, coming in over 50% greater in their tendency to watch video on desktop computers or laptops.

UPDATE: Along these lines, it’s probably worth pointing out another study that came out this week.

In a study conducted by Canadian research firm Solutions Research Group, nearly 80 million Americans, or 43% of the online population, watched a TV show on the Internet, as of November, up from 25% a year ago.

You can read the press release on the Digital Life America study here.

There are any number of issues that come up all the time in the cable business. And one of them is the pay-per-channel scheme known as “a la carte.” Sure, it sounds attractive. But when people describe what they think they will get under a mandatory a la carte plan, it doesn’t match reality.

It came up last week when NCTA’s Kyle McSlarrow was on a panel; it comes up all the time. Steve Jobs just gave his yearly Sermon on the Mount (a.k.a, his Macworld keynote) and he announced movie rentals on iTunes and an overhaul of Apple TV. This led to the Bad Luck City blog’s headline: Apple TV and iTunes video rental: Bye Bye Netflix and Cable.

What this means is that I may be able to cancel my Netflix account and rely on Apple for my movies on demand. Why send bits of data on a envelope through snail-mail when I can do it over my Internet connection?

As you know, I ditched cable for OTA television long ago, but now everyone else can do the same, at least until the cable industry offers programming a la carte.

Of course, Netflix already offers online movie viewing and they just lifted time restrictions, so that their customers can watch all they want. And cable customers get a lot more viewing options (especially if you’ve got digital cable with VOD) than someone getting DTV over-the-air.

Here’s another example in a blog post about the satellite radio business:

Sirius’ CEO Mel Karmazin has promised the FCC to allow a la carte programming for a cheaper price if the merger goes through. This way customers can pick and choose what they want to listen to. Chairman Martin of the FCC has tried to get the cable companies to allow a la carte programming, but to no avail, so he may see the Satrad merger as a precedent for a la carte options.

I’m going to keep referring people to this great column by the NY Times‘ Joe Nocera about why a la carte means fewer choices and higher prices. Maybe the message will get through.

UPDATE: And here’s another one. Diane Keaton drops an F-Bomb on Good Morning America and a Wednesday evening panel grapples with the effects. Tim Winter, President of the Parents Television Council, and Shawn Ryan, creator of FX’s The Shield, got into a tiff:

The evening’s hottest moment flared between Winter and Ryan over a PTC-supported proposal to offer consumers a la carte cable choices. Instead of having to buy multiple channels bundled in one package, the PTC supports legislation that would allow consumers to cherry-pick and pay for only the channels they want to watch.

“Why should I have to pay for FX when all I want is the Disney Channel?” argued Winter.

But Ryan, whose award-winning, gritty cop drama “The Shield” broke new ground for language and violence on basic cable, said that proposal would stifle creativity.

“I’d prefer you be honest about this,” Ryan said to Winter, whose nonprofit group originally referred to “The Shield” as “filthy trash” when it debuted. The a-la-carte proposal is a “backdoor way to censor shows and networks,” Ryan added.

On the one hand, you have mandatory a la carte leading to less diversity in programming, which could lead to fewer family-friendly viewing options. And on the other hand, cable has a better solution for content that you may be concerned about: parental controls. Everyone has different opinions about what they might block and cable’s controls let you decide. Check out our Control Your TV website or this report from PFF’s Adam Thierer.