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Cable's Speed Trap

3:00 PM -- If MSOs continue to style themselves as ISPs, as Charter Communications Inc. is doing, or view broadband as cable's new anchor service, a direction Time Warner Cable Inc. (NYSE: TWC) is heading in, then it should follow that broadband speeds and the quality of those broadband speeds are quickly becoming paramount. (See TWC: Broadband Becoming 'Anchor Service' and Charter Ready to Give DSL a Thrashing .)

But the notion of using advertised speeds in a "best effort" world seems as outdated as a dial-up modem. It leaves service providers open to doubts that the speeds they are claiming to offer is all just a bunch of smoke and mirrors.

Case in point: the New York area, where Verizon Communications Inc. (NYSE: VZ) and Cablevision Systems Corp. (NYSE: CVC) are trading blows over recent advertisements.

To catch you up, Cablevision sought to ban Verizon from using ads citing Federal Communications Commission (FCC) data published in August that say the MSO delivered 59 percent or less of advertised speeds during peak periods. A more recent FCC study said the MSO had "markedly improved" in October, though the average download speeds of its 15Mbit/s tier reached "90 percent of the advertised speed" during peak hours.

On Monday, Verizon grudgingly agreed to tweak its ads so they no longer refer to the older FCC data as "new," "recent" or "just released." But Verizon maintained in its memo to the court (DSL Reports has posted it here) that its ads were "entirely accurate and truthful."

Then again, the FCC's chart comparing ISPs showed that Verizon's DSL service didn't exactly blow the doors off the hinges, either. (See Will Verizon Abandon DSL for Mobile Broadband?)

These challenges to advertised speeds will grow louder still as more consumers tap into broadband to serve their video needs. The ridiculous bickering about who has the biggest pipe on the block will end (or maybe cool off) when ISPs of all shapes and sizes go to the lengths of offering -- gasp! -- guaranteed speeds that are checked by a reputable third party.

Maybe that's wishful thinking due to the kind of bandwidth that would need to be freed up to support such a policy, but what would you feel better paying for, a best-effort 15Mbit/s service, or a guaranteed 5Mbit/s service?

— Jeff Baumgartner, Site Editor, Light Reading Cable

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kaps 12/5/2012 | 4:46:37 PM
re: Cable's Speed Trap

You wouldn't buy a quart of milk if it "maybe" contained 32 ounces. You wouldn't buy a gallon of gas if it "could possibly be up to" one gallon.


Why should we put up with "maybe" measurements for similar commodities in broadband? It's not like they can't measure this stuff -- after all they are willing to bill you by the bit, so it's time for some truth in advertising.


I'll believe that government is out of the pockets of big providers when we see this line of inquiry start here in the U.S. Until then every other argument about broadband is a waste of time.

kaps 12/5/2012 | 4:46:37 PM
re: Cable's Speed Trap

You wouldn't buy a quart of milk if it "maybe" contained 32 ounces. You wouldn't buy a gallon of gas if it "could possibly be up to" one gallon.


Why should we put up with "maybe" measurements for similar commodities in broadband? It's not like they can't measure this stuff -- after all they are willing to bill you by the bit, so it's time for some truth in advertising.


I'll believe that government is out of the pockets of big providers when we see this line of inquiry start here in the U.S. Until then every other argument about broadband is a waste of time.

DCITDave 12/5/2012 | 4:46:37 PM
re: Cable's Speed Trap

Speeds and price. Price and speeds. That's all they can sell? And we wonder why so many consider them dumb pipes?


 


 

DCITDave 12/5/2012 | 4:46:35 PM
re: Cable's Speed Trap

I think the 7 percent are geniuses.


Meanwhile, why not sell content services along with broadband in the same way that you'd tout three months of free HBO for new customers? If it works for pay TV, it should work for broadband.


And, yes, quick the speeds discussion. Just be fast, flexible and answer the goddam phone once in a while.


ph


 

ravanelli 12/5/2012 | 4:46:35 PM
re: Cable's Speed Trap

The market studies we've done (and we just closed some new research last week), tells me that consumers basically look to their ISP for reasonably fast, reliable connectivity at a good price. And only 7% outright are in favor of consumption-based billing.  


In my market, the incumbent cable operator has such a rich tradition of predatory introductory pricing and unexplained annual price increases that people like me are hesitant to sign up for, say, home security with a minimum 3-year commitment (I'm not making that up).  


So I'm in the middle.  I say be a pipe provider, but set out to be the best darn pipe provider you can be: offer turbo buttons for bandwidth on demand at peak times, better troubleshooting and self-remedy tools, and white glove customer service.

DCITDave 12/5/2012 | 4:46:35 PM
re: Cable's Speed Trap

I've always said that Netflix, Hulu, etc. are nothing more than demand creation for broadband services. So if you are a service provider and some percentage of your customers are hooked on Netflix that is GOOD for business.


Why isn't anyone making a co-marketing agreement with Hulu or something of that ilk and arranging a discounted rate if they buy Hulu (or whatever) WITH your broadband package of choice?


Seems like consumers would win. Service providers would win. Hulu or whatever would win. Am I a genius or what?


Discuss.

Jeff Baumgartner 12/5/2012 | 4:46:35 PM
re: Cable's Speed Trap

given all the retrans battles lately, being a dumb pipe may not sound so horrible  when the margins on HSD are great, and the margins on pay-TV services continue to shrink. But it's an interesting point... if concentrating on speed and price shows limited creativity for how to package and sell HSD, what else should these guys consider to help spur buying decisions? JB

DCITDave 12/5/2012 | 4:46:34 PM
re: Cable's Speed Trap

I think they're better off being dumb pipes. But they won't cop to it. They fight against that sort of characterization. And, yet, they won't call the companies that are creating demand for their product and strike a deal with them.


Bizarre.


Even as a genius I can't understand their thinking sometimes.


ph

craigleddy 12/5/2012 | 4:46:34 PM
re: Cable's Speed Trap

We would never call you a genius, Phil. :) But you do raise a good point.


I can only surmise that the reason that MSOs don't get into content arrangements with OTT providers is that they don't have to. When cable was in its infancy, MSOs needed TV programming to grow. Just hooking people up for TV reception wasn't good enough. Content is king, and all that.


With broadband, they've become fat and happy by just selling the connection and boosting the speed. The beauty of this is that there's no programming deals to cut, no revenue split to make, no co-marketing to manage, no license fees to pay. It's easy to manage and control costs. 


So smart people (and yes, even you Phil) would say cable should replicate the traditional distributor-programmer co-marketing model (if OTT providers would go along, which is another big question). But since the MSOs' relationships and costs with programmers are souring them on being in the content business, they're reluctant to go there.  


So being a dumb pipe might not be so bad.       


 


 

shygye75 12/5/2012 | 4:46:31 PM
re: Cable's Speed Trap

Big companies rarely are of one mind when it comes to strategery. Different parts of organizations will work at cross purposes, often (but not always) without ever realizing it. I would expect cable cos and telcos to continue to wrestle (metaphorically, of course) with the dumb pipe/smart pipe/OTT/content pimp/bandwidth pusher identity issue for some time. And mistakes will be made.

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