The Tiny Bit Of Competition Remaining In The Broadband Market Is On The Verge Of Extinction

from the scare-quotes-now-mandatory-when-referring-to-broadband-'competition' dept

America, prepare for the coming of your new Broadband Overlords. Karl Bode at Broadband Reports points out the inevitable.

In most areas cable has already won the broadband wars, with inexpensive DOCSIS 3.0 upgrades allowing them to offer speeds that cash-strapped, smaller telcos simply can't match. As I noted the other day, things are looking even brighter for most cable operators given that AT&T and Verizon have all-but stopped next gen upgrades, and are willfully driving DSL customers they don't want to cable, strengthening cable's dominance across most of America over the next five to ten years.

This is all before you factor in the fact that the cable industry appears poised for a new round of consolidation, with Liberty's John Malone clamoring for a series of deals that could include a Charter acquisition of Time Warner Cable and Cox, or a Time Warner Cable acquisition of Cablevision.

In most areas of the US, cable companies enjoy cushy duopolies, if not outright monopolies. This has never worked out well for the customers, who are routinely subjected to terrible prices and worse service. Unfortunately, the few non-cable companies providing broadband connections seem to be more than happy to cede ground rather than upgrade or repair existing infrastructure.

Karl Bode has been documenting these activities for several months, especially the more egregious anti-consumer actions of Verizon. Most notably, Verizon has used the damage caused by Hurricane Sandy as an excuse to dump its DSL offering and replace it with a service that offers less but costs more.

Verizon has been going around telling many Sandy victims who have been waiting almost eight months for DSL repair -- that repairs will never happen. In its place, Verizon is giving those users "Voice Link," a service that lets users connect home phones to the Verizon Wireless network. The problem? Voice Link is no replacement for DSL: it's buggy, it lacks many features (like named callerID), doesn't include data service, and actually is less reliable than many POTS lines during a storm. It's simply not an even exchange.

At first glance, this looks like nothing more than a bottom line-oriented move by Verizon. Sure, it screws existing customers and makes the company appear to be exploiting a natural disaster to protect profit margins, but it doesn't explain why Comcast willingly repaired its existing infrastructure post-Sandy. After all, Comcast wouldn't have done it if it couldn't justify the expenditure.

There's another reason both AT&T and Verizon are willingly ceding market share to cable companies. Both telcos would rather push existing customers to their LTE offerings, which are apparently profitable enough to cover any lost customers. For Verizon, the positives for ditching fixed line services are even greater, thanks to a rather symbiotic relationship with cable providers -- further bad news for customers seeking competitive options.

Consumer advocates remain worried that Verizon's co-marketing partnership and spectrum deal with the cable industry contains either a documented or undocumented "gentlemen's agreement" that Verizon will limit future expansion of FiOS to prohibit more intense landline broadband competition. As we discussed, that would mean that the company's already stalled FiOS upgrades would remain that way as a courtesy, in exchange for being able to sell LTE service to millions of new cable customers.

All of this points to a small handful of cable companies controlling the American broadband experience. Verizon and AT&T are both actively attempting to gut regulations prohibiting them from (advantageously) fleeing markets. The broadband speeds and connectivity that cableco cheerleaders and spokespeople proudly hail as "capable" will very likely remain at their current "adequate or below" level. Smaller competitors will be squeezed out of the market by the unified front of wireless providers and cable companies.

In addition to the negatives listed above, Susan Crawford at Wired suggests this could lead to widespread adoption of metered billing, something most cable providers are hesitant to put into practice due to its massive unpopularity -- but who cares about massive unpopularity when the public has no alternatives where they can take their business?

It works out to be the perfect storm for the two industries, both of which will likely see gains in market share for their most profitable offerings.

Filed Under: broadband, cable, competition, dsl

The Short-Sightedness Of Wall Street When It Comes To Broadband Infrastructure Investment

from the short-term-thinking dept

Karl Bode, over at Broadband Reports, absolutely destroys stock analyst Craig Moffett for doing his usual song and dance. If you're unfamiliar with Moffett, Bode has the details:

Like any good short-sighted investor, Moffett has urged companies to not upgrade their networks, insiting that caps and overages are the "next generation of communications." The irony of course is those telcos who listened and didn't upgrade their networks are now having their lunch eaten by cable providers on a massive scale, which, if Moffett's firm and client investment interests lean heavily toward cable operators, is something that's working out rather well for him and them.

Less network investment, less competition, higher prices. Great for investors, not so great for you

Bode's piece focuses on Moffett's silly analysis that the DOJ's interest is in how Comcast and Time Warner are trying to stifle Netflix and Hulu and that will somehow increase prices (huh? what?!?) because they'd take away Moffett's preferred solution of anti-consumer data caps.

However, I wanted to focus in on the larger issue here: the idiocy of short-term Wall Street thinking over long term strategy. Wall Street functions on a quarterly basis mostly -- with an occasional nod to looking out a full year, but rarely anything further than that. This creates stupidly short-sighted incentives that are deathly towards anyone with any long term goals or strategy. It argues that any big strategic investments don't make sense, because they cost lots of money in the short term, but you won't see payback until outside the myopic window of vision of these Wall Street analysts.

Perhaps that's great for day traders, but as Bode notes, it's bad for the public. And here's the thing: it's actually even worse for companies. It's unfortunate how many companies find themselves slaves to Wall Street analysts views in making their strategic planning efforts. Because that holds them back from actually making the important big strategic investments they often need for the future. Every so often you have a more visionary leader who simply ignores the folks like Moffett. You get situations like Ivan Seidenberg at Verizon, who ignored Moffett and invested in fiber -- which is why it's still competitive today. Unfortunately, as Seidenberg got closer and closer to retirement (which happened last year), the company backed away from continuing its build out. Short term thinking over long term thinking.

In some ways, this is the flipside to the Innovator's dilemma. It's an explanation for why big legacy companies fail to respond to disruptive innovation: because they can't. Because they can't put in the effort to be ready for disruption and instead leave themselves wide open to such disruption by not investing in their future, but rather by listening to the Craig Moffetts of the world -- such that the money that could be building a company for the future instead ends up in the hands of Moffett's real clients: the short-term investors.

If we want to build a stronger economy that builds jobs and continues to innovate, we have to figure out a way to diminish the power of Wall Street's short-term focus, and how to incentivize companies to understand what investing for the long run means.

Filed Under: cable, craig moffett, doj, dsl, infrastructure, wall street
Companies: comcast, hulu, netflix, time warner

Verizon Sued For Promising Faster Broadband Than It Could Deliver

from the up-to dept

Years ago, we used to joke about the prevalence of "up to" language in the marketing around any kind of broadband connection. You'd see claims of speeds that could be reached in huge letters, but right before that, in fine print, would be an "up to." So sign up now to get "up to" 3 Mb per second. Of course that means anything less than that qualifies. Hell, they could argue any top speed, and as long as they included the "up to," they could get away with it. Eventually there was some cracking down on that and some threats that such language was potentially misleading, and companies have been somewhat (but not totally) clearer in describing their speeds. But, when it comes to DSL, there are other problems as well, including the general limitations on speed based on how far you are from the central office (CO). For reasons that still escape me, DSL providers seem notoriously bad at being able to predict ahead of time just how far you really are and what kind of speeds you can get. In the past, I've had these arguments with my DSL provider -- even to the point where a few years ago, when I had terrible DSL (despite living in the middle of Silicon Valley), I actually had an AT&T rep tell me that the company never should have provisioned my DSL because I was simply "too far" from the CO.

Either way, this confusion over distance has resulted in a new lawsuit -- which is trying to become a class action lawsuit -- against Verizon in California for over-promising speeds. This isn't just about the "up to" speeds being marketed. In this case, a woman was convinced to upgrade her account from a 768k top speed account to a 1.5 Mb top speed account -- at $10 more per month -- only to find that her line could only handle the 768k, based on her distance from the CO. She then had a Verizon rep tell her she should downgrade her account, but the company was unwilling to reimburse her for the higher fees she paid on a level of service she couldn't technically get.

Whether or not this specific suit has merit, it does highlight just how confused the DSL providers often are, where each time you call or speak to a rep, you will get different info. In another situation that I once had, I called to sign up for DSL a few years ago, and the rep told me that I couldn't get it at my location. When I said I was surprised, she told me to wait as she tried it on her "other computer," and that one said I could get DSL. It seems that even the DSL providers don't seem to have very good or consistent information themselves, so it's little surprise that customers get conflicting reports -- some of which lead them to paying too much for services they can't actually use.

Filed Under: dsl, speed
Companies: at&t, verizon

Netflix Shows Which ISPs Actually Perform Well... And Which Don't

from the ah,-data dept

It's always fun to discover some data that reveals some useful info -- and the folks over at Netflix have apparently realized that they're sitting on a treasure trove of data concerning the performance levels of various ISPs, based on all that content Netflix is streaming. Rather than just keep it all internally, Netflix is starting to publish the data, showing how well certain ISPs perform, and highlighting how you generally get better performance out of cable than DSL. This is smart on Netflix's part, as it actually does a nice job encouraging ISPs to improve their quality, knowing that they can tout these kinds of "independent" rankings to show their overall quality.

Filed Under: bandwidth, cable, dsl, internet
Companies: netflix

Canadian Regulators Say Bell Canada's DSL Throttling Is Fine

from the sorta-misses-the-point,-though dept

Earlier this year, you may recall that Bell Canada started traffic shaping its DSL even at the wholesale level -- and did so without bothering to tell any of its resellers. That meant that various resellers of Bell Canada, which had promised customers an open network, were suddenly lying, without even knowing it. These reseller ISPs protested, and Bell Canada responded by telling them to shut up and deal with it. The other ISPs protested to Canadian regulators who have now sided with Bell Canada, claiming that the traffic shaping is not discriminatory, because it impacts all reseller ISPs the same way. Of course, that's not the type of discrimination the ISPs were complaining about...

The whole thing does seem quite questionable, as Bell Canada effectively changed the terms by which it provided service to its reseller ISPs, without any notification, let alone negotiation. Yet, because Bell Canada is effectively a monopoly as a provider of DSL, the ISPs have no competitive options to which they can turn. It sounds like the regulators could be convinced to examine other aspects of Bell Canada's traffic shaping plans, but for now, it's given the go-ahead on having them force all resellers to provide traffic-shaped DSL, even if they had promised not to traffic shape.

Filed Under: canada, dsl, regulation, throttling
Companies: bell canada

Italian Authors Want A 'You Must Be A Pirate' Tax On All DSL Connections

from the you're-a-criminal! dept

Plenty of countries have different types of "blank media" levies, which act as something of a "you must be a criminal!" tax. Basically, industries have convinced governments to force consumers to pay a lot more, on the assumption that they're all criminals, and rather than pushing the industries to innovate new business models, they just get to collect that "tax." In the US, the RIAA has suggested such a tax should be added to broadband connections, though there seems little chance of that happening any time soon.

However, Sean alerts us to an effort under way in Italy to do exactly that. Apparently the Society of Authors and Editors has asked the government to impose a tax on all DSL connections (the article's in Italian, but Google has a decent translation). Hopefully this is one of those outlandish proposals that goes nowhere, but it's worth paying attention when these sorts of proposals are being pushed, as they have the inevitable tendency to spread.

Filed Under: criminals, dsl, italy, piracy, tax

AT&T Just Can't Let Go Of It's Forced Bundles... But Claims It's In The Customers' Best Interest

from the not-so-believable dept

It really was just a month ago that AT&T's CEO said forced bundles were bad. Specifically, he said forced bundling "is an old mind-set. We need to get over it." Apparently, it's not that easy. Broadband Reports lets us know that AT&T's new U-Verse service requires you to bundle broadband internet access with TV -- but it's okay, because they claim it's got nothing to do with how desperate the company is for TV subscribers, but because it's really the best thing for customers (and, apparently, those customers are too dumb to make that decision on their own): "Because AT&T U-verse members will gain the most features and benefits from having both AT&T U-verse TV and AT&T U-verse Enabled Internet, Internet must always be bundled with TV." Old mind-set indeed.

Filed Under: bundles, dsl, tv
Companies: at&t

Washington Post Notices That Japanese Broadband Is Pretty Damn Fast (And Competitive)

from the in-case-you-hadn't-been-paying-attention dept

While there isn't that much new there if you've been paying attention, the Washington Post has an article about how Japan reached the point where it has a highly competitive broadband market that is cheaper and many times faster than US broadband offerings. The Washington Post version does a pretty good job highlighting how opening up access to the core lines was a big part of it (as was newer infrastructure and the much smaller geographic footprint in Japan). It's a pretty balanced piece, and good background if you weren't familiar with the situation in Japan. There is one very interesting point, however, that doesn't get very much attention in this debate and deserves to be highlighted.

Whenever the debate comes up in the US about unbundling broadband networks and requiring network providers to offer their wholesale pricing to competitive providers, people say that it will kill those network providers and take away all of the incentive to invest in new network technologies. In Japan, it seems the exact opposite happened. When the gov't required DSL wholesaling to competitors, it certainly increased competition and lowered prices for consumers -- but it also opened up new uses for the network that increased demand for bandwidth. That became an opportunity for former monopoly provider NTT who was pushed (thanks to the competition which drove the increased usage) to invest heavily in a new fiber optic network that provided even better speeds and services. And what's happened? NTT is doing great: "NTT is becoming dominant again in the fiber broadband kingdom," according to a Japanese professor of telecom economics. This is a point we've tried to make repeatedly, but sometimes doesn't get through clearly: while many people fear that competition hurts innovation by making it tougher to profit, the opposite is usually true. Competition drives innovation as the competitors look for some edge that differentiates them and allows them to profit. That edge pushes the innovation train faster and faster, opening up new opportunities to earn even greater profits. The new things that people can do on fiber networks are going to help NTT (and others) make a lot more money than if it had remained offering pokey DSL without any competition.

Filed Under: broadband, dsl, japan
Companies: ntt, softbank, yahoo bb

AT&T Makes $10 DSL Marginally Easier To Find Following Complaints

from the it's-in-there-somewhere,-we-swear dept

Remember the $10 DSL from AT&T? The same one that the company had to offer as part of its deal to buy BellSouth? Yes, the same one that it had to offer, but never had to promote to anyone. Well, after numerous complaints, AT&T finally recognized that maybe people do want it (even as its CEO denies that people want cheap DSL) and has made it just slightly more findable. Consumerist points us to a column at the St. Louis Post-Dispatch, where the columnist tried and failed to find the $10 DSL offer -- until someone from AT&T walked him through the process (while noting they had just made it easier to find). It's still not easy, though. Even though it's the same DSL the company is promoting in big type for $14.95, down in the righthand corner there's a link (in smaller type) saying you may be able to "get DSL at a lower price!" Then, you have to click through to see if you qualify. It's a slight improvement, but unless people know to look for it, many people who likely qualify will simply miss it and end up paying $5/month extra.

Filed Under: dsl
Companies: at&t