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.

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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).