Posts about cable

Time Warner Cable chokes customers

Time Warner is testing throttled — severely throttled — tiered pricing for internet access, putting it at odds with its customers, with the media industry, and with the future of the internet. I’d like to discuss how they could think differently about their business and customers. What if, instead of a gatekeeper, they saw themselves as platforms or technology innovators or catalysts or enablers?

The AP reports (via PaidContent) that TW will charge subscribers in Beaumont, Texas, will be charged $29.95 a month for slow service at 768 kilobits per second and a 5-gigabyte monthly cap up to $54.90 per month for 15 megabits per second and a 40-gigabyte cap; going over will cost them $1 per gig. For scale, the AP points out, a standard def movie is about 1.5 gigabytes and a high-definition movie is 6 to 8 gigs.

So Time Warner could end up charging customers more for watching a movie than the service selling the movie, whether that is iTunes or Netflix. I’m sure that’s quite on purpose. It is TW’s FU to the net neutrality debate: If we can’t gouge both ends of the pipe, we’ll doubly gouge the one that is stuck with us.

I happen to know that cable companies were making roughly 40 percent margins on the internet access a few years ago. Since then, bandwidth costs to them have been doing down but those savings have not been passed onto customers. Meanwhile, equipment and marketing costs are being amortized. So I’m betting the margins are only getting better. Their poor-mouthing is disingenuous at best. Still, they say that 5 percent of customers take up half their bandwidth and they say that’s not fair. So some cap may be reasonable. Note also that Comcast Corp.is considering a cap of 250 gigs/month. The problem to date has been that cable companies have not told customers their caps or their recourse (witness the throttling of Dave Winer by cutting him off).

TW’s cap is unreasonable and it is nonsensical as a business strategy.

Start with the basic lesson Tom Evslin taught us about internet usage. He, as I’ve pointed out here before, is the unsung hero who made the internet explode when he offered $19.95 flat-rate, all-you-can-eat dial-up access at AT&T Worldnet. Here is his view of subscription pricing and caps. From the AP story: “‘The metered Internet has been tried and tested and rejected by the consumers overwhelmingly since the days of AOL,’ information-technology consultant George Ou told the Federal Communications Commission at a hearing on ISP practices in April.”

We the customers don’t like worrying that we’re going to go over and so we use a metered service less and resent it more. It’s just not good for TW’s relationship with customers — all customers not that 5 percent they hate — to make them all try not to use TW’s service. That is a conflict.

TW is also in a conflict with media models — and you’d think they’d understand that since they are coming out of a media company (though, believe me, having worked there, synergy is not a goal, it is treated as an evil; Warner fought TW Cable hard to try to stop them from using the Roadrunner brand). The essence of the media model is that you want your customers to consume more and more: more pageviews, more shows, more podcasts, more, more more. TW Cable is making itself the enemy of more.

So now both ends of the pipe will hate TW Cable, though TW cable won’t care because it is still a monopoly in most markets. But here comes competition from Verizon. And someday, I still hope that we’ll get mesh and mobile networks to compete with the duopolies. So the monopolistic screw-your-customer model is not a strategy for the future.

So what is a cable company to do?

For starters, it’s a hopeful sign that Comcast is working with Bittorrent to figure out how peer-to-peer can be a friend, not an enemy. Comcast is still reportedly secretly throttling P2P and certain other classes of traffic; that’s evil. But if cable companies used P2P to make their networks more efficient, that’d only be smart.

It’d also be smart if they became technology innovators bringing mesh networks to their own communities before new players bring in wireless competitors. What if I could get online anywhere in my town or my state thanks to my cable company? I’d have a deeper, more loyal relationship with them. But not if they tried to throttle my use of their service unfairly.

Next, if cable companies thought of themselves as platforms for local content creation and media, they’d increase usage and under their current business logic, that would be bad. But if they were built to take advantage of local media, it would be good. What if they encouraged and enabled churches, schools, clubs, sports teams to broadcast over their network? What if the cable company sold local advertising on that? What if they shared revenue with the locals to encourage them to do more? The cable company would explode uploads and downloads and but they would make new money on that traffic and build a stronger relationship with customers and the community. That’s a different way to think about the cost or the benefit of traffic.

What if the cable company became a host for media and content created in the community. They could charge me a reasonable rate for storage and bandwidth or, again, they could monetize my media and make us both money. Why haven’t cable companies been thinking like Amazon and now Google have to create the means to enable people to build content, services, and businesses atop their services? Because cable companies think like closed, monopolistic utilities and not platforms.

Now I look at my cable operator as the company that tells me what I can’t do, that has a bunch of rules and is always breathing down my neck to stop me from doing what I want to do, that is trying to nickel-and-dime me at every turn and charge me for things I don’t want.

What if, instead, I looked upon my cable company as a platform: a platform that helped me create content and benefit from that, a platform that connected the community better, a platform that served local businesses in new ways (beating newspapers and radio stations to the punch), a platform that kept me connected all the time, anywhere, easily? What if?

: Here’s the BBC getting internet customers to track their bandwidth and map it. The same issue is underway there as the BBC iPlayer is changing the way people watch TV and using a lot of bandwidth. The ISPs, a whining bunch, are complaining that some of the Beeb’s license fee should go to them. Maybe they, too, should look at new technical solutions that allow them to P2P the BBC’s programs.

It’s about frigging time

Jeezus H. Cable, what took them so long? The Wall Street Journal reports that TVs may soon be able to get TV without those damned cable boxes that do so little for so much with such bother:

Sony Corp. and six of the biggest U.S. cable operators announced an agreement to create digital televisions capable of receiving cable service without a set-top box.

Sony signed a pact with Comcast Corp., Time Warner Cable Inc., Cox Communications, Charter Communications Inc., Cablevision Systems Corp. and Bright House Networks to develop technology that will allow consumers to eliminate set-top boxes, yet still receive basic as well as advanced cable services, such as pay-per-view movies.

The new technological standard should enable a new generation of TVs to include video-on-demand, digital video recording, interactive programming guides, and other services, the National Cable & Telecommunications Association said Tuesday. By eliminating the set-top box, cable companies can simplify installation and reduce costs, while consumers can worry about one less component in their home theater systems. . . .

Sony and the cable operators will adopt a Java-based application called tru2way as the nationwide interactive standard, which will allow for the manufacture of new “plug-and-play” interactive devices that can be used with TV sets.

The technology could also make it easier for consumers to receive the full range of cable-based services on other devices, such as laptops, MP3 players, and cellphones.

It’s not as if this took a single technological breakthrough. It simply took cable companies realizing that they make it too fucking difficult to get the service they offer and it’s getting far easier for us to watch TV via the internet (witness the incredible popularity of the BBC iPlayer in the UK). The cable box should have been dead at least a decade ago. The only thing that kept it alive was cable companies’ business model built around control and restriction. But you can no longer make a business on telling us what we can’t do.

Fly FU Air

Over at Seeking Alpha, where they reposted my recent rant about airlines, there’s a classic example of industry insiders in denial bitching at me: How dare I expect decent, civilized service. Water? You want water? Sit down and shut up. This is exactly the same reaction I get from whining real estate agents every time I dare to question whether I get 6 percent’s worth of value for the service they don’t provide. Head, meet sand, insert. It’s going to be fun watching them self-destruct. Couldn’t happen to better industries. Except perhaps cable and other protected monopolies and oligopolies. Bye-bye now. Bye-bye.

One person you don’t want to piss off

Michael Arrington just told his Twitter fans that Comcast has been for 36 hours and he’s told after a half-a-lifetime on hold that it’s California-wide. Others pipe in with their troubles. I go looking at the news and find more problems on the East Coast. Here you can watch the Comcast revolt spread across Twitter. Arrington is vowing “expend significant energy over the next three weeks trashing comcast.” Heh. Can’t wait to watch that. I also told him via Twitter that he should join forces with Bob Garfield at ComcastMustDie.

I’m willing to bet a few dollars that this could be the start of the first (or an early) consume revolt spread on Twitter (as the Laceygate revolt spread at SXSW): the instamob. I wonder whether Comcast is monitoring Twitter and whether it will be man enough to come in and explain what the hell is happening (without hold music).

All cable companies must die

I never cease to be amazed anew at how cable companies think it is their job to make their customers’ lives difficult.

I challenge any cable executive to publicly go through the experience of being a customer at their own companies and tell me straight-faced that it’s pleasant and efficient and worth the money and effort.

Today, I drove a half-hour to the only Cablevision “store” within the area to get a cable card for our new TiVo (shhh; don’t tell anyone that I’m only now getting one). I walk in and face a wall of ladies who look more bored and angry than prisoners. I am told that they won’t give me a cable card. I must make an appointment and wait a day for the damned cable guy to come to our house to stick it in the slot. It wastes them money. It wastes me time. It wastes some more of my three free months from TiVo. It inconveniences me. It’s just stupid. I walk out angrier at Cablevision. But I’m stuck with them because Verizon tore up my street two years ago — exaggeration — to lay fibre but still has not hooked up Fios. I’m a prisoner and Cablevision knows it. But that is any excuse to treat customers this way>

For Christmas, I wanted to get my father broadband and so I contacted Bright House in Florida (with whom I used to work) to get a gift certificate. They don’t do that. Can’t I just give you money? No. So I order the service but only on the condition that the installer will hook up the wi-fi router I was wrapping for under the tree. Yes, they said, that’s included. I tell them not to tell my father and to wait until after Christmas to contact my father because, of course, it’s a present. The next day, the phone rings. They called my father. Good work, Bright House. Scrooge. I tell my father to reschedule but instead they cancel the entire account. They were going to bill him for his own present. They also tried to charge him $149 to hook up that modem. I spent a good hour and a half calling Bright House and having fits before they finally switched the billing and agreed to do what they said they would do and hook up the modem (saving the company, by the way, the expense, time, and effort of running a cable halfway around the house; I saved them money by buying a router and they complained).

And, of course, we mustn’t forget Bob Garfield’s jihad at Comcast Must Die.

The only solution to this is true competition and openness. At CES, Brian Roberts promised a Cablevision 3.0 with the customer at the center — all of you who believe him, raise your hands — and a new standard for TV devices. We’ll see.

Jeremy Allaire of Brightcove (no relation to Bright House) sets a higher standard for a fully open alternative. We must be able to plug any device we own to the connectivity coming into our homes and get to any content. It’s that simple. I shouldn’t need to call them to beg or go to their distant offices or ever, ever, every wait all day for the damned cable guy. Connectivity is electricity.

Rather than telling Comcast that they can’t grow any bigger, the FCC should be telling them one thing: Open up.

Screwing customers is a business model

Bob Garfield continues his jihad against Comcast with a live podcast (oxymoron?) on December 11 featuring me on the same bill with Ralph Nader and Harry Shearer. Bob’s not letting up.

Yesterday, I sent Bob what I thought was astounding statistics from the oft-quoted University of Michigan’s American Customer Satisfaction Index on Comcast and cable and satellite TV, which reported that the industry suffers “the lowest level of customer satisfaction among all industries covered by ACSI.” Yes, even worse than airlines, hospitals, and Microsoft. Yet, of course, they still make money money because they enjoy monopolies … for now. Says ACSI:

There seems to be an element of monopoly-like pricing in the cable industry: basic cable services rose 5 percent in 2006 and 93 percent over the past decade, nearly four times the rate of overall consumer prices during the period. Such pricing power usually comes with some level of monopoly protection and most cable companies have little competition at the local level. This also means that a cable company can do well financially even though its customers are not particularly satisfied. Comcast is one of the lowest scoring companies in ACSI. As its customer satisfaction eroded by 7% over the past year, revenue increased by 12%. Net income went up by 175% and Comcast’s stock price climbed nearly 50%. In the first quarter this year, Comcast added 75,000 new cable TV subscribers, a 49% increase, and posted an 80% rise in earnings over the previous first quarter.

In short: They can still make money screwing their customers.

But be warned, cable oligarchs: Your monopoly will end, as newspapers’ did. You will fall. But for you, no one will cry.

I wish Google would win wireless spectrum and use it to create an open network that will finally bring cable and phone companies the competition they, and we, so richly deserve. Cable’s business is built on telling its customers what they cannot do. Google is built on letting us do what we want to do. Cable needs an attitudectomy.

Comcast must listen

I want you to invent the ideal cable company. That may sound oxymoronic or just moronic, but I want you to try. Here’s why:

Bob Garfield continues his jihad against his cable company (and, by extension, all of them) at Comcast Must Die. He is inviting fellow cable-sufferers to come in and tell their tales of the foe. Garfield charges his congregation: “Congratulations. You are no longer just an angry, mistreated customer. Nor, I hope, are you just part of an e-mob. But you are a revolutionary, wresting control from the oligarchs, and claiming it for the consumer. Your power is enormous. Use it wisely.”

Of course, parallels have been drawn to Dell Hell, of which Garfield confesses a tad of jealousy.

If Dell can reform — and that’s what I’ll be asking in the magazine piece I’m writing on them, which has now been delayed a week — then can Comcast? Of course, it can. Any company can. Or it can die.

But it’s worth asking the definition of reform. What would a good cable company look like? How would it act? I’ve just reread the open letter to Michael Dell that I blogged in August 2005. I’m not saying they followed my advice but they did end up doing what I suggested and I think they and their customers are better off for it.

So what should Comcast do? Under my post about airlines as prison wardens, Brett Rogers suggested that we should imagine what a good company would look like in various industries (and then hold them up to that standard). He wrote: “I haven’t looked for one, but why not create a venue where people can describe their dream ____________? Could be airline, could be mortgage company, could be dentist. Let people collectively brainstorm what could be, instead of just collectively complaining about what isn’t. Business plans by customers, rather than by an executive or two. If such a venue already exists, what is it?”

I love the idea, Brett. So let’s make this that place. And let’s start with the cable company.

What should a cable company be? What would make us love our cable company? Sounds like a stretch to even imagine, but why should any company hold itself to any standard lower than that. Now that we, the customers, are empowered, companies must recognize that we are in control and that they can no longer build business models on telling us what we cannot do.

It’s not our job as customers to worry about the business models of the companies that serve us, if they want to serve us. We do need to be realistic. But we should not assume that we know the definition of business realism. In the midst of Dell Hell, commenters to this blog said I was nutty to think that Dell could or should reach out to customers who blogged about their problems. But, in fact, that was the first reform Dell made and they’ll tell you that it was a great move that helped them solve problems efficiently and learn more about their products and customers and get good PR, to boot. So don’t get crazy with your wishes, but also don’t restrain a great idea.

Here’s my shot. Please add yours. Here’s my ideal cable company:

* I want my cable company to treat me with the respect it would give a business and issue me an SLA (service-level agreement) that guarantees me uptime, speed, and response time to problems on the internet, TV, and phones — with penalties if they fail. If a gas station can’t pump gas, I don’t pay them anyway. If a cable company can’t pump bandwidth, then I want my money back — plus. And if it’s mission-critical for me, it needs to be mission-critical for them.

* I want my cable company to guarantee that they will not restrict any content on the pipe I pay for. Let network neutrality start at home.

* I want my cable company to offer wi-fi all over my town and to come to roaming agreements that let me get wi-fi anywhere I travel. I’m willing to pay more for that. But I want it.

* Let me choose what channels I get. (Yes, I know that cable companies make money off of bundling but they need to shout back up the stream and change their relationship with the channels to make this happen or we’ll all revolt against both.)

* Give me the ability to watch the programming I’ve bought whenever and wherever I want, without having to pay extra on-demand fees or program my TiVoesque thing or buy a Slingbox. If I bought it, I want to watch it on my terms, damnit. Kill the schedule. For that matter, kill the channel. Serve me anywhere, not just at home. (And, yes, I know there are copyright challenges but the industry better figure this out or their stuff will be left behind.)

* The wise cable company will seamlessly merge programming from broadcast, cable, and the internet. I shouldn’t care where it comes from if I want to watch it.

* The wise cable company would enable the people formerly known as the audience to become critics, recommending programming to each other as part of their system. If cable companies had a business model built on desire — I want to watch that — rather than on mere monopoly, it would serve them and us so much better.

* And the wise cable company would realize that peer-to-peer would save them money, used well.

* The strategic cable company will start to think two-way and realize that many of its customers are creating, not just consuming. So give us the means to host our stuff.

* I want a means to report bad employees and know that action has been taken to fix the personnel problems that give these companies such a terrible reputation with their customers.

* When they have to come out for a service call, I want a guaranteed time. If something beyond their control happens, then I want to be notified. If they don’t do this, I want to be paid for my time.

What does your ideal cable company look like?

One more thing: If Comcast is smart, it will enter into a real dialogue — not just unconvincing apologies — about what it should be on these sites and with other blogging customers. Watch Dell.

No more wire hangers

The Wall Street Journal reports that Time Warner is thinking of reducing its stake in cable because access will be commodified. Well, at long last, a good decision.

I’ve been arguing for a very long time that cable is not a business with a long and good future. Access to media is going to be a commodity, no longer a monopoly that makes money thanks to its exclusive control of content.

I argued this as long ago as 1990 — and argued it inside Time Warner itself. In my time as a Time Inc. executive, as creator of Entertainment Weekly, I went to my one and only corporate retreat in the Bahamas via the company Gulfstream. The then-executives of the company were bragging about having just gotten rid of their paper manufacturer, Temple Inland, which their predecessors had bought because they thought that as consumers of paper, it’d make sense to own the trees. The bosses now said it made no sense to own those trees.

But they went on and on about the wisdom of buying cable instead. I raised my hand at their dinner bragfest. (This will give you some understanding of why I did not last as an executive at that company.) I said that it seemed to me that owning cable was only the electronic equivalent of owning trees: You were owning a piece of the distribution instead of a piece of the real value.

After saying this, I was practically set adrift on the Atlantic in a rowboat. They scowled. They shook their heads. They moved on. They made plans to get rid of me. What a young fool I was.

Well, it may have taken 17 years, but I was proven right and all those scowlers and cable-buyers are gone: Cable is trees. Nobody wants to own trees. In the meantime, Time Warner has decided it wants to own content instead. But I’ve argued that owning content also has no real future. For that matter, owning isn’t a verb with value. Enabling is what you want to do. Google doesn’t own. It enables. MySpace enables — and its vulnerability is that it still owns and controls. Craigs List enables. YouTube, Flickr, FaceBook enable. Pure enablement is the model of the future, I think.

So what media should a media conglomerate own, if not cable? Newspapers? Ha! TV stations? You have to be kidding. Magazines? Stop, you’re killing me. Networks? Nope; they all accrued their value by controlling a scarcity that no longer exists.

So I’ll repeat the question: What should they own? AOL? Oh, that was below the belt. No, I wouldn’t want to own AOL or Yahoo or even MySpace. They try to control. And controlling will not work in an economy that is based on handing over control, of distributed control.

What enables instead? Hmmmm. Google. YouTube. DoubleClick. Blogger. What they have in common is as obvious as Google’s strategy: They enable. No more trees. No more wire hangers.