Policy + charging

Feds Favor Usage-Based Broadband

Today's broadband news roundup kicks off with some of the initial reactions following a report by The Wall Street Journal that the U.S. Department of Justice is investigating whether cable is trying to stifle over-the-top (OTT) video competition through the use of broadband consumption caps and TV Everywhere business models that require users to subscribe to pay-TV packages. (See Is Cable Stifling OTT Video Competition? )

  • Sanford C. Bernstein & Co. Inc. analyst Craig Moffett said in a research note that the purported probe could "accelerate the industry's shift to usage-based pricing for broadband," adding that usage-based broadband is already endorsed by the Federal Trade Commission and by the Federal Communications Commission (FCC) 's Open Internet Order. Comcast Corp. (Nasdaq: CMCSA, CMCSK), by the way, is getting ready to test a new policy that would charge for extra once customers exceed their monthly caps. (See Comcast to Raise Caps, Test Overage Fees .)

    Moffett also predicted that the proceeding, even if it causes the DoJ to end broadband capping policies, could be bad for OTT video wannabees, as it "is likely to slow the pace of innovation and reinforce the closed nature of the cable infrastructure," and actually hinder the likes of Apple Inc. (Nasdaq: AAPL) or Google (Nasdaq: GOOG) from getting access to cable video feeds. Netflix Inc. (Nasdaq: NFLX) has been vocal about how caps discriminate OTT services, but Moffett believes that if a shift toward more usage-based billing by ISPs could be more damaging to the video streamer: "Be careful what you wish for," he warned. (See Netflix Cranks Up the Net Neutrality Heat .)

  • Cable operators contacted by Light Reading Cable declined to comment on The Wall Street Journal article, but National Cable & Telecommunications Association (NCTA) spokesman Brian Dietz did issue a statement that cable's new offerings "represent accepted and legitimate business practices as well as sound network management. All the industry's actions are intended solely to ensure consumers get the highest value for their subscription."

  • Free Press Policy Director Matt Wood had the opposite opinion, holding that the probe will be good for consumers and OTT providers, predicting that cable will have a hard time justifying "its use of these arbitrary data caps." He argued that Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s decision to exempt traffic delivered by its VoD app to the Xbox 360 "proves that these caps have nothing to do with congestion." (See Comcast Denies It's Prioritizing Xbox Video .)

  • Will Richmond, the president and founder of Broadband Directions LLC and a leading video industry analyst, blogged that the DoJ's focus on broadband cap policies is misplaced. The organization, he writes, should be focusing instead on sports programming and the "multi-billion dollar annual subsidy that non-sports fans are required to pay due to current cable network bundling practices."

  • Knology Inc. (Nasdaq: KNOL) said two leading proxy advisory firms -- Institutional Services Inc. and Glass Lewis & Co. -- have recommended that shareholders vote in favor of the company's US$1.5 billion merger with WideOpenWest Holdings LLC (WOW) . Knology has scheduled a June 26 meeting for stockholders to vote on the proposed deal. (See Whoa! WOW Buys Knology for $1.5B .)

    But the path isn't entirely clear. Knology shareholder Sheila Lewis is suing Knology, claiming that the deal undervalues the company, reports Bloomberg, noting that WOW's bid was 34 percent more than Knology's average three-month closing price before The Wall Street Journal reported on February 28 that the companies were in merger talks.

  • The Internet Corporation for Assigned Names and Numbers (ICANN) received 1,930 applications for new generic top-level domains (.com, .net, and .org are among the most commonly used today), and it appears that Dish Network LLC (Nasdaq: DISH) is trying to lock up a couple (.dtv and .direct) that might elicit a response from satellite TV rival DirecTV Group Inc. (NYSE: DTV). Among other notables, Comcast wants .xfinity and .comcast, and Netflix is trying to secure .netflix.

    — Jeff Baumgartner, Site Editor, Light Reading Cable

  • marjsdad 12/5/2012 | 5:30:15 PM
    re: Feds Favor Usage-Based Broadband

    Regarding the Xbox usage: Think about it. Like a set-top, the Xbox is not mobile. Like a set-top, the Xbox delivers on-demand content through a subscription video service. Like a set-top, the signals do not travel over the open Internet or have any impact at all on last-mile Internet traffic. The only difference is the technology: one is QAM and the other is IP.

    The FCC has had the goal of getting cable service on 3rd-party devices for 15 years. The CableCARD just was not the right solution for two-way cable traffic on 3rd-party devices. An IP-based device works, however, not just on the Xbox, but also on the retail TiVo box using both a one-way CableCARD for linear and IP for on demand.

    What's the big fuss? CE companies and consumer advocates should be jumping for joy that a mass market for cable service on 3rd party devices is finally at hand, rather than whining about net neutrality stuff that doesn't apply.

    AESerm 12/5/2012 | 5:30:08 PM
    re: Feds Favor Usage-Based Broadband

    If usage based pricing gains traction, then Will Richmond's point about the subsidy non-sports fans pay for bundled programming could too. Idea being those who never watch Sports Center would prefer not to pay for it.

    Sign In