How The Digital TV Transition Will Accidentally Help HDTV Sales

from the customer-confusion dept

There's been a huge amount of confusion concerning the February 2009 transition from analog over-the-air TV to digital over-the-air TV, but one of the big points of confusion is the false assumption by many that this has something to do with HDTV. It doesn't. It's just about the television content that's available freely over the air -- as opposed to via cable or satellite TV. For anyone who is a subscriber to cable or satellite (i.e., the majority of Americans) the transition basically means nothing. Yet, thanks to years of FUD from folks resisting the transition (mainly the TV broadcasters who wanted to keep their spectrum) many people are quite confused about what this means. Some new studies have looked at public readiness for the switch, and while most of the headlines focus on the fact that about half of those impacted are unready for the shift, what may be much more interesting is a tidbit not found in most of the coverage, but tucked into the Washington Post coverage:

About 30 percent of the respondents indicated they had plans to ready themselves for the transition, even though they do not have to do anything to maintain service.

In other words, an awful lot of people who already have a digitally enabled TV, cable service or satellite service somehow think they need to upgrade to keep service after February. Obviously, they're confused, and it would be a good guess to assume the root of at least a significant percentage of that confusion is that idea that this has something to do with HDTV. So, it sounds like a large group of cable or satellite TV subscribers are planning to upgrade to HDTV, not because they want to, but because they incorrectly think they need to to keep getting TV after February of next year. HDTV providers must be thrilled.

As for the percentage of folks who will be impacted and haven't done anything about it yet, that doesn't seem too troublesome. After all, there's still seven or eight months to get it done, and people sure do like to procrastinate. What's more troubling, perhaps, is the fact that the $40 coupons for converter boxes that are being sent out to those who request them expire after 90 days. Why? No one seems to have any clue, and its leading to many of these coupons expiring before people have a chance to redeem them.

Filed Under: confusion, digital tv, fcc, hdtv, spectrum

That Didn't Take Long: Verizon Wireless Trying To Get Out Of Open Spectrum Requirements

from the not-hard-to-see-that-coming dept

We noted recently that Verizon Wireless' new PR campaign around its "open" network offerings seemed open in name only, and it appears that the same concept is being expanded to cover the recently won 700 MHz spectrum, which FCC rules require to be open. Google has filed a petition to deny Verizon the spectrum, noting that the company's public position on how it will "open" the spectrum isn't really open at all. Basically, it looks like Verizon Wireless is trying to reinterpret the rules in its favor. Google isn't really asking the FCC to deny the spectrum sale, but really just wants the FCC to actually enforce the rules that were put in place. Given the FCC's friendly attitude towards telcos bending the rules, don't be surprised if that doesn't happen. Even if the FCC somehow tells Verizon to follow the rules more closely, it seems likely that Verizon will still figure out some way to wiggle out of them again.

Filed Under: 700 mhz, open spectrum, spectrum
Companies: google, verizon wireless

Politician's Spectrum Plan Sounds Mighty Familiar

from the m2z-in-the-house... dept

You may recall the well-hyped venture-backed startup named M2Z that wanted the FCC to hand over a segment of unused spectrum. Part of the plan was to offer a free ad-supported wireless service that would cover 95% of the country, that would be slow and "filtered" so that it was "family-friendly." It would also offer a higher-level paid tier, as well as priority services for public safety uses. The kicker, though, was that M2Z hoped the FCC would hand over the segment of spectrum for free in exchange for a piece of the profits down the road. The FCC turned down the request, but apparently that's not the last we've seen of it.

Congressional Representative Anna Eshoo has introduced a bill that would reserve the same slice of spectrum for a wireless service that would cover 95% of the country, that would have a free tier that was slower and filtered, as well as a higher-level premium tier, and which would offer priority services for public safety uses. The difference, though, is that it looks like this bill wouldn't involve just handing spectrum over, but would include an auction component towards how that spectrum is used. While it does seem like M2Z is well meaning in its plans, it's still hard to see why setting up all these rules makes sense. It still seems like it would make much more sense to create a much more open market system, to allow the spectrum to be put into the best use possible, rather than setting so many rules for each slice of spectrum.

Filed Under: anna eshoo, politics, spectrum
Companies: m2z

Cablevision Caught Blatantly Lying To Customers About Digital TV Switch

from the don't-blame-us,-blame-the-fcc dept

As you probably have heard, in early 2009, over-the-air TV stations will no longer be broadcasting analog signals to those who receive television over-the-air (with an antenna). This is part of a necessary effort to reclaim valuable wireless spectrum that the broadcasters have held (for free) for many years, and put it to much better use. This change only impacts those who watch TV over-the-air. That means it has no impact whatsoever on anyone who receives their television via cable or satellite TV (representing the majority of TV viewers out there). Yet, this apparently didn't stop at least one cable company from claiming otherwise.

Consumerist has caught Cablevision telling customers that they need to upgrade to a digital cable box by order of the FCC. This is simply untrue. Cablevision is upgrading many of its channels to digital format from analog, and those channels will no longer be available to customers who don't have a digital cable box. But, that's entirely a business decision made by Cablevision, and has absolutely nothing to do with the the FCC-mandated switch for over-the-air broadcasts. It's just that Cablevision timed this deal to coincide with all the stories about the over-the-air switch, and is using that to make people think that it's the FCC's fault. Cablevision responded to Consumerist admitting that the change has nothing to do with the FCC's mandated change -- but refused to explain why every customer support person Consumerist spoke to gave the FCC as the reason, even after they specifically went to check their training notes. It's a rather sneaky (and likely illegal) move to claim that people need to upgrade due to the FCC when the FCC has nothing to do with it.

Filed Under: analog tv, cable, digital tv, fcc, spectrum
Companies: cablevision, fcc

AT&T-Funded Politicians Accuse Google Of Gaming The Spectrum Auction System

from the please-explain dept

We've already explained why Google's actions in the recent 700 MHz spectrum auction wasn't "fleecing" taxpayers as some lobbyists had contended. Yet, it appears that the lobbying has been effective. A set of Congressional representatives have started asking whether or not Google gamed the system. This is a pretty bizarre claim against a company that put up $4.6 billion in an auction and was then outbid. Clearly, in putting up the bid, there was a chance that Google could have won and had to pay the $4.6 billion. There's no rule that Google had to keep bidding. The company stopped at the point at which it was comfortable bidding. Of course, it will probably surprise no one that if you look at the top campaign contributor to all 3 representatives attacking Google's actions, you'll notice a pattern (in the letters A, T and T). Check it out for yourself. There's Fred Upton, Cliff Stearns and John Shimkus. You think that had something to do with their opinion on the spectrum auction process? Nah...

Filed Under: 700 mhz, auction, politics, spectrum
Companies: at&t, congress, fcc, google

No, Google Did Not Fleece Taxpayers Out Of $7 Billion

from the bad-math dept

We've talked about Scott Cleland before. He's a "telecom analyst" who has a reputation for stretching the truth as far as it can go in order to contort himself into making telcos look good and anyone opposing the telcos look bad. Jim Harper points us to Cleland's latest, where he accuses Google of "fleecing taxpayers" out of approximately $7 billion with its actions in the recent 700 MHz auction. He notes Google's admission that it was only in the auction to push the bid over the threshold requiring any service on the network to be open. This isn't a surprise. It was widely assumed that Google would merely bid up to the threshold, knowing that if it could buy the spectrum at that price, that would be great, but if someone else got it and the network was then required to be open, that was great too. So this is hardly a shocking admission on the part of Google.

Cleland then compares the prices of the other blocks of spectrum available (those that didn't have open access rules) and does a back of the envelope calculation that the average price per MHz was noticeably higher on the closed access spectrum than the open access spectrum. From that point, he jumps to the conclusion that the C block (the open access block) was significantly underpriced because (he claims) telcos valued it less since it was open. Of course, there are all sorts of problems with this. He determines the amount of the underbidding by merely averaging the % difference in the A and B blocks to the C block -- but it's a massive difference. The A block was 50% higher and the B block was 250% higher. He then just averages that to 150%. Yet, anyone who bothered to actually think about it (rather than look for a weapon with which to bash Google) would note that this calculation is quite dubious. Beyond the "small sample size" problem, the very difference in price-per-MHz in the A and B blocks should make it clear that there are many other reasons why the price would fluctuate having absolutely nothing to do with whether the network was open or closed. To assign the entire blame to that makes no sense whatsoever and ignores the realities of what these different blocks of spectrum were good for.

Next, Cleland tries to spin this story as Google illegally swiping $7 billion from taxpayers -- since this entirely mythical $7 billion would have gone into the treasury, which will now have to make it up from taxpayers. On top of that, he suggests (totally incorrectly) that the only real beneficiary of the open access rules would be Google for its Android offering. Except... not quite. He's ignoring (conveniently) the other half of the equation. The open access rules benefit plenty of other companies beyond Google (in fact, any company that wants to take advantage of those rules), and will likely lead to much greater innovation and new and valuable businesses and services, that will likely generate much more tax revenue for the government than the totally mythical $7 billion. But Cleland decides to ignore all that inconvenient information in order to make an entirely bogus claim against Google.

Filed Under: auction, scott cleland, spectrum, taxpayers
Companies: google

Lessons From The 700 MHz Auction? More Of The Same

from the no-surprises-here dept

So the winners of the 700 MHz spectrum auction have been announced and to say that there were no surprises would be an understatement. It played out almost exactly as most observers predicted it would. Verizon Wireless ended up with the C-block (with Google only bidding right up to the cut-off amount to force Verizon to play by "open" rules) and AT&T added some spectrum as well, which it can add to the 700 MHz spectrum it picked up separately last year. The end result? Nothing too exciting for consumers. Whether or not Verizon Wireless's required "openness" makes a difference remains to be seen. What didn't happen was someone new entering the scene -- meaning that we're not going to see anything really new come out of all this spectrum.

In fact, perhaps the most bizarre bid of all was EchoStar spending $700 million on spectrum that can only be used for one-way communication. One-way communication is less and less useful these days. EchoStar has been making some interesting moves of late, but using this spectrum to build a mobile TV broadcast solution (which is what many expect) makes little sense. It will cost the company billions, and then they'll be limited to a one-way communication system just as people are recognizing that the real value is in multi-directional communications. It may give the company another option rather than relying on satellites (which are costly and troublesome at times), but the expense is way too high considering the limitations. So, even with EchoStar, we're talking about "more of the same." That's too bad, as there was a quiet hope that someone different would step in and do something really new and interesting with this valuable spectrum.

Filed Under: 700 mhz auction, fcc, spectrum, wireless
Companies: at&t, echostar, verizon wireless

Open Does Not Mean Communal

from the kill-this-myth dept

I hesitate to post anything that involves Scott Cleland, a telecom "analyst" who has a bit of a reputation for, well, perhaps stretching the truth in order to make a point that supports the big telcos who pay him to be a public advocate. However, with InfoWorld positioning him as a legitimate critic of the FCC's open spectrum rules and hearing him make statements like: "Everybody throws the word 'open' around and says open is wonderful. But 'open' means communal. It means not owned," it seems a response is necessary. This is an old trick used by those who can't actually come up with a reason why "open" systems are bad. So they fall back on the false claim that open means communist, and that's bad.

There are just a few problems with this statement, with the big one being that it's completely wrong. First of all, "open" hardly means communal or communist. In fact, it often means exactly the opposite. It means creating a platform or a standard on which multiple parties can compete, as capitalists, rather than locking people out via a government-granted monopoly. Also, the smear that "open means not owned," is used to suggest that open systems are somehow antithetical to property rights. Again, this is hogwash. First of all, when discussing spectrum, we're never talking about property that is owned anyway -- merely a bit of the air that is licensed. Spectrum is, by it's very nature, the property of everyone. That's not a "communist" idea -- it's a factual one. The various spectrum auctions aren't about owning property, they're about getting a license from the FCC to be able to do something with the spectrum that is already around us.

What Cleland is really arguing for is the idea that it's better to have government-granted monopolies limited to a few big providers (mostly the ones who back his firm), rather than a more level playing field that creates real competition in a real market. For him to suggest that an "open" system is somehow less capitalistic than one that involves a gov't agency granting monopoly rights is simply laughable.

Filed Under: open, property rights, scott cleland, spectrum

Frontline Shuts Down; Spectrum Buying No Place For Startups Apparently

from the can't-upset-the-world-without-some-money dept

There was tremendous hype and a number of big names behind the wireless startup Frontline, who was talked up as a possible upstart bidder (and potential winner) for a segment of the spectrum that the FCC is auctioning off later this month. However, if one thing has become clear over the years, spectrum auctions are not a game for startups to play -- as unfortunate as that may be. On Tuesday, the news came out that Frontline had shut down after it was unable to find financial backers to pony up all the money it needed. There are some questions about this, as some of the company's early supporters represent a ton of money, but some are noting that this could actually cause something of a domino effect impacting all of the spectrum being auctioned off. There are a variety of rules and hurdles that various bidders need to meet, and if those hurdles aren't cleared, then the FCC can cancel the auction and try again -- with different rules that could toss out the open access requirements the FCC put in place. It's not clear if that will actually happen, but it appears to increase the likelihood significantly.

Filed Under: auction, spectrum
Companies: frontline

Forget Google, Watch Out For Chevron In The 700 MHz Auction

from the my-ISP-is-Chevron? dept

Everybody's been buzzing about the likelihood of Google bidding on the 700 MHz spectrum that's up for auction in a few weeks, that's allowed a few other interesting characters to get in on the auction below the radar. The FCC has now announced that 266 separate entities have filed to take part in the auction, so it's quite a long list. So far, only 96 applications have been accepted, but the others have until January 4th to get their applications in order. Everyone knew Google was on the list, and it's no surprise to hear names like Verizon Wireless, Alltel, MetroPCS, Vodafone and AT&T (who already got a head start buying some other spectrum in the 700 MHz realm earlier). There was some speculation about cable companies participating, and sure enough, Cox and Cablevision will show up at the auction. Then there are a few surprises. Qualcomm is planning to bid -- which could upset some of the US carriers who consider Qualcomm more of a partner than a competitor.

In a list of 266 companies, there are always going to be some long shots -- but it still doesn't hurt to point out some of the more interesting bidders. Microsoft co-founder Paul Allen plans to bid via his Vulcan Spectrum LLC (reusing his favorite "Vulcan" name for companies). It's unclear what he would do with the spectrum. Perhaps even more surprising is the news that oil giant Chevron is planning to participate. What the company would do with the spectrum should it win (and it certainly has the money to win) is an open question, but there are a few intriguing ideas. As for Google, don't hold your breath for a win here. It has seemed pretty clear from the beginning that the company is only in the auction to bid $4.6 billion -- the lowest point necessary to force open access rules to kick in. It would be a huge surprise if the company bid much more than that, and it would be an even bigger surprise if no one outbid Google.

Filed Under: 700 mhz, fcc, paul allen, spectrum, spectrum auction
Companies: at&t, chevron, fcc, google, verizon