Posts tagged ‘Comcast’

SkypeCast

The other day, Comcast (NASDAQ: CMCSA) announced a partnership with Skype, to allow–among other things–video chat on your TV while watching shows.

In addition to the usual candy-coated and breathless quotes from company officials, the NY Times had this comment:  “Cable companies like Comcast have been trying to figure out how to make it easier to chat while watching shows.”  That should have read, “...trying to figure out how to make money from subscribers while they’re chatting during shows.”

May I be among the first to say “Epic Fail”?

People are already chatting while watching shows; some of them on video, surely many on Skype.  For free.  I get using your TV as a large videoconference screen incorporating Skype.  That has value.  But how many are going to pay Comcast a hefty monthly charge so their friend’s face appears next to their favorite show on the TV set , instead of their tablet or iPhone?   Not many, I bet.

Oh, they will undoubtedly snag some consumers who don’t know about Skype already, and who think the idea of chatting with Grandpa over American Idol (assuming you’re both watching live) is cool.  I suspect there aren’t many of those.

Interesting how instead of watching together in one room, the industry vision has become one in which we’re in separate domiciles watching the same thing at the same time, using the Internet to chat about what’s happening on screen.  Looks like Isaac Asimov had it right all along.

Perhaps there are other benefits from a Skype/Comcast hookup.  I’m not holding my breath on this one.

Disclosure: I hold no position, either long or short, in any stocks mentioned here.

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June 16, 2011 at 9:36 am Leave a comment

Lawyers and TVs and Tubes, Oh My!

The business models surrounding video delivery to consumers are sure evolving rapidly, aren’t they?  And in sometimes surprising ways.

Time Warner Cable (TWC) has been sued by Viacom (VIA) over an iPad app it recently released.  The app allows TWC subscribers to watch live TV on their iPads within their own home, effectively turning the iPad into a TV.  It streams channels wirelessly to the iPad, typically from a router attached to the subscribers’ internet cable modem.

Cablevision (CVC) has released a similar app, although because it streams directly from the cable box (plus wireless adapter add-on), this one does not require cable subscribers also to be internet customers.

Broadcasters such as Viacom are claiming that TWC and Cablevision have “no iPad video streaming rights.”  Time Warner Cable, for its part, insists it can send TV to any device in the home.

Meanwhile, ESPN (DIS) has taken another tack, releasing their own app that lets properly identified subscribers from Time Warner Cable, Verizon (VZ), or Bright House, to stream its live content to an iPad from any location.  This is an example of the “TV Anywhere” initiative envisioned by the likes of TWC and Comcast (CMCSA) among many others.

And on another front, startup company Zediva is being sued by all 6 major movie studios over its service that “rents” DVDs to consumers and then streams them over the internet.  Each customer has exclusive use of a DVD disc and a DVD player.  Again, the studios are claiming copyright infringement, calling Zediva’s business model a “gimmick”.  All Zediva is really doing is putting a DVD into a player, pressing play, and then sending the customer the output signal directly.  They just happen to be using the internet instead of a wire.

[Next, I imagine, it will be illegal for me to stand outside my neighbor’s house and watch a DVD on his TV through the window.]

Logically, Zediva and the cable providers seem to be on reasonably solid ground.  Legally, who knows?

Regardless, the notion that this has anything to do with distribution or copyrights is beside the point.  What’s really being fought over is the ability to make money in new ways by using the Internet.  Or as the late Senator Ted Stevens of Alaska laughingly called it, “a series of Tubes.”   Time Warner Cable’s app does in fact use IP to move video around, though it is exclusively on its own cables.  And while Zediva uses the open internet, there is precedent in the form of virtual circuits to think of that transmission channel as being private and dedicated.

In a way, these links are functionally no different than wires.  Perhaps Senator Stevens was more right than his detractors thought.  Companies are using the internet just as if it was a series of private pipes, or tubes.  So why wouldn’t these distributors have the right to send video this way?

Because it interferes with the content owners and networks from getting two things they dearly want:  (1) unfettered control over using the internet to sell content directly to consumers, and (2) ownership of customer information for marketing (read: monetization) purposes.

Every movie Zediva rents and shows is one that a studio can’t derive its own rental income from.  When people watch Mad Men or Survivor from the dining room on an iPad, that’s one more episode that can’t be monetized through iTunes or Netflix (NFLX), or viewed on ad-supported Hulu.

What’s worse, when an iPad,  smartphone, or netbook is used to view video streamed through a cable or satellite provider, the content sellers have no information about the end user.  If they could sell or rent directly, they’d gain valuable demographic and other information that could be used for marketing purposes or monetized via ad networks.

They know that content is not king; the customer is king.  Networks and studios would love to be able to eliminate the middle man if they could.  And they don’t want to be beholden to Apple (AAPL), the way music publishers are now and magazine publishers are quickly becoming.

To own the customer is to be prepared for the day when consumers “cut the cord” on cable.  And when they use tablets and smartphones instead of a TV.

In 1993, Nicholas Negroponte (the founder of MIT’s Media Lab) made a prediction that became known as the “Negroponte Flip.”  He said, in essence, that what was wired would become wireless, and vice-versa.  When you consider that our phones are becoming wireless, and over-the-air TV is increasingly via cable or fiber, Negroponte seems to have nailed it.  We have a similar flip occurring with centralized mainframe computing moving to distributed (PCs) and then back to centralized (the “Cloud”).

Could it be that just as we’ve reached the point where most TVs are flat, and no longer have tubes, we are moving to a time  when the “tubes” are what’s important, and video is no longer watched on TVs?

Disclosure: I hold no position, either long or short, in any stocks mentioned here.

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April 17, 2011 at 8:24 am Leave a comment

C’mon In, The Water’s Fine

The blogosphere has been abuzz since last week about Comcast’s (CMCSA) new policy limiting the amount subscribers can download. Starting October 1st, Comcast will limit users to 250 GB of total downloads per month. Violators will first get a warning if they exceed the cap. A second “offense” within 6 months will risk loss of service for a year.

I continue to be amazed at the ISP business. The telecablecos are the only companies I know that limit the use of what they provide, instead of selling you more of it. As I wrote some months ago, the reason is largely due to the fiction of unlimited usage banging up against the reality of limited network design and oversubscription models.

I could rail at how unfair Comcast is being, or how out of touch they are with Internet users, or how ridiculous it is to punish people for exceeding usage limits they can’t measure. But I’ll leave that to other, better minds.

Instead, I’ll point out how Comcast isn’t even solving the right problem. The trouble with its network isn’t so much capacity in bytes. It’s peak speed.

[Let’s ignore for the moment that the Internet is a two-way connection mechanism, and think like a telecableco, where the purpose of ISPs is to shove stuff downstream to you. We know different, but bear with me here.]

Ever take a shower at the same time as someone else in your house? What was the result? Yup, low water pressure, and a singularly annoying experience. Now imagine that on a neighborhood scale. Five people on your street decide to get clean at the same time and all you get is a dribble out of the shower head.

So what’s the solution? Well if you’re Comcast, you limit the size of the swimming pool your subscribers can have. Huh?

How many bytes you download is much less important than when you download them. If a thousand people try to stream a movie (shower) at the same time, they only use up 5 GB or so, but the experience sucks, because the speed (water pressure) is reduced for all. Conversely, download 250 GB (fill your pool) overnight when hardly anyone else is online, and you not only get a fast download but you don’t bother others.

Instead of limiting bytes–a poor proxy for usage–Comcast might be better served by limiting speed. Then they’d be in a position to charge different prices for different speed tiers. This would be relatively easy to do by capping modem speeds, would allow more accurate network capacity planning, and would solve the actual problem, namely congestion at busy times.

In other words, charge for water pressure (or size of water pipe), not the amount of water you use. If you want better pressure, pay extra. An alternative would be time-of-day charging, like traffic on interstates, bridge tolls, and electricity usage. (I suspect that would get too complicated for consumers, but you never know.)

Honestly, Comcast isn’t dumb. So why are they capping total bytes? Two explanations spring to mind, both only small contributors in my view:

  1. It’s easier to simply monitor total usage and kick people off. (Admittedly, most subs won’t run afoul of the new limits any time soon.)
  2. They’re clinging desperately to the fixed price, all you can eat model of bandwidth, and are loathe to change it unless their competitors do (that assumes they have competitors, of course).

But the real reason is that Comcast and their ilk want to be in the water business, not the pipe business.

Anybody think that the new usage caps won’t apply if the content you’re downloading comes from Comcast? Like, say with the new Network DVR service some of the telecablecos are itching to charge you for? You bet.

I have no doubt that if Comcast provided most of the video and other content you consume over its connections, their congestion problems would magically disappear. They’d probably even be advising you to build a bigger swimming pool.

And reminding you to fill ‘er up.

Disclosure: I hold no position in any of the stocks mentioned here.

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September 2, 2008 at 5:27 pm Leave a comment

Alias Mr. Moneybags

Who benefits the most from the recently announced Sprint/Clearwire deal? It may not be who you think.

This massive ($3.2B) infusion of money seems like a lot, but it’s just the beginning for this boondoggle. WiMax is a nice technology that works in some circumstances, with the right business model. But then so will WiFi, and it’s much cheaper. Besides, the mobile providers have a huge head start. Why buy new cards and sign a new contract when I already have what I need from my cell phone (or hotspot) provider?

In terms of becoming a successful business, WiMax is vying for the “most hyped” award with social networks. Expect more bags of money to be tossed into the trough before long.

So who gets what?

Sprint (S) – Removes one monkey from the back of CEO Dan Hesse as he is now free to focus on why Sprint has been shedding customers for so long. Also distracts everyone from noticing the delays in its own WiMax buildout.

Intel (INTC) – Intel has been peddling WiMax like a desperate streetwalker to anyone with an open car window. And its been seen hanging around the Clearwire convertible before. Intel wants to be the undisputed standard for WiMax chips, a role it failed to capture in WiFi. Not to mention selling lots of new processors for next generation laptops and smart phones.

Google (GOOG) – Yes, critical mass for Android will help extend its search and advertising dominance into mobile. And this network might turn out to be actually open. Despite Google’s game playing at the FCC auction, the “open” spectrum Verizon won will–in practice–be anything but. Fundamentally, Google has become a VC firm. A billion here, a billion there, something just might stick. All it takes is one 10-bagger to make it work. This ain’t it.

Time Warner Cable (TWC), Comcast (CMCSA) – the Rosencrantz and Guildenstern of mobile will be exactly as successful here as they were with Pilot, the failed MVNO venture with Sprint. And for the same reasons.

Clearwire (CLWR) – Now we’re getting somewhere. Big cash infusion, lots of media attention. The rights to resell Sprint 3G will allow it to grow its top line, giving it time to progress on the buildout. In the end, though, even with a working network it won’t be enough to either satisfy consumers or to make it a viable competitor to the telecableco ISPs. ( And I’m not alone in my thinking, here.)

But you see, by then Craig McCaw will have made his money.

McCaw has a history of promote, build, and sell. Usually at the top. And always with someone else’s money. He’s going to extract himself from this before long, and come out smelling like a rose.

Or a crisp thousand-dollar bill.

Regardless of what happens, whether the network succeeds, whether or not anyone else makes any money, you can be sure of one thing: McCaw has this all mapped out. There’s your winner.

Disclosure: I hold no position in any of the stocks mentioned here.

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May 9, 2008 at 12:17 pm 10 comments

Open Sezmi

Startup Sezmi is beginning to get some notice–in a short piece on NewTeeVee, and a longer one on Forbes. Sezmi is aiming to become a new video distribution platform, combining over-the-air broadcast and internet delivery. While their strategy is ambitious, I have some doubts.

What it gets right:

  • Video on Demand. These guys seem to get the transition from channels (called “nothing more than playlists for shows” by Sezmi co-founder Phillip Wiser) to VoD.
  • Storage vs. Delivery. Storage is still cheaper, and Sezmi will “pre-load” it’s Terabyte box with some content, based on the results of a predictive software algorithm.
  • Navigation. Sezmi is developing a viewing guide that will combine traditional TV fare with internet content, in customized “channels” that automagically group content by category.

What it doesn’t:

  • Content. None announced yet, and Sezmi is attempting to extract per-sub pricing from the networks that’s identical to what the telecablecos pay. Good luck with that.
  • Pareto’s Rule. The model relies on the fact that only a few shows account for most of the viewing at a given time. True enough. But take away the option for (or even impede) viewing that occasional odd show, and you’re D.O.A.
  • Inertia. Such a new paradigm will create difficulty with viewers who are more interested in plopping down in front of the tube than in learning a new technology, box, and way of viewing TV. Certainly not impossible, but not easy either. At least with TiVo (TIVO), consumers could always default back to their old habits if they wanted–Sezmi will require jumping in with both feet.
  • Cost Structure. This is where the wheels fall off, I think. Sezmi claims it can deliver TV for half the cost of cable, not having to pay for physical pipes. But it must pay to lease extra local broadcast spectrum. And it piggybacks on telecableco internet pipes that are largely cross-subsidized by the very content distribution it aims to disrupt. Let’s see how long that lasts. Not to mention beaucoup marketing and subscriber acquisition costs just to get off the ground–investments that incumbents like Comcast (CMCSA) and Time Warner Cable (TWC) have largely made.

My bet is that this will get lots of press, a few rollouts, and ultimately fail. If Sezmi is able to get some of its predictive algorithms right and create a useful way to combine internet and TV programming into a single guide structure, someone will buy it eventually–at a price disappointing to its VCs–for that technology alone.

Otherwise, Sezmi simply becomes Sezyu.

Disclosure: I hold no position in any of the stocks mentioned here.

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May 1, 2008 at 7:55 am 4 comments

The Broadband Salad Bar

The Wall Street Journal reports this morning (article, paid subscription required) on talks between Comcast (CMCSA) and BitTorrent, Inc. to make nice over Comcast’s admitted blocking–excuse me, “delaying”–of bittorrent generated traffic.

At first glance it seems a rather ham-handed attempt to mollify Comcast critics. The WSJ and others are reporting it as a fairly straight up development, if something of a backpedal by Comcast. But these miss the point, I think, sidetracked by conspiratorial discussions of “net neutrality” and how the big bad telecablecos are angling to limit our choices, take over the world, and generally do evil.

Do I believe the big ISPs want to control content (or access to it) as well as the pipes? Absolutely. There’s gold in them thar hills! None of them want to be limited to connectivity or bit delivery services. But will they succeed? Is the above fictional ad to be our broadband future? I doubt it. Anyway, it’s beside the point.

There’s another motive for ISPs to manage bandwidth on their networks–it’s a finite resource. No, Virginia, there is no unlimited bandwidth. You can talk all you want about Moore’s Law, etc. Bandwidth ought to be cheap. In a perfect world–or Asia–it is cheap. But not here, not without real competition.

The telecablecos have promised this always-on, flat-rate, high-speed internet access. It was a fiction created by the need for market share, and by consumer demand for a broadband salad bar. All-you-can-eat, with a fixed price. Sounds wonderful. But it could never have lasted since the infrastructure is largely shared and was built on the expectation that demand would be low (or at least intermittent).

Now the growth of video is stealing the condiments, and file sharers are sneezing in the salad.

There’s no free lunch. So you do one of two things. Limit how many trips each patron can make for salad. Or charge them for each trip. Comcast has tried the former. My bet is on the latter.

You believe it’s a fantasy? That no one will go for tiered or bit-based pricing? Think again–Time Warner (TWX) is already trialing it. And the more successful we are at regulating the ISPs to ensure net neutrality (in the absence of competition), the more likely it is we’ll see pricing by the byte.

March 27, 2008 at 5:54 pm 6 comments


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