Costs of Building a Cable System:

Around 1997, a number of companies began to build cable systems over top existing cable operators to compete with them directly. These companies were called "over-builders" and many still exist today. However, before they even began the economics were at play - the same economics the cable companies know all too well. These articles provide a glimpse of the costs of running a cable company from costs to run coax along phone poles, to numbers of technicians needed miles or plant or numbers of customers, to the ultimate costs in the content which become extremely expensive. The costs of content range from a high of 76% of revenue taken from actual subscribers (in the case of ESPN) to 7.15% of revenue taken from actual subscribers. These are numbers pulled off an actual cash flow projection of an operating cable MSO.

NFL net scores Insight carriage pact (March 11, 2004) The 4-month-old NFL Network has advanced to another first-and-10, signing a five-year carriage deal with Insight Communications, the ninth-largest cable operator in the U.S. MSO reportedly will pay a license fee in the neighborhood of 22 cents per subscriber.

Fickle fiber (October 6, 2003) Wholesale prices for fiber-optic network capacity are dropping again after appearing to bottom out, putting additional financial pressure on telecommunications companies. Holme recently announced an OC-48 circuit connecting 21 cities for $150,000 a month. That circuit can handle 32,256 voice calls simultaneously. He said the network, fast enough to carry the traffic of most Fortune 100 companies, could be operated for less than $2 million a year, compared with $200 million three years ago. "The supply of capacity grew so absurdly fast that it's going to take years to restore supply and demand to a reasonable balance," Beckert said. For example, he said, a potential 113 terabits per second of capacity runs through Helena, Mont., population 26,000. (A terabit is a trillion bits of data.)

What Key Franchise Issues Arise in Negotiations with Overbuilders? () An over-builder needs 20 subscribers per mile of plant construction to pay off the capital investment of the new network. A conservative business plan may assume the overbuilder can reasonably expect to capture only ¼ of the current operator's subscribers. This means the overbuilder will argue against building to neighborhoods with densities below 80 homes per mile (1/4 x 80 = 20 subscribers per mile).

Over and Up: Cable Overbuilders Push Their Business Case (October 2000) Overbuilders starting from scratch with the most modern possible plant may be able to command substantially higher market values than incumbent cable systems. We're figuring on about $2,600 in both capital and marketing costs for each new customer, which looks mighty good to me when compared to the average valuation of $5,000 per subscriber for a rebuilt digital cable system. The goal is somewhere between 15 percent and 30 percent penetration for each of the three services-video, voice and data-in contrast to the 40 percent to 60 percent penetration needed for a viable cable system. Newbuilds expect monthly household expenditures of $30-40 for video, $25 -35 for local phone, and $35-45 for high-speed data, which means $100-125 per month per subscriber household.

Wrestling with return path realities (04/1999) Most industry officials agree that the average cost to activate a two-way system ranges between $750 to $1,500 a mile, with initial equipment costs to activate two-way being relatively low, especially if a system is already upgrading to 750 MHz. MediaCom uses one technician per 400 miles of plant, or one per 30,000 subscribers. However, the more customers, the higher the maintenance. Approximately 50 percent more personnel will be needed to maintain two-way services in the new century.

ESPN's Full-Court Press (02/11/2002) On average, ESPN charges operators $1.50 a subscriber per month--more than twice what CNN charges. And ESPN contracts call for 20%-a-year increases.

Defending Turf Against Cable Overbuilds (01/1999)  In constructing and improving their systems, overbuilders such as Ameritech, GTE, 21st Century, Knology and others have encountered myriad operational challenges, and cable operators are cast in the unfamiliar role of defenders of their turf. The hybrid fiber/coax network has fiber running to within 1,000 feet of homes, with an average of 400 homes served per node. Ameritech spends, on average, $230 per home passed (HFC only) in fixed costs, and plans to pass 500,000 homes per annum over the next three years. 21st Century's system, when built out, will serve 350,000 homes passed in two franchise areas in the Chicago market, and 50,000 hotel units with video and phone service. It uses a unique "Distributed Ring and Star" system (DRS) for its residential customers and is stretching its 750 MHz platform to 820 MHz. The company launched its service in late 1996 and has 190 employees.

Other Sources of Revenue for Cable Companies:

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If We Ain’t Got It, They Can’t Buy It (May 3, 2004) nearly 70% of active Internet users log on around 8 p.m.—prime time—according to A.C. Nielsen Kagan World Media estimates the cable industry could easily generate $9.7 billion annually from commercial clients by 2008. Today, Kagan says, cable operators pass 38% of the commercial businesses with their plant but serve fewer than 1% of those businesses. Cable's $85 billion network platform upgrade will certainly come in handy, no matter what products and services consumers want in the future. All it takes is bandwidth. Operators realize that to deliver new services, they're going to need to go all-digital.

Are MSOs Getting Stingy With Their Marketing Avails? (April 19, 2004) It appears so, based on the past two years, as affiliates have used more of that inventory to promote their own services, such as broadband. This has forced some cable networks to shift toward paid consumer marketing to sell their newer services, especially hi-def and VOD. affiliates get two to three local minutes an hour from the various cable programmers. "Fifteen to 25% of that is to market local products and services," rather than to run branding spots as they used to, he adds.

Cable Operators Continue To Lag U.S. Ad Recovery (November 17, 2003) At a time when many emerging media would be posting robust rates of growth, spot cable ad sales declined 5 percent during the third quarter and the first three quarters of 2003, compared with the same periods in 2002. Time Warner experienced a 24 percent decrease in the third quarter and a 30 percent cut through the first three quarters

Broadband Service Adoption:

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Survey: Customers not taking bundling bait (May 5, 2005) In particular, while 80 percent of those surveyed said they take three or four of the telecommunications services, less than a third buy them from a single provider. More than 67 percent indicated that offers of discounts if they took more than one service from a provider was the most important factor in their choice. But 43 percent also indicated the best way for a provider to improve service was to offer a better bundle of services that fit their needs. Another 24 percent indicated the best improvement would be to offer better customer service to resolve problems. Content also appears to be a conflicting area for the customers, according to the survey. About 41 percent indicated they had purchased video-on-demand, games or movies from a cable provider and 41 percent they had purchased content from an online provider. Of that group, 86 percent said they had done so at least once or twice a month. But another 39 percent of respondents said they had never purchased content. Top reasons for not doing so included being unfamiliar or intimidated by the process (39.9 percent), being unaware of what content is available (33.25 percent), and that service providers had never marketed such offerings (26.85 percent). And perhaps most importantly, 64.5 percent of all those surveyed said they would not pay more for content tailored to their interests. Another 24.5 percent said they would pay 5 percent or less of the typical cost of service.

Analysis: Broadband penetration to grow in 2005 (January 3, 2005) Broadband Daily predicts that the high-speed Internet will reach 33% of U.S. homes by the end of 2005, up from 29% at the end of 2004. Cable will lead telcos in net high-speed subscriber gains, while alternative broadband technologies such as satellite and Wi-Fi will continue to make inroads

Internet surfers get tired of poking along, dump dial-up for high speed (April 19, 2004) More than half the Internet users in the USA have speedy connections somewhere in their lives. So says a survey of 2,200 Americans over 18, released today by the non-profit Pew Internet & American Life Project. As of February, 48 million folks, or 39% of Net users, had adopted speedy access at home. That's a 60% climb compared with the 30 million home users in March 2003. For the first time, more than half of college-educated people 35 and under have broadband at home. Just 10% of rural Americans go online via fast connections from home, one-third the rate of those who don't live in rural areas.

Broadband's Real Impact (February 5, 2004) Jupiter says users switch so they can access rich media content, such as video and music files. Price is another factor -- it's dropping. If that trend continues, an estimated 40 percent of all U.S. households will have a high-speed Internet connection by 2008. Increased broadband use helped trigger development of such groundbreaking technologies as Skype. This system, from Kazaa's creators, allows Internet users to sidestep phone companies and make crystal-clear PC-to-PC calls, free of charge.

Bundled services give boost to SBC (January 6, 2004) Digital subscriber line Internet subscribers were up 12 percent to 3.2 million, while long-distance customers grew 23 percent to 14.2 million, Edward E. Whitacre Jr. said at a Smith Barney Citigroup investor conference in Phoenix. The increases helped SBC stem its overall loss of local-phone service accounts by 30 percent from the third quarter, when it lost more than half a million local lines. In the third quarter, DSL and long-distance accounts grew 13 percent and 17 percent respectively.

DSL Drives Global Broadband Growth (September 9, 2003) DSL - the world's most popular broadband technology added another 10.7 million subscribers in the first half of 2003 according to new figures prepared for the international DSL Forum by London analyst firm, Point Topic. This brings the total number of subscribers to 46.7 million. Western Europe showed the greatest growth in the six months, where 12.8 million homes and businesses are now using broadband DSL, second only to Asia-Pacific at 17.8 million subscribers.

U.S. ranks 11th in broadband (November 21, 2003) U.S. broadband penetration is just 6%, which ranks it 11th in the world. South Korea is far and away the leader of the pack, with 21% of the population subscribed.

Broadband Internet and Household Income Go Hand-in-Hand (November 18, 2003) The top four states in high-speed Internet penetration each rank among the bottom ten states in DBS penetration. At the beginning of 2003, three states had a residential penetration of high-speed Internet above 20% and 13 states had broadband penetration below 10%. With over 22 million broadband subscribers in the US today, attracting consumers from a broad economic base will play an important role in broadband's future growth.

Broadband numbers reach all-time high (November 12, 2003) cable companies accounted for 64 percent of the overall U.S. residential broadband market, while DSL garnered the remaining 36 percent, according to market researcher Leichtman Research Group. DSL added 800,000 subscribers, or 39 percent of new broadband customers, while new cable subscribers made up the remaining 61 percent. Since the summer, the Bells have introduced aggressive price discounts in hopes of signing up new customers. Cable companies have responded by boosting their download speeds and toying with price promotions of their own.

The Motley Fool Take Broadband Booming (October 14, 2003) The number of broadband (high-speed) Internet subscribers worldwide zoomed ahead 72 percent last year, and it is likely to keep zooming. This is nothing but good news for the global economy. According to the United Nations' International Telecommunication Union, 63 million people paid for high-speed service last year. That works out to about one in every 10 Internet subscribers. The United States ranked 11th in broadband adoption, with seven subscribers for every 100 inhabitants. (No. 1 was South Korea, with 21.) In the United States, broadband is expected to reach the 25 percent penetration mark more quickly than personal computers or mobile telephones did.

7 Million Broadband Internet Subs In Canada by 2006, Study Says (August 18, 2003) A new study by the Yankee Group predicts that there will be 7 million broadband Internet subscribers in Canada by 2006. The market already has taken some positive steps, as most services have increased in price during the past 12 months. However, it is troublesome that price appears to remain the key differentiator. Broadband providers continue to struggle to differentiate themselves in a market that has been moved by price, and price alone.

America Online Takes Off Gloves (August 13, 2003) AOL has more broadband subscribers, 2.2 million, than its rivals, but they represent only about 8.7 percent of its 25.3 million customers. Atlanta-based rival EarthLink, by contrast, has about 5 million total subscribers, and nearly 20 percent are broadband. In the second quarter, the company added about 300,000 broadband accounts from the prior quarter. However, it lost a total of 846,000 subscribers. The large subscriber loss, announced during AOL Time Warner's earnings call July 23, was more than many analysts expected and sent the stock price down nearly 7 percent that day. Even though AOL charges one of the highest prices for broadband --- nearly $55 --- the company still doesn't make as much money on the service as it does on dial-up. It must pay the phone or cable company $30 to $33, Kersey said.

Broadband Nation (August 9, 2003) At the end of 2002, U.S. cable companies had slightly more than 10.5 million broadband subscribers in total, whereas DSL providers had only 5 million, Yankee Group analyst Mike Goodman said. He predicted this proportional gap will stay roughly the same. By 2007, he predicted, there will be 48 million U.S. subscribers. 106.6 million U.S. households in the country, 21.7 million will have broadband. there will be an estimated 112.4 million households, and of those, 62.4 million will have broadband. 29 percent of households that now have dial-up Internet access plan to upgrade to broadband in the next two years. Other broadband distribution methods like satellite, fiber to the user and wireless lag far behind the top two methods and are not expected to catch up soon. Satellite and wireless are still relatively rare and are considered less attractive options for a lot of consumers. Satellite in particular doesn't have much uptake. Goodman noted that about 80 to 90 percent of South Korean households that have PCs also have broadband. "But if you're talking about the number of subscribers, South Korea is far smaller than the U.S. So, basically, it depends on how you look at it.

Biggest Broadband Booster: Michigan (July 17, 2003) The state has created a Broadband Development Authority, which provides loans to broadband providers, and passed a law that eliminated right-of-way disparities for laying broadband lines. Right-of-way issues include the permits necessary for laying new broadband lines, such as fiber-optic cable. Only six out of 100 U.S. residents have high-speed Internet, according to the Organization for Economic Cooperation and Development. TechNet has a goal of 100 million households having 100-megabit broadband connections by the year 2010.

Carriage of Various Content:

EchoStar ups rates (January 5, 2005) Starting Feb. 1, one of EchoStar's most popular programming packages - America's Top 60 - will increase by $2 a month. The company's Top 120 and Top 180 packages each will rise $3 a month, while EchoStar's larger America's Everything bundle of channels will jump by $4. Rates for pay-per-view programming, the Dish Latino package and individual premium channels such as HBO will remain unchanged. EchoStar said the increases primarily reflect rocketing fees to get its programming, particularly for sports channels like ESPN. "Our programming costs have gone up . . . about 7 percent over the last year," said EchoStar spokesman Steve Caulk. "That represents a big part of our expenses."

Comcast stays a good sport (October 31, 2003) Cox accused ESPN of raising the price it charges cable companies by 20 percent annually over the last five years, to a current $2.61 per customer per month. Together, ESPN and Fox Sports account for 32 percent of Cox's standard-cable programming costs, but they attract only about 8 percent of standard-cable viewing, according to Cox. Without addressing ESPN specifically, Roberts said yesterday that Comcast's goal was to get programming cost increases closer to the rate of inflation. According to a report released last week by the government's General Accounting Office, the price paid by cable operators for sports programming rose 59 percent over the last three years, while the cost for all programming went up 34 percent.

ITV Is Already A Part Of Life In The U.S., And Only Cable Can Make The Most Of It (September 29, 2003) Already, over 50 million digital cable and DBS subscribers interact with their TVs daily, clicking through program guides, ordering video-on-demand, using PVRs. At an average 100 clicks per subscriber household per day, that's 5 billion clicks. There are many reasons enhanced TV has worked in Europe better than in the U.S. The PAL standard, of course, provides TV displays with 53% more pixels than the NTSC standard, providing more space for overlays. Europeans tend to watch TV in smaller rooms than North Americans, and are therefore closer to the display, so overlay content can be made visible using fewer pixels on the screen. Moreover, because digital TV deployment began later in Europe, with DBS taking the lead, the European market didn't have the challenge of launching enhanced TV service to an installed base of 25 million thin boxes, as has been the case in North America.

Porn Sent Packing (August 11, 2003) Starting after Labor Day, its 314,000 subscribers in four states will lose access to up to six networks from Playboy Entertainment Group: Playboy, Spice, Spice 2, Hot Choice, Hot Network and Urban Extra. Adult VOD and PPV via digital cable are both doing really well for the industry,” says Kagan World Media analyst Deana Myers. “Adult has one of the highest profit margins for operators. a system with 100,000 cable subscribers that carries four adult networks provided by The Erotic Networks may average around 36,000 buys, says TEN president Ken Boenish. At an average cost per adult film of $8.99, that's $323,640 in gross revenue a month. The system could keep 75% to 90% of that, depending on the deal it cuts with TEN. Revenue grew to $23.8 million for Playboy's domestic TV unit in the second quarter of this year, slightly above the $23.4 million for the same period last year, due to increased buys of more explicit content and its new deal with Adelphia Communications. Bresnan is not only saying goodbye to potential profit — his subscribers are being lured by racier fare from satellite TV. Satellite providers offer a wide range of adult content, from soft-core pornography to more explicit programming. EchoStar may even launch a new adult content channel, the Private Fantasy Channel, in the fourth quarter, according to two adult industry sources. EchoStar wouldn't comment on any negotiations but said there is no carriage agreement to date.

A La Carte Related Articles

NCTA Slams a la Carte (July 15, 2004) A la carte cable would raise prices and not lower them, decrease diversity for most subscribers and violate the First Amendment in the bargain. The study found that under a government-mandated a la carte system--in which subscribers could create their own ad hoc lineups--the price of service would go up by as much as 15% even if nobody opted for the a la carte option.

ACA: Big Programmers Deny Consumers Choice (July 13, 2004) Powerful cable programmers are using their muscle to block small cable operators from removing expensive sports channels and racy content from expanded basic in an effort to force consumers to buy as many cable networks as possible, according to the American Cable Association. The ACA represents 1,100 small cable companies serving about 8 million subscribers in all 50 states. As it has in the past, the group pinned the blame for a dysfunctional programming market on The Walt Disney Co., Viacom Inc., News Corp., NBC and Time Warner Inc. At the request of Congress, the FCC is studying the feasibility of greater a la carte services provided by cable operators. Some in Congress view a la carte as a way of lowering cable bills and allowing parents to filter indecent programming.

Seattle: Surveys Support a la Carte Mandates (July 12, 2004) Seattle cable regulators sponsored a pair of surveys that produced results showing that 46% said they would pay “a little extra” for more a la carte options. A second, less-scientific survey showed that 66% said they would opt for a la carte if given the chance by the cable company. Seattle’s cable market is dominated by Comcast Corp., which, along with most cable operators and programmers, is strongly opposed to mandated a la carte. Cable’s largest players argued that forced a la carte would lead to higher bills for fewer channels and would drive niche networks from the market. The FCC is conducting an a la carte study due at the House Energy and Commerce Committee by Nov. 18. The commission asked for initial comments by July 15.

Comparison of Marketing/Sales Efforts:

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Cable Ratings 2004 Wrap-Up (December 30, 2005) Ad-supported cable networks focused on the youth market in 2004 -- changing schedules and programming focus to win viewers in younger demographic groups. Turner Broadcasting System's TNT, which took the top ratings slot for the third time, grew its viewership among the 18-49 and 25-54 groups by 3% and 4% respectively. ABC Family grew its primetime delivery 31% to 481,000 viewers 18-49. Among the worst performers of the year was Discovery Networks' TLC, which saw its audience fall 25%. BET and E! were each down about 9%.

GCI Offers Free High-Speed Data (January 26, 2004) GCI said it’s offering new and current customers free "LiteSpeed" cable-modem service if they subscribe to its basic-cable or higher-tier cable service, GCI telephone service or its long-distance package.

Cable Clutter on the Rise (September 15, 2003) On average, the 37 basic cable networks studied air 14 minutes and 30 seconds of non-program material each hour in prime time. The study found that the average for the four largest broadcast networks was lower, at 13:04. Court TV's research did not break out any specific data for ABC, CBS, NBC or Fox. Traditionally, broadcast networks have been the biggest culprits when it comes to commercial clutter. Although Court TV's study of the last prime-time season found that broadcast prime-time clutter was lower than that of most cable networks, others dispute that finding. Some buyers said the broadcast nets' clutter is much higher than Court TV reported and could average about 15 minutes, not 13.

Cable operators need some marketing savvy (July 15, 2003) Cable's problems are not political ones, based in the Beltway, but rather marketing ones based on its historical inability to peddle its services, especially against competition. Critics point to the FCC's latest competition report, which found that the industry retained a 76% market share. That's unbelievable. In less than 10 years, DirecTV and EchoStar have carved out a 20% share. How many customers has Verizon lost? Cable operators have done a dismal job of persuading people about cable's value. For the first time, cable lost customers in 2002, and those who try new digital services are quitting cable at an alarming 5% monthly rate. When I tell my friends they can watch "The Sopranos" any time they want through the magic of video-on-demand, their eyes light up. Consumers might even be willing to overlook a rate increase for such a luxury, but only if cable can find a way to let people know that with leading-edge VOD services, they really can get what they want whenever they want it.

The Education of Cable Marketers (July 14, 2003) When it comes to marketing, cable is still at the crawling stage. Given the industry's maturity and the level of competition cable operators endure, you could argue, as many have, that at this stage MSOs ought to be more sophisticated about selling their wares. There have been a lot of good marketers in this business. But MSOs' marketing efforts haven't been stellar — until recently. "one of the reasons DBS providers always score better in satisfaction studies is the fact that consumers feel they had a choice in picking that service,” Leichtman explains. “They don't feel they have a choice with cable, and cable operators don't stress that enough. They've spent all the money to upgrade their networks and have all these services to offer. They should talk about that proudly and repeatedly.” new services are the key to selling a company's worth to consumers, asserts Josh Bernoff, a senior analyst with Forrester Group. He's not convinced that overall corporate branding campaigns are necessary — or even successful — unless there is a product or service to sell along with it. Cable's reputation problems — mostly service related — can't be solved with an advertising campaign. They have to be solved by providing better service and delivering on their promises.” most spend between 2% and 4% of total revenue on marketing. The big difference today is scale and reach. Consider this: Comcast serves residents in 17 of the nation's top 20 markets. “Retail outlets provide the opportune venue for this interaction. ABC Warehouse has been a great partner for our high-speed Internet service, so it is natural that we team with them to showcase our digital cable and HDTV products.” [interesting read]

Rates for services:

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Local Broadcasters Offer Cheaper Premium Services (May 3, 2004) In an age when cable and satellite television companies offer channels by the hundreds, the service that Aaron White receives at his home in Sandy, Utah, seems almost quaint. For $20 a month, Mr. White has a dozen specialty channels, including ESPN and the Discovery Channel, along with all his local high-definition stations for just $20 a month. Nationally, 1,186 stations offer some kind of digital signal, according to the National Association of Broadcasters. (When 85 percent of the national audience can receive digital television, the broadcasters will have to hand their analog spectrum back to the government, but that will still leave plenty of room for these new services.) At the time, they subscribed to a basic cable package from Comcast for about $18 a month, he said. But getting high-definition channels from Comcast would have substantially increased that. For about $2 more, U.S. Digital not only gives Mr. White high-definition broadcasts, but he also receives more specialty channels than he did from Comcast. "I'm very glad we switched," he said.

Satellite, cable operators get ready to raise rates (February 10, 2004) DirecTV, the top U.S. satellite service at 12 million subscribers. The service plans to boost average rates by more than 3% starting March 1. No. 2 satellite operator EchoStar is raising rates an average of 1.7% on its most popular packages this year. Comcast, the nation's largest cable operator with 21 million subscribers, will boost average cable rates by 5.4%, spokesman Tim Fitzpatrick says. Time Warner Cable will raise average rates by 4.9%, spokesman Mark Harrad says. Cox Communications' rates are going up by an average 3% to 4%, spokeswoman Laura Oberhelman says. Cablevision is upping rates by an average of 3.2%

Little Outcry From Viewers As Rates Rise For Cable (November 24, 2003) Average monthly bill for what cable television industry calls expanded basic cable has risen 40 percent since 1997, according to General Accounting Office, but there has been relatively little outcry from subscribers; consumer groups say public has simply given up protesting increase in cable rates because no one in Washington seems interested in doing anything about it; cable companies say consumers are not complaining about bills because they are getting so much value for their cable dollar; say industry is also saddled with rising programming costs; GAO has recommended that FCC continue to minotor state of competition in pay-TV business (M)

Higher cable TV rates spur criticism (June 9, 2003) Basic cable rates rose an average 8.2 percent nationwide in the 12 months ended July 1, 2002. The inflation rate, as measured by the Consumer Price Index, rose 1.5 percent during the period. But consumers --- who paid an average $40.11 a month in basic service and equipment charges --- apparently got more for their money. The FCC said the average number of channels increased to 63 from 59. So although consumers have seen higher bills, rates actually fell when the additional channels are considered and rates are adjusted for inflation. Cable providers surveyed by the FCC attributed about two-thirds of the rate increases to higher programming costs. Those costs rose 7.9 percent in the latest period. Cable rates have risen an average of 32 percent over the past five years, compared with a 12 percent increase for the CPI in the same period. Comcast has not raised rates since then for basic cable, the service used by about 60 percent of its 600,000 subscribers in metro Atlanta. But some Comcast customers who get higher-end digital packages saw their bills rise an average 6 percent.

Video competition:

Satellite has long competed with cable operators. However it mostly won out in rural areas where the availability of cable was either poor (due to bad or weak service) or non-existent. However, the alternative was a very large obscene dish. DSS has since made reception of these signals compact (within a very small antenna) and very high quality. DSS actually offered digital television before most of the cable MSOs and their leadership in this area shows. DSS also the first to offer HDTV before most cable companies and will likely continue to lead the pack in terms of delivering the most innovative television reception for some time. Cable has begun to follow suit but their offering is not near the same quality. It all boils down to this, the cable operators are concerned about a whole lot more than offering the highest quality television entertainment and hence have a hard time competing with DSS who focus on one thing and are apparently doing it right (evident from amazing customer satisfaction levels). By offering more than just high quality digital entertainment the cable companies find themselves paying for a number of unrelated expenses. DSS has also done a HUGE number of cable operators by shoring up retail channels for the sale of their service. Over 50% of all new DSS installs were the result of a retail sale in 2001, 0% of all new cable television installs came from retail affiliations. Many cable operators realize this, but reversing their ways and paying referral fees is a new business area for most cable operators.

Satellite transmission breaks the bands locking TV in (February 9, 2004) A Rhode Island-based company recently released a system that allows SUVs and minivans to receive 300 channels of satellite TV - while the vehicles are moving. And several airlines, including Denver- based Frontier Airlines and JetBlue Airways, now offer satellite television to passengers through individual seat-back TV screens.

Report: Digital-Cable Satisfaction Slips (January 28, 2004) 58% of digital-cable respondents characterized their overall service as "excellent," versus 65% the prior year. Relative to cable’s service packages, 43% of digital subscribers expressed that level of satisfaction, as opposed to 51% the year before. Satellite-subscriber respondents accorded the same marks in terms of overall satisfaction and package choice at 75% and 60%, respectively, year-to-year.

FCC: Satellite Gaining on Cable (January 15, 2004) In 2003, cable operators served 75 percent of subscribers to multi-channel video program services, down from 76.5 percent a year earlier and 78 percent in 2001, said Ken Ferree, chief of the FCC's media bureau.

Cable industry prepares defense against Murdoch (December 4, 2003) Cable operators said their ability to offer high-definition television and telephone services - and the ability to bundle the services in one bill - would give them the edge over satellite TV's national footprint and DirecTV's current contract to offer National Football League games. As more broadcast networks adopt HDTV and local cable companies strike deals to offer sporting events in high definition, consumers will find cable more compelling, the executives said. OCAP is designed to solve the problems posed by proprietary operating systems used by major set-top-box-makers such as Scientific Atlanta Inc., and the so-called "middleware" companies such as OpenTV Corp., that provide software to operate channel guides and other interactive applications. When fully deployed by the major cable companies, the system will allow digital-TV-makers to build cable services into their sets. Cable service will then be activated locally by inserting a chip from the local cable company.

Nov. Sweep: Cable Barely Behind B’cast (December 1, 2003) For the first time ever in a November sweep, the combined primetime share for the seven broadcast networks dipped below 50%, according to the Cabletelevision Advertising Bureau. Cable tallied an average primetime-household delivery of 32.5 million homes, up 10% versus a year ago and not far behind the seven broadcasters’ 33.1 million homes, which reflected a 2.2% drop, the CAB said.

108.4 Million TV Households in the U.S. - According to Nielsen Media Research, the total number of television households in the United States (including Alaska and Hawaii) is estimated at 108,400,000. The new estimates took effect with the television week of September 1-September 7, 2003, meaning each national rating point will represent one percent of the total, or 1,084,000 television households.

Can video relieve Baby Bell ills? (September 2, 2003) "Phone companies, in general, have this legacy of not being great at adapting to competitive markets," said Jim Penhune, an analyst at Strategy Analytics. "They've appreciated strategically for at least 10 years that they need to expand into services--in the consumer market--that went beyond voice. Where they've stumbled is in execution and sticking to the plan." Now, with the Bells again suffering from video envy, their ambitions are no longer tied to copper wire. Instead, the four companies are singing the praises of fiber-optic lines running into homes--essentially, super-high-bandwidth pipes that can handle video, voice and data with ease. Some analysts say fiber won't be fully delivered to homes for at least 10 years. And given the billions of dollars that cable companies have invested in their own network upgrades to digital, many question the Bells' appetite for jumping head first into upgrading to fiber.

Basic Cable Clobbers Networks in July (July 29, 2003) The ad-supported cable channels scored a 55 share versus a 36 share for broadcast, which dropped a share point from a year earlier. In June, the broadcasters managed to boost their share by two points from the same period the previous year to 39 on the strength of their own gaggle of new reality series; cable stayed flat that month at 54. Original series aren't everything, however. Without a single one in primetime, TNT led all basic cable networks in total viewers and the 18-49 demographic in July.

DirectTV Sub Gains Are A Pain (July 21, 2003) DirecTV's subscriber gains were cable's loss. Forty percent of its gross subscriber additions, or some 253,000 customers, came from digital cable, according to DirecTV president Roxanne Austin. PriceWaterhouseCoopers estimates that total cable households will decline 1.1% between 2003 and 2007, to 65 million, while satellite households will grow 8.4%, to 27.5 million. If 40% of DirecTV's gross additions in the latest quarter came from digital cable, then that's got to be negatively affecting [cable's] numbers. But the overall video market is expanding at a snail's pace. Growth in the multichannel video household is now limited to new households, Kane says. Last year new households totaled 2.1 million, the smallest increase since the advent of cable networks, she notes. PriceWaterhouseCoopers estimates the total number of multichannel households will expand 1.3% between now and 2007, to 97.1 million. That means cable and satellite will fight that much harder to gain new customers and keep old ones. DirecTV saw its subscriber acquisition costs jump to $595 per sub for the quarter, from $545 in the previous quarter. Satellite was also early in the game with HD, and DirecTV has some 200,000 HD boxes deployed. An HD battle is brewing on the retail front, as cable operators horn in on an area previously dominated by satellite.

The device that could change cable (June 13, 2003) Pace Micro Technology unveiled at cable's annual convention here what it calls the "world's first" inexpensive digital-to-analog signal converter. Operators envision buying millions of these converters — or similar ones planned by Motorola and others — and putting them on virtually every TV owned by their nearly 72 million customers. Then operators can stop transmitting analog signals and go all-digital. That's a big deal. Analog TV channels consume about 65% of the bandwidth on most modern systems — and operators can squeeze as many as eight digital channels into the bandwidth that each analog channel now fills. The Pace adapter is attractive, executives say, because it's small and inexpensive. The model on display this week would sell for about $70 and would feed signals to both a TV and a VCR.

DBS Continues to Gnaw at Your Digital Dinner ( September 10, 2003) NCTA reports that at the end of 2Q 2002, digital cable had16.8 million subs with 890,000 new sub sign-ups. However, the J.D. Power and Associates study points to increasing cable sub unrest. "While the study shows the average expenditure for both information/entertainment services is now nearly equal, more consumers are electing to switch services to satellite TV providers," "In overall customer satisfaction performance, DirecTV ranks highest among the 14 major providers of cable/satellite TV services nationwide -- 18 index points higher than the cable TV service average,"

DBS Beats Digital Cable on Value, Quality, and Consumer Satisfaction (05/23/2002) DBS subscribers are almost twice as likely as digital cable subscribers to say they receive solid value from their service. DBS earns a 68 percent approval rating, while analog cable scores 37 percent and digital cable just 36 percent. On signal transmission quality, DBS earns a 79 percent approval rating, while analog cable scores 67 percent and digital cable just 66 percent. The research also shows that digital cable is far more susceptible to consumer defection than DBS, with 21 percent of digital cable subscribers expressing an interest in switching to satellite television. Conversely, only 5 percent of DBS subscribers would consider switching to digital cable.

Competition in the Multi-Channel Video Programming Distribution Marketplace (12/4/2001) DBS companies are not subject to local franchise fees and taxes which can add so much as 15% to a cable customer’s monthly bill, as they do in the District of Columbia. Also, DBS companies are not saddled with the costs of public access studios, institutional networks and free municipal cable hook-ups which are required by most cable franchise agreements.

Wireless Cable: A Competing Technology (old) At significant penetration the cost per sub (for Wireless Cable - WC) could be one-third to one-half of that for cable. It may cost CATV $1,000 per sub vs. $350 for WC. CATV has a trade association that concerns itself with system standards. This is an area WC needs to develop because individual installations are more intense. You risk your business if you use untrained installers who mount rooftop antennas incorrectly or have no knowledge of grounding.

IP Video:

Cisco banks on IP video (February 18, 2004) On Wednesday, the networking giant announced the latest version of its Internet Protocol-based PBX call manager software, which integrates video conferencing into its IP telephony solution. Desktop video conferencing is already available from several companies, but Cisco claims the applications are hard to use, expensive to operate, difficult to manage and offer poor-quality resolution. These companies, such as Polycom and VCon, sell only roughly 6,000 units per quarter, said Brent Kelly, senior analyst and partner at Wainhouse Research.

indecency:

Under Assault (April 26, 2004) For years, cable networks exploited their immunity from the indecency restrictions that broadcast networks face, luring audience with edgier fare. Now Congress, the FCC, and advocacy groups are plotting a new assault on the cable industry. Currently, two bills moving through Congress would restrict cable indecency or violence. Basic-cable networks are the biggest targets. In a letter to Sen. John McCain (R-Ariz.) imploring Congress to hit cable with new rules, Parents Television Council President L. Brent Bozell called basic cable "a kind of Pandora's box for families." The group's latest study, he said, showed that "offensive content was more than twice as frequent on original cable programming as on broadcast TV."

Mr. Clean Available for DVDs (April 18, 2004) People wanting to automatically mute the foul language in Seabiscuit or skip the violence in The Patriot have a new option -- a DVD player from RCA that filters content deemed objectionable. The filtering software is from ClearPlay, which had offered it previously for watching DVDs on computers and talked to RCA last year about a standalone player. The partners are hoping the current stir over broadcast decency, spurred by Janet Jackson's breast-baring Super Bowl show, will help boost sales.

TV Networks to Air Ads Promoting V-Chip (March 31, 2004) The Advertising Council, a nonprofit group, said it would work with NBC, ABC, CBS and Fox to produce public service announcements tailored to each network on the V-Chip, which is required in all televisions with screens 13 inches or larger. The Ad Council, in a statement, said fewer than 10 percent of parents use the V-Chip in their TVs and about 80 percent of parents who have TVs with the chip are unaware of it.

HDTV Competition:

Telcos:

HDTV Makes its Premiere on DSL Developer Agendas (June 16, 2003) Specifically, new compression techniques and the development of ADSL2+, which can send data downstream at 20 Mb/s up to 5000 feet, will eventually give telcos enough bandwidth to provide HDTV over copper wires. “Over the next six to nine months, you'll see everything re-spun to include ADSL2+,” said Matt Byrd, vice president of marketing for Net to Net. “We're getting 9 Mb/s to 10 Mb/s at 10,000 feet.” Driving some of the interest is the emerging MPEG 4 encoding standard, which can squeeze an HDTV signal that normally needs 12 to 15 megabytes of capacity into a 6- to 7-megabyte space. The technical part of the standard has been completed, but it won't find its way into digital TV products until the end of this year,

New Coding Enables HDTV Images over ADSL Line (October 2002) Windows Media 9 - The image quality at data rates of 3 to 6 Mbits/s is equivalent to HDTV, and for DVD images we only need 750 kbits/s to1.5 Mbits/s. There just isn't any requirement for ultra-high speed optical fiber networks or next-generation optical disks anymore. Real Networks KK,a subsidiary of RealNetworks Inc of the US, claims that the firm's Helix Platform AV distribution software, announced on July 22, 2002, offers even better image quality.

Satellite:

DirecTV Approaches FCC on Local TV, HD Issues (March 13, 2003) In February, representatives with DirecTV met with Federal Communications Commission staff concerning issues associated with continuing carriage of local TV signals, including local HDTV. In a presentation filed at the FCC, the company said mandating digital must-carry with format and multi-casting obligations - known as full ATSC must-carry - "would dramatically limit DirecTV's ability to continue providing local channel service in the markets where such service is currently offered." DirecTV added that if full ATSC must-carry becomes mandatory, it could deliver local TV service only to one average-sized market. "HD bandwidth consumption effectively undermines the ability of DBS to provide satellite-delivered local channels on a wide-scale basis," DirecTV said in its presentation.

Cable System Growing Pains:

The biggest difference between cable operators in 1996 and now is debt. Most have been saddled with unprecedented debt and leveraging their way out of this burden will require new revenue streams to be created. However, most of their broadband headend equipment really needs at least another two years (through 2004) before it can realistically pay for it self. Cable operators like to see anywhere from 5-7 years out of infrastructure purchases. Set-Top-Boxes (STB) for example typically stay in the field for 7 or more years before they are replaced -- which is a major undertaking. Many of these mergers also produce hidden costs. Like the loss of experience when long time leadership is replaced - this changing of the guard often creates opportunities for franchises to work with a clean slate (new management) that is unaware of the past favors, kindness, or the real issues. The lack of "local" credibility these new people bring ends up costing the new organization.

Bigger Is Looking Better In The New Competitive Landscape (November 3, 2003) Ninth-largest MSO Insight Communications, which saw customer defections to satellite and disappointing cash flow growth in the third quarter, went on the defensive, pledging to renew its focus on customer service and marketing in an effort to return to double-digit cash flow growth next year. Conversely, both No. 4 MSO Cox Communications and top MSO Comcast are in offensive mode, and could see accelerating revenue and cash flow growth in coming years as new services become available to more of their customers.

Cable veteran has a strenuous task at Adelphia (July 3, 2003) Adelphia generates less revenue per subscriber than Time Warner Cable and other large operators, according to company figures. Its profit margin is 27 percent, down from 45 percent in 2001. submit a reorganization plan in U.S. Bankruptcy Court before he can restructure almost $18 billion in debt or sell significant assets. In that time, the company's bonds have risen more than 50 percent to 62 cents on the dollar from 41 cents. Adelphia shares, which had fallen as low as 5 cents, rose 0.3 cent, or 1.1 percent, to 27.5 cents yesterday in over-the-counter trading. Adelphia collapsed last year after disclosing that the Rigases had tapped $2.3 billion in credit lines guaranteed by the company, a figure that grew to more than $3 billion. The company's average monthly revenue per customer is $51, compared with $66 for Time Warner Cable and $65 for Cablevision Systems Corp. Adelphia has rebuilt 70 percent of its cable lines, compared with more than 95 percent for Time Warner Cable and Cox Communications Inc. Adelphia lost 125,000 basic-cable customers, or more than 2 percent of its base, in the 12 months ended March 31, according to a filing with the Securities and Exchange Commission. The company had 5.3 million subscribers.

Cox Communications Redesign (?) In 1995, Cox Communications acquired a large cable television provider that operated four cable television systems in two states serving 1.3 million subscribers. In one stroke, the acquisition nearly doubled the company's number of subscribers. Cox found substantial variation in the operating methods of its existing and newly-acquired systems that involved differences in information technology, organizational structure and management philosophy. The company wished to integrate operations, establish best practices to improve customer services, and contain operating costs.

The cable operator misery index (05/13/2002) The emerging phenomenon of cable operators clearing time-shifted programs from the broadcast networks the same week they originally air, as a freebie to build their video-on-demand business, is going to lead to some interesting carriage fee negotiations a year from now. Comcast has signed to carry NBC news and entertainment fare and is looking to do the same with other broadcast networks. Cablevision Systems will offer free VOD runs of Fox's "24" and FX's "The Shield." Broadcast networks' becoming major content suppliers to cable's digital tiers simply by time-shifting what they already produce is an intriguing notion that smacks of second-revenue-stream potential. It's not clear whether eventual compensation would take the form of cash payments or shared subscription and user fees. But it clearly is a new revenue stream in the making.

Continuing Concentration in Cable (March 1999) it is not cable television that is driving this concentration, it is everything else that cable can do. Concentration initially came to the cable industry in the form of MSOs, because as cable experienced its greatest period of growth in the late 1970s, it was only the biggest, richest corporations that could afford to build, buy, and improve operations in advance of the income they promised to generate. The second form of concentration in cable is vertical integration, where a company holds financial interest in all aspects of the industry—production (the program service), distribution (the satellite service), and exhibition (the local franchises). There is a documented tendency for systems to demonstrate an inclination to carry cable networks owned by the MSOs that own them. [Interesting Read]

Market/Wall Street Valuations for Cable Systems:

Cable Faces Multiple Challenges (December 1, 2003) The pay television universe is nearing saturation at 86 percent of U.S. homes (68 percent of which are cable and 18 percent of which are satellite). But the widespread installation and use of optical fiber transport infrastructure has, at the same time, drastically altered the type of business pay TV is-and the clout it carries, much of which has yet to be fully recognized or felt. Bernstein Research analyst Craig Moffett in a Nov. 24 report to clients estimated that the typical $3,500 to $4,000 valuation per subscriber at some cable multiple system operators is actually valued at more like $11,000 each at the high end. Already the triple-play subscriber, who takes telephony, data and video services, accounts for 7 percent of Cox's users and 17 percent of its total revenues, and two-way product bundles comprise 30 percent of subs and 46 percent of revenues.

Dolan Scheme Draws Wall Street Scorn (November 3, 2003) While the cable systems could be sold during the next 18 months to likely rival bidders Time Warner Cable and Comcast Corp. for some premium to the existing $4,250-per-subscriber valuation Cablevision now commands, many on Wall Street are betting the Dolans will hold out for more-something closer to the $6,000-plus per subscriber they privately have mentioned as a price target. Lara Warner of Credit Suisse First Boston downgraded Cablevision to "underperform," saying the new game "will ultimately prove to be a value-destroying action." Other Wall Street response has been as swift and severe.

General Cable vs. DSL vs. Satellite vs. Wireless (WiFi) vs. Power Line vs. Radio Comparisons:

Technology comparisons:

 Broadband's power-line push (July 11, 2005) But last week's investment by Web search leader Google, the media conglomerate Hearst and bankers at Goldman Sachs in a Germantown, Md., company called Current Communications Group has many wondering if the time is finally right for the oft-ignored BPL. Current didn't disclose the amount of the investment, but The Wall Street Journal reported it was about $100 million. IBM has also started making noise in this market, announcing on Monday that it is partnering with Houston-based power utility CenterPoint Energy to build a BPL network. In 2004, 89 percent of U.S. households had access to either cable modem or DSL service, according to Jupiter Research. The research firm estimates that 56.6 percent of households had access to both. By 2009, dual access should jump to 76 percent.

3G: Where Will It Be a Year from Now? (December 27, 2005) Despite the hype surrounding 3G, the technology is better suited for data on a small scale, not wide-ranging wireless broadband deployments, according to columnist Guy Kewney. In North America, it seems more likely that technologies such as TD-CDMA and Flash-OFDM will come to prominence in 2005

Internet access from the sky has yet to fly (April 26, 2004) EchoStar and DirecTV prove that it hasn't been a total flop. But Internet access from the sky hasn't exactly caused cable and DSL providers to quake in their boots. Angel Technologies: The St. Louis-based company planned to provide extremely high-speed voice, data and video services from piloted aircraft. Teledesic: The Bellevue, Wash., firm was founded in 1990 and signed a contract in 2002 with Italian satellite manufacturer Alenia Spazio to build satellites for Teledesic's global broadband network. WildBlue Communications: An Arapahoe County-based company founded in 1997 and backed in part by John Malone's Liberty Media Corp.

Pretty soon, you'll be able to get broadband Internet over your power lines. Maybe you already can. (March 15, 2004) Roughly 50 million homes in the United States connect to the Internet through broadband, typically cable or DSL (but to a limited degree satellite as well). Although that sounds like a lot, it's still a far cry from the nearly 70 million homes with dial-up connections. The new option: connecting to the Internet through electrical sockets. In this scenario, the home user plugs a specialized modem into the wall socket and is immediately brought online at speeds up to 3 megabits per second, as fast as any broadband service on the market today. Known as "broadband over power lines," or BPL, the service is currently available to 16,000 homes in Cincinnati. Current Communications figured out a way to transmit Internet signals along another frequency—it won't disclose which, other than to say it's somewhere between 1.7 megahertz and 30 megahertz—and to comply with FCC regulations that the signal not interfere with other transmissions. And last month, the FCC ruled that BPL systems could go forward, clearing a major regulatory hurdle. [Must Read]

New Outlet for High-Speed Access (February 18, 2004) For power-line communications to work, Bill Blair, an adviser to the Electric Power Research Institute, estimates that power companies must install repeaters, devices that ensure a data signal retains its strength, every quarter mile or so along their networks. Given that installing a repeater typically costs from $1,000 to $5,000, it's an expensive undertaking.

BT tunes into 'radio broadband' (December 17, 2003) Four areas have been chosen to test the technology which uses radio signals to transmit a fast, always-on connection. The technology being tested sends the broadband signal using radio waves, without the need for wires, similar to wi-fi technology. The signal travels from a base station to a home computer through a low-power antenna. It is similar to a satellite dish, but is smaller and diamond-shaped and fits onto the side of a house. Currently, there are 600 small telephone exchanges which have not even had this level set, which account for about 100,000 households. BT announced last month that it had set triggers for 2,300 more exchanges across the UK, potentially covering two million homes and businesses.

Wi-Fi Grows, but Profits Don't  (December 16, 2003) The study, published Monday by research firm In-Stat/MDR, counted 40,000 wireless hotspots around the world in 2003, showing a rate of growth that surpassed analysts' expectations. This compares to just a few hundred in 2000. Researchers predict there will be around 180,000 hotspots worldwide enabled with Wi-Fi, the popular protocol for delivering high-speed wireless Internet service, by 2007. For instance, one research firm, Baskerville, predicts that there will be 135,000 hotspots by 2007, up from 14,242 in 2002. Another, Allied Business Intelligence, projects that within five years there will be 200,000 hotspots in existence, up from 28,000 this year. Allied predicts that revenues from Wi-Fi services will reach $3.1 billion in 2008, up from $59 million this year.

IDACOMM, (September 9, 2003) a subsidiary of utility IDACORP, is planning a trial offering broadband over power lines in Idaho. The company says it is reaching speeds of 15 to 20 megabits per second through the electricity grid.  Broadband Daily (subscription required)

Which broadband technology will win? (February 23, 2002) Power Lines offer one intriguing option which is not currently being developed is to use electricity cables to transfer data. This has the advantage of having a ready-made network in virtually every home in the developed world and could deliver data at 1 Mbps. Industry rumors suggest that the technology worked well but radio frequency tests showed that lampposts were acting as powerful transmitters and drowning surrounding areas with interference.

Scouting Report Eyes DSL, Cable; Players, Competitors Vie For Turf (September 2000) In the business and enterprise field, DSL's estimated 550,000 customers give it the clear advantage largely by default. "Cable is slowing down in the sense that they've done it in all of the areas where it is easy to do," he says. "Now they are targeting the market where it's harder - where they actually have to dig new trenches and make major upgrades." DSL has also forged into retail, but it lacks the same uniform standards. Industry members recently announced the creation of a OpenDSL consortium to create an autoprovisioning standard, after efforts to establish the bare-bones g.lite standard "really imploded,"

Cable modems or DSL: Which is better? (September 23, 1999) Some people here complain that because the bandwidth is shared with everyone on the block, and because cable modems are very popular in the Bay Area, that they don't have enough bandwidth ... Compared to DSL the speeds are not all that great. My associate recently installed a cable modem in her home and was shocked to find that 'Network Neighborhood' was, literally, her neighborhood! She could see the desktops of all her connected neighbors. This seems like an enormous oversight on the part of cable modem companies, or maybe they just don't care (more likely the latter.) Cable companies tend to lag in technical expertise and service. MediaOne, for example, blocks the particular TCP/IP ports used by the Microsoft file sharing protocol. (The company can unblock the ports on a subscriber-by-subscriber basis, if you call them up and make the request.) Other companies leave the ports open, and warn their customers to disable file sharing. I prefer MediaOne's approach.

DSL vs. Cable: The Final Analysis (?) DSL and Cable Pros and Cons.. Cable: Line shared with others in neighborhood; speeds vary accordingly, Less secure than DSL. DSL: Setup can be difficult, Performance depends on location, For business users, higher speeds get pricey.

DSL vs Cable vs Dial-up (?) It is of importance to note that both DSL and cable modem do not guarantee any minimum speed commitment. This means that the speed you sign up for, for example 768/128kbps, represents maximum speeds. Your ISP cannot control or guarantee you any minimum speed as they have no control over the telephone company's Frame Relay or ATM network nor cable company's cable infrastructure. The speeds listed as well as the speeds you sign up for represent maximum speeds. Actual throughput depends upon many factors often out of any one entity's control. You may have an uncongested circuit directly to your ISP, but the ISP's own connection may be congested. The ISP that the web site you are trying to reach may be congested, the company whose website you are trying to reach may have their circuit congested, or even the server running the website may not be powerful enough to send data out at such speeds.

 

Pricing comparisons:

Is DSL Pricing Behind Drop In Time Warner's HSD Adds? (July 28, 2003) Still, Wall Street was not expecting Time Warner Cable's big drop in high-speed additions, reported last week by AOL Time Warner. The MSO added 170,000 HSD customers during the quarter, surely nothing to sneeze at, but a full 35% decrease from the 260,000 customers the company added in the first quarter. He also noted that churn remains low, while penetration of HSD and digital cable, at 37% and 26%, respectively, remain in the upper echelons of the industry. ...2003 estimates for TWC's high-speed data customer additions by 9%, to 920,000 from just over 1 million.

Billing for Internet Services (bandwidth pricing models)

ISP Bandwidth Billing (December 31, 2002) This lack of a consistent, accurately implemented billing mechanism makes it impossible to compare service providers based on price or to estimate future bills based upon projected business. 95^th percentile measurement allows the ISP to bill the customer for the maximum bandwidth used during the billing period while forgiving a small amount of bandwidth spiking. [Must Read]

Internet pricing and the history of communications (February 8, 2001) The history of communication suggests strongly that as services become less expensive and are more widely used, the balance shifts away from the need to segment the market, and thereby to extract maximal revenues and to maximize utilization efficiency of the infrastructure. Instead, customer desire for simplicity becomes dominant. Simplicity is likely to be much more important on the Internet than in other communication services. Customers do not care about the network, they care about their applications. Those applications are growing rapidly in number, variety, and importance, as the Internet becomes what Bill Gates has called the “digital nervous system” of more and more organizations. We will not want to worry how much to pay for a packet from site X to site Y that was generated by our request for something from site A, which then contacted site B, etc. We will be happy to pay extra for simple schemes that make our lives easy. Flat rate is by far the simplest pricing plan, and, as predicted by Anania and Solomon [AnaniaS], it continues to dominate the data transmission market. The historical information of this paper only strengthens the arguments of Anania and Solomon and of the papers [Odlyzko3, Odlyzko4] in favor of continuing with flat rates for data transmission over core fiber optic networks.

Subscriber growth comparisons:

[not yet archived] Cable TV at 68% Penetration, but Dishes Poised for 25% in Urban Homes (July 30, 2003) cable TV penetration in urban markets is currently at 68%, with digital cable penetration rising from 34% in 2002 to 38% among cable subscribers interviewed for the study. Satellite penetration is currently at 15%, but dishes could soon be in one out of four urban homes, as 8% of urban consumers surveyed are currently considering getting a dish and 4% have already decided to purchase one.

Cable's sinking subs (July 28, 2003) The seven biggest cable operators may lose a total of 47,000 subscribers in the second quarter, and are likely to experience a decline in the number of new digital subscribers, analysts say. Moreover, competition from telecoms and satellite companies appears to be eating into cable's share of the high-speed Internet market.

Report: Cable Trumps DSL, Broadband Jumps (July 25, 2003) WebsiteOptimization.com compared cable and DSL broadband Internet access in the US and found that cable has 67% to 105% more users than DSL in the US, according to two recent surveys. Overall, broadband grew by .83% in June, with 36.7% of wired US users enjoying a high-speed connection. Ipsos-Insight found in a May 2003 survey of 1,000 US adults that 40% had broadband while 59% had a dial-up connection. Of those with broadband, 25% had a cable connection while 15% had a DSL connection. Confirming this trend, Nielsen//NetRatings found that cable has over twice the penetration (14.6%) of DSL (7.1%) in the US as of June 2003.

 

Cable vs. DSL in Business Marketplace:

Cable definitely has the ability to dominate the residential market place and has come by this feat relatively easy. However, in building a beach head in the business services arena they have a long way to go. Most cable plant doesn't even traverse business neighborhoods and would need to either be extended or completely built from scratch. As a result, ILECs can offer business services such as DSL in a matter of days where as cable operators would require weeks if not months to run the required cables. Running these cables without any serious commitment by the customer would be bad business for the cable operator and could impact its ability to service other more accessible business customers. This is a very tough market for cable to enter not only because of their lack of physical access to it but also because of their lack of organizational preparation for it. Few cable operators understand the requirements of offering a business service and those companies that sign up with them quickly learn the risk of seeking the cheapest connectivity. At best, current cable broadband service is a secondary data connection for a business. While this is still of value and should be pursued by cable operators, this service has some distance to go before it becomes a fully functional business reliable service. Everything from billing, network operations, customer care, service, and installation needs to change to offer business service. Some of these changes are being made but that will take time and then the only barrier will be physical access.

Cable and DSL Fighting for Business Subscribers (12/12/2002) Cable providers currently have a bit of an edge in terms of number of business subscribers, primarily among at-home workers, but because they are primarily residential, are losing out on the significant revenue opportunities that providing broadband services to small offices in commercial areas can bring. DSL services are expected to enjoy greater uptake in commercial locations and eventually erode traditional circuit-switch high-speed services, like private lines and frame relay, as the service levels on DSL improve. Business broadband subscribers are at-home workers, estimated to account for roughly 71% of business broadband subscribers in 2001.

5 reasons why DSL beats cable for your business (?) Access: Cable Internet access today has about twice as many users as DSL, due largely to its penetration of the residential market. But it has as many access limitations as DSL, even to residences. Iintended users: Cable is not available in many downtown areas, business parks and other commercial zones. DSL providers are generally carriers with a line of business products to serve your other Internet and telecom needs. Cable companies' offerings to business are limited. Delivery: the more than 800 million copper twisted-pair lines that deliver plain old telephone service — represents the most extensive communications network available in the U.S. today. Availability: hile most people get DSL through their telephone company, you do have other options, such as MSN. Cable Internet access, although generally cheaper, is available only through your cable operator. Speed: DSL is a point-to-point line, while cable is a shared system in a given neighborhood or geographic area. That affects an area's cable users like a telephone party line does, resulting in slower access during peak usage. Remember the old telephone party line?

Cable vs. DSL in the world-wide marketplace:

While cable dominates the US, it lags xDSL in the global marketplace. The US has the highest concentration of cable services. 40% of the worlds cable systems reside in North America. So, as DSL continues to spread the US will become increasingly more competitive with DSL as it becomes perfected within the global marketplace.

Broadband soars in 2004 (December 27, 2004) By Sept. 2004, the number of British computer users accessing the Internet via broadband exceeded the dial-up population, with 30% of U.K. homes likely to connect via broadband by the end of 2005. Low prices and BT's 70% reduction of line charges to rival operators who offer Internet access are expected to spur home and business users to make the switch to broadband next year.

Worldwide DSL Market: Asia Thrives as US Slows (01/26/2002) Not only is DSL alive. but it has also completely surpassed cable on a worldwide basis in 2002. By the end of June. 2002. DSL had leaped past cable by 10 million subscribers. In-Stat/MDR expects DSL to be leading cable by 15 million subscribers worldwide by year-end.The next big surge of DSL. which is covered in our report on the worldwide DSL market. is taking place in China. With over 1.2 billion in population. the stage is set for a substantial rise in demand for high-speed broadband access to the Internet. In-Stat/MDR expects 30 to 40 million DSL subscribers in China by 2006.

U.S. Residential DSL Market Continues to Grow (10/2001) Cahners In-Stat Group expects the residential DSL market to continue growing. Residential DSL services in the U.S. are expected to produce in excess of 7 billion dollars of revenue by 2005. The installed base of U.S. residential DSL subscribers is expected to exceed 3.5 million by the end of 2001, and more than triple by 2005.

Business DSL Worldwide Market: The Buck Starts Here (11/2001) examines the business subscriber base worldwide that is expected to produce in excess of 36 billion dollars of revenue by 2005, with 21 billion dollars coming from business DSL subscribers.

Cable Beginnings (how it all got started):

*new*

Before Cable Was Cool (July 9, 2003) While cable was getting its start in small towns in Arkansas and Oregon, the real foundation of the business was being laid in Pennsylvania. The Keystone State was close to several major TV markets — Philadelphia, Pittsburgh and New York City — and this made it the logical place for the first real growth in the industry. About 75 miles northwest of Philadelphia, John Walson ran an appliance store in Mahanoy City. He ran an antenna wire into his shop to pick up TV programs from Philadelphia and show people how the system worked. Before long customers were insisting that he string more wire around town so they could buy a TV and bring this new form of entertainment into their residences. He put up the wire and began charging $2 a month for the service. By 1957 he had 14,250 subscribers. Malarkey contacted other cable operators in the autumn of 1951 and asked them to come meet with him in the Necho Allen Hotel in Pottsville. Nine other men showed up and together they pledged $1,000 apiece and formed cable's first trade association, the National Community Television Council. Malarkey became the NCTC's first president. Strat Smith, a lawyer who'd previously worked with the Federal Communications Commission, joined up and convinced the NCTC to change the organization's name to the National Community Television Association. The NCTA would eventually evolve into the industry's premier trade and lobbying group. In 1952 the FCC had finally lifted its freeze on new TV stations, and many entrepreneurs rushed forward to get permits to build new ones. In the next two years, the number of stations tripled nationwide. Many of these new outlets were in smaller towns that had already been wired for cable. As broadcasters began to appear in communities where cable was present, conflict was inevitable. Local TV stations aggressively disliked competing with the signals that cable brought in from larger markets. They felt that they couldn't get either the local viewers or the national advertisers interested in their product, and that cable would eventually put them out of business. Politicians in these towns tended to line up behind the local broadcasters — at the expense of cable. In Asheville, N.C., the city council voted against building a cable system. In Fairmont, W.Va., local broadcasters asked for the federal government to step in and limit cable systems. In Memphis, Tenn., the homegrown TV outlet told the cable entrepreneurs that it wanted nothing to do with their services. In Reno, Nev., the group that produced the very popular Cisco Kid series sued the local cable system because it was bringing in this program from a San Francisco station and directly competing with the Reno channel that aired the same show. Cable was creating enemies everywhere, and its troubles were only beginning. As the industry quickly spread across the country, mostly through the efforts of local entrepreneurs, a host of technical problems had arisen with it. Many of the amplifiers and other equipment were homemade and only partly functional. They might work for a while, but bad weather was always a threat to these systems. When they inevitably broke down, frustrated customers erupted in anger. The pictures were often accompanied by “snow,” the little bits and pieces of electronic fluff on the screen that make it almost impossible to see the action. Before long, consumers were getting together, approaching the local governments or utility companies and asking them to regulate cable or force it to live up to certain standards. In Palm Springs, Calif., a branch of Paramount Pictures called International Telemeter built a cable system designed to bring pay-per-view films into that community. Local theater owners became so upset by this prospect that Paramount quickly shut down the service. In Bartlesville, Okla., a business known as Video Independent Theatres (VIT) offered the same kind of programming to the 28,000 people of that community. VIT put on three first-run uncut movies a week on one channel, at a cost of $9.95 a month. The Bartlesville experiment failed miserably, even after the price was chopped in half. The arrival of VIT had forced its main competition — the local TV stations — to improve their programming so more people decided to stay home and watch television, which was one reason why the experiment failed. Secondly, the citizens of Bartlesville preferred to be able to choose the movies they wanted to see, instead of being given a very limited selection via cable. Third, they claimed that TV shows were more alive and spontaneous than what Hollywood was currently producing.

Illegal or questionable behavior:

NCTA: Theft Down 50% (April 11, 2005) According to the NCTA, the theft rate for expanded analog service is now 4.65% (the percentage of theft per 100 homes passed), down from 11.5% in the previous NCTA cable-theft survey in 2000. Premium-service theft has been cut from 9.5% in 2000 to 2.15% in 2004, the association added. However, despite the success, the industry still loses $4.76 billion in annual unrealized revenue due to theft, representing more than 8% of its $57.6 billion in annual gross revenues for 2004. The 2000 survey cited annual unrealized revenue of $6 billion

Confessions of a Cable Thief (October 6, 2003) A comprehensive survey conducted by the National Cable & Telecommunications Association in 2000 concluded that revenue lost to cable operators as a direct result of signal theft were in excess of $6.5 billion a year, or about 17% of the industry's estimated gross. Google the phrase “free cable,” and you'll find yourself staring down the barrel of 263,000 hits. The more specific query for “cable descrambler” yields 81,100 hits. We're a nation of thieves. The penalties can be severe. Offenders can be charged either with a Class B infraction, which carries a fine of as much as $1,000, or a Class D felony, punishable by six months to three years in jail and a fine of up to $10,000.

Putting a lid on broadband use (September 22, 2003) According to Comcast, just 6 percent of subscribers use about 78 percent of the company's bandwidth. Some smaller cable companies are imposing much lower caps. Alaska's GCI Cable, for instance, limits its subscribers to transferring just 5 gigabytes a month.

Cable cops (July 2, 2003) Comcast technicians scouring the city have checked 98,485 homes and apartments, finding 14,874 unauthorized users. Of the 14,874 Chicago residents caught receiving a signal for free, only 1,200 have become legitimate Comcast subscribers, a number Traczek described as "very low." Comcast, which completed its purchase of AT&T Broadband earlier this year and has about 95 percent of the Chicago market, is offering an amnesty program to cable thieves who want to fess up before they get caught and slapped with a fine, but time is running out. The program, which lets thieves off the hook one time, expires July 13. The National Cable Television Association's Office of Cable Signal Theft estimates the industry loses $6.6 billion each year to cable thieves, who steal the service mainly by accessing the cable-owned "tap" and hooking up the signal. So-called illegal "black boxes" are less common and much harder to combat because, unlike the tap, they are inside the home. Comcast employs 12 full-time auditors to weed out cable pirates, while Chicago's other two cable operators-RCN and Wide Open West-each have four. For the special audit, Comcast has hired 50 additional technicians to drive around the city and check each of the 1.3 million units wired for cable in Chicago. Cable technicians use what's called a SAM meter, which measures and establishes if a signal is going from the cable to the property. They carry around a list of subscribers to determine which address is properly receiving a signal. Each day of receving a stolen signal is considered a separate offense, which is punishable by a fine of up to $500 per day. A second-time offender once paid a fine of $2,500, but the average fine is between $250 and $500, officials say.

Covert cable TV? CATV consortium complains about BellSouth's buildouts (December 16, 1996) The telco is simply laying coaxial cable in regions where it is also laying telephone lines, namely newly built residential areas, a company spokesman said. The Tennessee Cable Telecommunications Association disagrees. BellSouth should not be laying cable without a cable TV franchise. "If they don't have a [cable] franchise where they're putting in these facilities, then who's paying for the cable system?" asked John Seiver, partner at Cole Raywid & Braverman, Washington. "They're putting the buildout of the cable facilities on the account balance sheet for their regulated business, which is an unfair cross-subsidy.