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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NCTA today filed comments at the FCC in the “Broadband Industry Practices” proceeding in opposition to two petitions (from Free Press and Vuze) requesting that the Commission enact new regulation that would restrict the ability of broadband service providers to manage their networks to provide a better customer experience.

To quote from NCTA’s media release:

With the FCC’s 2005 adoption of a Policy Statement concerning broadband service, NCTA said that the Commission has already taken the correct approach – one of vigilant restraint – to ensure that the rapidly changing marketplace for broadband services develops in a way that best meets the needs of consumers. Importantly, the Commission’s 2005 Policy Statement expressly recognized that its broadband principles were “subject to reasonable network management,” NCTA said.

These seem to be the two key phrases: vigilant restraint and reasonable network management. In other words, broadband Internet services have evolved over time, responding to marketplace needs, and for the FCC to impose regulations would be, as the filing says, “likely to do more harm than good.” Further, network management “makes it possible to offer consumers access to the broadest possible array of services, sites and applications.”

The issue of network management has arisen with the growth of peer-to-peer services which are designed not only to download large files for long periods of time but also make their computers available as servers that constantly upload files for use by others. The use of peer-to-peer services by only a small fraction of Internet customers can consume a very large portion of the network’s resources and capacity which can interfere with the use and enjoyment of the Internet by other customers. So, without reasonable network management techniques, heavy usage of peer-to-peer services can degrade the overall speed of Internet access for all customers.

The filing enumerates some of the key points behind this approach:

• Not all applications use bandwidth in the same way.
• Content agnostic management of a network is not “censorship” or an anticompetitive technique to harm other services.
• Approaches to managing networks are best decided by network providers, rather than by the government.

This discussion reminds me of a point made in a Washington Post editorial almost two years ago:

If you want innovation on the Internet, you need better pipes: ones that are faster, less susceptible to hackers and spammers, or smarter in ways that nobody has yet thought of. The lack of incentives for pipe innovation is more pressing than the lack of incentives to create new Web services.

Today’s filing concludes by pointing out that there are a number of open questions about the best way to improve consumers’ experience of the Internet. Regulation would only put up a roadblock on the path to figuring out the right approaches.

We’re coming up pretty quickly on the official start to the One Year Countdown to the Digital Television Transition.

On the off-chance that the preceding sentence was complete gibberish to you, let me step back and explain. The DTV Transition refers to the coming switch from analog to digital over-the-air broadcast television. Congress has mandated that after February 17, 2009, full power television stations will stop broadcasting in analog, and will broadcast in digital exclusively. Changing over to a digital format will create efficiencies in the use of the radio frequency spectrum on which the nation’s TV broadcasters transmit their signals. Some of the old spectrum that’s freed up will be made available to first-responders such as local police and fire departments and will enhance the way they react to emergencies, which will significantly increase public safety for all Americans.

That phrase “full power broadcast TV stations,” however, is a really important distinction, as the FCC’s website points out:

While the majority of consumers in the U.S. can receive the programming of full-power over-the-air stations, there are three other categories of broadcast TV stations - “low-power,” “Class A,” and “translator” stations. There is currently no statutory deadline for these stations to convert to digital broadcasting.

That page defines what these stations are, but it’s useful to remember that not every station broadcasting in America is going to be transitioning next year.

But there is a solution: analog pass-through in digital-to-analog converter boxes. You’ve possibly heard that you can buy a converter box that will let your old analog TV sets receive and display over-the-air digital signals. There are some of these boxes that will also “pass-through” an analog signal, in addition to performing the conversion for the digital ones.

The National Telecommunications and Information Administration (NTIA) has a list of converter boxes that are eligible for their coupon program, which allows consumers to apply to receive up to two vouchers that offer a significant discount off the price of the converters. That list clearly marks the models that are “capable of passing through an analog signal to the TV set.” Right now, there are three such boxes, but it is expected that additional models will be available in the future.

For more info on the DTV Transition, you can visit the cable industry’s website GetReadyForDigitalTV.com or the NTIA’s website on this topic. If you’re a cable customer, the good news is that for any of your TVs hooked up to cable, you shouldn’t have to do anything to continue enjoying full power broadcast TV stations in their new digital format, whether you have a hi-def television or not.

Right on the front page of NCTA’s website, down in the lower right corner, we run a little feature called “Statistic of the Week.” Since cable prices are always a hot topic, and since I’ve made some reference to the notions of price and value, I thought I’d highlight what we’ve run recently.

This week it was:

Cable’s PPVH decreased by 3.3% on a nominal basis between 2001 and 2006 and 15.4% on a real, or inflation -adjusted basis

And this was footnoted as follows:

[PPVH = Price Per Viewing Hour = the price of a cable subscription divided by the number of hours per month spent viewing basic cable networks]

Source: Average basic cable rates from SNL Kagan divided by average basic cable network viewing time from CAB

Fine. What the heck does this mean? It means that how much you watch cable television ought to be factored into price and value. Any discussion of cable prices ought to be put in context. NCTA doesn’t think that the nominal price is the most accurate measurement. It’s not like a loaf of bread or a carton of milk; over time the service that cable offers to customers changes and the way people use that service changes.

The FCC is quick to point out that the price per minute (which is a quantity-adjusted metric much like PPVH, the price paid divided by the amount consumed) of wireless service has been declining, yet the Commission fails to acknowledge or discuss PPVH. Consumers are paying more for wireless service and they are paying more for cable service, but they are also consuming (talking/viewing) more of both services too. They must be finding value and quality in each of these services.

As I mentioned in my first post, I’ve been a cable customer for most of my life. I pay more today than my parents paid back in the early Seventies. But I get a lot more channels, the programming is more diverse and is of a higher quality and I now spend more of my time tuned to more cable networks than I used to.

We sent a letter to the FCC a year ago. In it, NCTA’s President & CEO Kyle McSlarrow noted that today’s marketplace is quite dynamic and there are better ways to measure price:

Although it’s short-sighted to focus on video pricing alone, there are more obvious ways to measure prices that actually stand up to scrutiny. It is useful for consumers and policymakers to know whether price increases are or are not accompanied by corresponding increases in the quantity and quality of the service or goods being sold. That’s why it is important to analyze prices not only on an inflation-adjusted basis but also on a quality-adjusted basis.

One way is to simply measure the price per channel as the FCC has done for some time. And the data clearly show that the real price per channel over ten years has gone down, not up.

He also talks about PPVH and you can read the whole thing for yourself. I’d also recommend looking at this study by Professor Steven S. Wildman of Michigan State University. He argued that the “real (inflation-adjusted) price of cable service divided by the number of hours spent watching basic cable programming” was a good way of measuring prices. If you pay 10 bucks for service and watch 10 hours, then you paid a buck an hour. If you pay 20 bucks and watch 60 hours, then you paid 33 cents an hour.

On Tuesday, NCTA filed a Petition for Stay pending its appeal of an order of the FCC entitled Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate Developments.

As described in the Multichannel News article by Ted Hearn:

NCTA sought a stay in the U.S. Court of Appeals for the D.C. Circuit on one key issue: the FCC’s decision to apply the ban to existing contracts, not just to future deals, between cable operators and the owners of multiple dwelling units (MDUs.).

You can find NCTA’s filing on our website. There’s another article on this action at Light Reading. And you can read the Oct. 29 article in the NY Times that kicked this whole thing off: F.C.C. Set to End Sole Cable Deals for Apartments.

UPDATE: Apartment owners appeal FCC decision banning exclusive cable contracts.

Now the National Multi Housing Council and National Apartment Association who represent the owners of many of these buildings are challenging the ruling in the U.S. District Court of Appeals’ District of Columbia division. The complaint alleges that the ruling exceeds FCC authority and is “arbitrary and capricious, an abuse of discretion, unsupported by substantial evidence.”

And a Dow Jones story on NCTA’s filing as well.

FCC Chairman Kevin J. Martin spoke today at CES and did a Q&A with Gary Shapiro, President & CEO of the Consumer Electronics Association. In his remarks, he talked about the coming Digital Transition, confirming that the “hard date” continues to be set in stone.

Actually, he remarked on a number of issues, but I’d like to zero in on comments he made towards the end of the session. The question of cable prices was raised and Chairman Martin reiterated remarks he has made on other occasions. He spoke of the increase in cable prices, which he characterized as too high, and said that “I’m doing everything I can” to increase competition, which he sees as a panacea. He said that prices in “almost every area” had decreased, although the examples he gave were from telephony and data services.

Gee whiz, where to begin?

Cable services, cell phone services. Apples, oranges. That’s one objection. Just to pick one aspect, the rise in prices is driven, in part, by increases in programming costs. A cell phone call isn’t going to ask for a salary bump next season.

Or maybe I should point out that comparing today’s prices with those of 1996 is a little goofy, given the small analog offering of ten years ago and today’s bundle of digital, high definition, and video-on-demand. There’s a factsheet on the NCTA website which compares 1995 to 2005 and finds that consumers were getting more channels, watching more cable programming and getting more value for their dollar.

This fits in with another good piece of research by Professor Steven S. Wildman of Michigan State University. He argued that the “real (inflation-adjusted) price of cable service divided by the number of hours spent watching basic cable programming” was a good way of measuring prices. If you pay 10 bucks for service and watch 10 hours, then you paid a buck an hour. If you pay 20 bucks and watch 60 hours, then you paid 33 cents an hour.

NCTA has also pointed out that cable’s bundle of video, high-speed Internet and voice service costs 23 percent less than ten years ago. Chairman Martin argues that a mandatory a la carte scheme will save money, but there’s plenty of evidence that suggests just the opposite.

Let’s just say we disagree and let it go at that.

In addition to the earlier CES panel on the DTV Transition (which had focused on the coupon program and retailers), there was another session later that afternoon entitled “Goodbye Analog Hello DTV” which examined current educational efforts to get the public ready for the big change.

The panel started with remarks from Meredith A. Baker, Acting Assistant Secretary for Communications and Information, National Telecommunications & Information Administration (NTIA), outlining how the Digital-to-Analog Converter Box Coupon Program is going so far. She indicated that consumers can expect to start receiving their coupons in late February and also said that of people contacting NTIA for information on the program, 74% were using the website and 26% were using the phone number.

Then a discussion followed, with moderator Jason Oxman, Vice President, Communications and Member Relations, Consumer Electronics Association; and a panel made up of members of the DTV Transition Coalition: Debra Berlyn, President, Consumer Policy Solutions, Federal Affairs Consultant, AARP; Jonathan Collegio, Vice President, Digital Television Transition, National Association of Broadcasters; Catherine Seidel, Chief, Consumer & Governmental Affairs Bureau, Federal Communications Commission; Rob Stoddard, Senior Vice President, Communications and Public Affairs, National Cable & Telecommunications Association; and Tony Wilhelm, Director, Consumer Education and Public Information Television Converter Coupon Program, NTIA (panel pictured in order, from left to right).

Everyone painted a very positive picture of how education efforts have been going so far, but there were a couple of key takeaways. The panel said that the measure of success is in terms of awareness, not response. As Seidel said, “Some people do get the message, but don’t act.” Collegio warned that for consumers who wait until the last minute to get a converter, there will be a lag until they get their coupon which may mean some people will be left out on February 17, 2009.

Berlyn said that AARP was particularly concerned about groups like seniors, minorities, non-English speaking households, disabled persons, and those living in rural and tribal areas. She also said there was concern about consumers knowing how to connect the converters once they obtain them and suggested that local community groups such as Meals on Wheels may be useful in working directly with consumers.

NTIA is focused on over-the-air population, said Wilhelm. Households that don’t get television via cable or satellite are most in need of information about the Transition. The key questions are where these people are to be found and where the key markets are. For example, Wilhelm noted that Los Angeles is the #1 over-the-air market and that along the Mexican border, there are a larger number of over-the-air households. Coupon requests will allow NTIA to track the consumer response and make mid-course corrections.

The initial stages of education efforts seem to be effective, with consumers’ questions evolving over time and becoming action-oriented. As Stoddard noted, there is a need for “articulate communication” which helps people understand when they need to do something and when they don’t.

For more on cable’s education initiative, visit our Get Ready for Digital TV site (also available en Español).