We’ve written about the so-called “Digital Migration” on quite a few occasions (Check this post for links). Again, for the short version, there are two transition taking place right now – the digital TV transition for full-power, over-the-air television stations, and the cable industry’s efforts to transition analog channels onto digital cable tiers, in order to reclaim bandwidth and serve consumers with more and better services.

Since the word “digital” is in both of these transitions, even though digital TV and digital cable are two different technologies, some confusion has occurred. For example, earlier this week, Thomas Kraemer wrote on his blog:

I was surprised to see Comcast doing a mandatory switch to digital cable at the same time over-the-air TV is switching to digital. I thought they would phase it a year later as a way to keep cable customers. At first I thought they might be trying to exploit the confusion over the digital TV transition to free up some bandwidth by eliminating analog TV channels that they could replace with more profitable bits.

See also Brier Dudley at the Seattle Times writing on his blog.

In fact, cable’s transition has been happening for some time and will continue after February. Some consumers have mistakenly assumed that cable’s assurances that its customers need probably do nothing during the DTV Transition were incorrect.

Good news today for all those folks. NCTA has sent letters up to Congress today to announce some moves that should help clear up the confusion. First, here’s a relevant quote from our letter:

… we recognize that the overlap between cable’s digital migration and the broadcasters’ DTV transition scheduled to occur on February 17, 2009, inescapably adds a layer of complexity and the potential for consumer confusion.  We are determined to address those issues.

The cable industry has gone to extraordinary lengths to help make the broadcasters’ DTV transition as seamless as possible for consumers.  Our industry was the first industry to run a national education campaign on the DTV transition and has already aired over $225 million in public service announcements entirely devoted to educating consumers about the broadcasters’ transition and the availability of converter boxes and government-supplied coupons.  Alone among multichannel video programming distributors, cable operators will also ensure that all commercial must carry broadcast signals are formatted for both digital and analog customers in accordance with rules set by the FCC (rules that were, in fact, based on a voluntary plan first proposed by the cable industry).

Even with those efforts, the cable industry has been asked to consider taking additional steps to help smooth the DTV transition. In response to these requests, cable operators represented on the NCTA Board of Directors (who own and operate cable systems serving ninety percent of the nation’s cable subscribers) have committed to the following:

• Digital Migration “Quiet Period.” To minimize consumer confusion during the DTV transition, operators will delay the substitution of digital versions of existing analog channels from December 31, 2008, to March 1, 2009, except to the extent necessary to free up bandwidth to comply with the requirement to carry broadcast signals in both analog and digital formats or meet contractual carriage obligations.
• Analog Broadcast Basic Tier. Operators that offer dual carriage of broadcast signals would make access to the analog broadcast basic tier available under a promotional offer to new customers who subscribe just to that tier. This offer would be available beginning December 31, 2008, and would continue for at least 120 days after the proposed quiet period – through June 30, 2009. The service would be provided at the promotional price for at least one year after the customer subscribes.
• No Additional Charge for Equipment or Service. Recognizing that there is likely to be continuing consumer confusion even after the February 17, 2009 broadcaster DTV transition, operators would also provide the following additional assistance to all-analog cable households during and for at least 120 days after the proposed quiet period – through June 30, 2009 – to help them manage cable’s digital transition. If, during this period, an operator removes the analog version of a PEG or other channel from the broadcast basic or expanded basic tier and replaces it with a digital version of the channel on either of those tiers, the operator would make available to all-analog households, upon request, at least one free device that enables those households to view the channel. The device provided under this program would remain free for at least one year. There would also be no additional service charge for at least one year for the affected channel or, at the operator’s option, the broadcast basic or expanded basic tier where the digital version of the channel has been placed. Individual operators may choose to continue this program after June 30, 2009, or to initiate other similar programs after that date.
• Clear and Conspicuous Customer Notification of Any Channel Migration. Whenever operators cease transmitting analog PEG or cable programming services and begin offering those channels only in digital, they will provide clear and conspicuous notice to affected subscribers and franchising authorities not less than 30 days in advance. The notice would also inform subscribers that they have at least 60 days to avail themselves of the offers described above.

I hope this will help consumers during an admittedly confusing period.

Comcast has announced it will be deploying the new DOCSIS 3.0 wideband standard in more areas: the Baltimore market, including areas in Anne Arundel County, Annapolis and Howard County (where I live); Atlanta’s North Fulton County; and Chicago’s northern and northwestern suburbs, including northern Cook County, Lake County, McHenry County and the northern edge of Kane County.

Those deployments will actually be expanded soon, reaching the city of Chicago, western and southern Chicago suburbs, northwestern Indiana, additional Atlanta communities, and the remainder of the Baltimore region in the first half of 2009.

All of this follow previous deployments earlier this year in the Twin Cities (April); Boston Metro and parts of southern New Hampshire, Philly Metro, and New Jersey (October); and Seattle, Portland, Spokane, Eugene (November).  If you’ve been reading this blog, you could have followed the progress here to here to here to here to… Well, here we are in December.

By the end of 2008, about 10 million homes and businesses will be able to sign up for wideband service. Customers can enter their zip codes at www.comcast.com/fastestfast to find out if they live in a serviceable area.

Verizon is touting a PC Magazine reader survey that purports to show their FiOS Internet handily beats the cable industry’s modem service, particularly on speed and customer service.  You can read their press release here.

Golly, it sounds awfully devastating. They say that “Verizon’s FiOS connection easily surpassed even the fastest cable.” They claim that FiOS Internet was significantly faster than cable Internet speeds and customer satisfaction is better.

Well, I just had to go read PC Mag’s story for myself: Real World Testing: The Best ISPs in America. The thing is, the numbers just didn’t add up for me.

What becomes clear straight off is that it’s odd to compare one company’s offering – which happens to be very limited – to an entire industry. Cable operators are very diverse; some companies are larger than others and a variety of service levels are offered. In fact, PC Mag acknowledges this: “Debating which cable company is superior is not necessarily helpful… we found a large variation in speeds among the nation’s many networks.” In fact, even beyond comparing Verizon versus cable, it’s diffcult to reach broad conclusions. As PC Mag notes, “Not all ISPs are created equal… In fact, the best ISP in Virginia is almost certainly different from the best in Texas.” Heck, even the best in Austin, TX may not be the best in Dallas.

Which, of course, makes sense. FiOS is a brand new service. Verizon has spent thousands of dollars per household to reach their customers and deploy their product. And for all of that, as of September of 2008, FiOS Internet was being marketed to only 7% of US households (9.1 million homes). In that same timeframe, cable broadband was being marketed to 92% of US households (over 100 million homes).

Verizon touts speeds of 10-50 Mbps. Cable operators also offer a range of speeds, depending on the company and the market; these speeds have steadily increased over the years.  Verizon is quite proud of its “ultra-high-speed broadband,” which “reaches more than 10 million homes and businesses.” Of course, Comcast has deployed DOCSIS 3.0, which offers speeds up to 50 Mbps, and by year-end will be offering the service to 10 million homes.

Note also that PC Mag says that FiOS outperforms cable and DSL, a part of the quote that Verizon left out, presumably because Verizon primarily sells DSL service to the vast majority of its footprint. In fact, 65% of Verizon’s broadband customers receive DSL service.  In other words, the survey supposedly proves that FiOS beats cable and Verizon itself.

It’s probably also helpful to note that other surveys have shown satisfaction with cable’s Internet access. The J.D. Power and Associates 2008 Internet Service Provider (ISP) Residential Customer Satisfaction Study gave high marks to Cablevision, Cox Communications and Bright House Networks.

I’m not challenging the survey, even though it’s actually quite difficult to measure ISP speeds accurately and consistently. But it didn’t take long to figure out that Verizon’s claims aren’t quite as clear-cut as they claim.

For some time, I’ve been noting on my Twitter account the rising tide of people who have decided to cut the cord that ties them to servicing their television needs through cable, satellite or other wired means, instead turning to the Internet to be informed and entertained.  The topic is blowing up now, with Washington Post tech columnist Mike Musgrove now examining the issue in his column this past weekend (”TV Breaks Out of the Box“).

And I don’t even really need to respond, because Adam Thierer has given it the one-two punch at Tech Liberation Front.

• Cutting the (Video) Cord, Part 2
• We Don’t Need to Mandate “a la Carte”… It Already Exists

But if you want my take on the cost-savings of broadband video, refer to these earlier posts:

• The Roles of TV and the Internet
• Does A La Carte Always Make Sense?
• More Media Inaccuracies About A La Carte

On a related note, TV Week’s Daisy Whitney writes about using the Boxee service to watch Internet video on her television, as part of a cable-free experiment she’s conducting.

The Golden Swamp blog comments on Musgrove’s column by noting that more people watched Tina Fey’s portrayal of Sarah Palin online than on television, and suggests than one could then unbundle one chunk of content (such as a Palin skit) from an entire television episode (a 90-minute SNL). Judy Breck is using this approach to propose unbundling educational resources; others have applauded the ability of iTunes to allow you to buy just the songs you want instead of the whole album (David Lazarus called it the “iPod factor.”).

But as I have written on this blog in regards to “a la carte,” the economics may not pay off. If you unbundle one cable network from others, the economics change. Unbundle one show from a network, they change again. Unbundle a segment from the show, again.  That’s not to say that cable networks don’t or shouldn’t repurpose content. Comedy Central puts entire episodes of The Daily Show online for free. Some cable networks make content available to mobile subscribers or put clips on their websites. I’m simply offering a reminder that there are different approaches and different business models; not everything you want may be available on the platform you want and in the manner you want.

But things change and nothing is permenant. Stay tuned.

Less than a month ago, I wrote about Comcast’s deployment of DOCSIS 3.0 in New England and areas of Philadelphia and New Jersey, following up on the Minneapolis/St. Paul market. I mentioned that they expected to reach more than 10 major markets in the coming months.

Here we go: Comcast launches DOCSIS 3.0 in Oregon and Southwest Washington, including such communities as Aberdeen, Spokane, Beaverton, and Eugene. The Extreme 50 tier offers download speeds of up to 50 Mbps. Comcast will also double speeds for the majority of existing high-speed Internet customers at no additional cost.

The company has a web page which allows you to check if wideband is available in your area or to sign up for e-mail updates when it is rolled out to you.

UPDATE: Media coverage.

• Comcast Rolls Wideband in the Pacific Northwest
• Comcast’s 50 Mbps service comes to OR, WA next month

There was a column in the L.A. Times yesterday from David Lazarus entitled: “Let’s pay only for the TV we watch.” So, once again, back we go to the topic of “a la carte” cable service.

I get it. It feels like much of the content world is going to a pay-only-for-what-you-want model. Certainly, it feels right emotionally to only pay for the stuff you’re going to use. But this argument is almost always predicated on one premise: If I could pick and choose, my bill would go down.

Lazarus writes:

The average U.S. home now receives a record 118.6 TV channels, according to a recent report from Nielsen Co. But the dirty little secret of the cable industry is that the average subscriber watches only about 17 channels regularly.

That’s more than 100 channels that most cable subscribers are paying for but seldom if ever watching.

Because of the number of cable systems nationwide, it’s hard to get a fix on the average monthly bill. But many estimates place this figure at $60 to $70.

This means, if all channels cost the same, the typical cable subscriber is spending about $9 a month for the 17 channels he wants to watch and about $55 for the 101 channels he never sees.

There are big problems with the figures here, so let’s break it down.

If you’re getting 118.6 channels, that means you’re getting digital cable service, because analog can’t deliver that many. SNL Kagan estimates that the current average monthly price for digital service is $59.23 (expanded basic is $44.28), which not only provides a wide range of programming but also opens up the door to high-definition and Video on Demand.

The first important point that Lazarus overlooks is that the average cable subscriber has elected to switch from a cheaper level of service with fewer channels, in order to take a more expensive level of service with more options. Perhaps people like the greater choice that comes with digital?

For example, Cablevision recently reported that more than 90% of its video customers subscribe to digital service, which means that 9 out of 10 of its customers want more channels, not fewer. If you look at the largest cable operator, Comcast, you find that 69% of its video customers elect to subscribe to digital service. Industry-wide, approximately 62% of cable’s video customers have made the decision to receive more channels via digital service.

Lazarus continues:

But all channels don’t cost the same amount. By most accounts, the sports channel ESPN is one of the most expensive carried by cable systems, costing by some estimates more than $3 a month per subscriber. Many other channels are said to cost as little as 25 cents monthly.

I never watch ESPN. When I watch TV, it’s usually CNN, CNBC or a movie channel. On an a la carte basis, I could probably get the handful of channels I like for pocket change.

That, of course, is not what the cable industry wants.

Lazarus leaves out all of the relevant content here. Those figures he cites are carriage fees that cable operators pay programmers in order to carry those services and offer them to their customers (The real rates are found in private contracts; actual figures will vary by company and circumstances). It’s not what those networks “cost” and it’s not a reflection of what you would be charged in an a la carte world.

He also writes:

According to the FCC, average cable rates nationwide more than doubled over the last 10 years.

In fact, the FCC has not released any reports containing this information. There have been statements in the media to this effect, but the Commission has not released any reports to back up this assertion. It is irrelevant to compare today’s rates to the rates from more than ten years ago, since the nature and value of that service has changed over that same time-frame, but it is worth noting that over the last several years, the increases in cable rates have actually lagged behind inflation rates.

Read this post for the financial details, but the short version is that if each network lost the carriage they have now and then had to market and sell the channel to individual consumers, revenue goes down, operating costs go up and programming quality probably also goes down.  And the price you think you’ll pay for individual channels on an a la carte basis? You’re probably grossly underestimating it. The reason why you should pay for more than you watch is that it beats paying more to have fewer options.

Lazarus writes that cable needs to be brought “in line with the wholesale shift in how consumers now approach entertainment.” But different distribution outlets have different pricing models. If you saw Iron Man in the theaters, you probably paid ten bucks. The DVD is probably $20. Buy it on iTunes for $15 or watch it on VOD for $5. As I’ve written previously, different businesses operate on different models and it’s a mistake to assume they should all be the same.

Lazarus makes a comment early on about knowing “as a newspaperman” a little something about “outdated business model[s].” The print edition of his newspaper, the Los Angeles Times, is not sold on an a la carte basis, with the option of buying just the sports section or the business section. They did experiment a few years ago with putting their online entertainment section behind a wall and then charging a subscription fee for access. They later ended the experiment. The New York Times did something similar with its TimesSelect service. In these instances, the free market determined their actions, not regulation. Business models change over time and the models of the cable industry will undoubtedly do so as well.

If you look at the comments of this column, you’ll find some other reasons given why mandatory a la carte would probably be problematic. You could also check out some of Mike Masnick’s posts at Techdirt, such as here, here or here.

There are adults today who have never known a world without cell phones, color television or ATMs. These are people who have had cable television all of their lives (not to mention Internet access, DVRs, DVDs, and so on for a shorter period of time). This actually presents significant challenges to the cable industry.

To people who have always had cable, there is no difference between an over-the-air (OTA) broadcast channel and cable offerings. However, in both the business and regulatory environments, the difference between OTA television and cable matters. The business models are different, the ad revenue streams are different, the content regulation is different. Whether you run a local TV station or a cable system, a broadcast network or a cable net, you live with these differences everyday.

To viewers, those differences are invisible. They cruise around the channel lineup, probably not paying any attention when they’re tuned to a cable channel and when they’re looking at a broadcast station. They may be vaguely aware the rules for swearing vary between basic cable and networks like NBC, CBS, ABC, Fox, or the CW – although, as broadcast standards have changed over the years, the differences aren’t as stark as they used to be. Even if they see that distinction, they may not know this is because broadcasters use the public airwaves, while cable programmers do not.

Another example: If a cable programmer – Animal Planet, Comedy Central, Turner Classic Movies – wants to be carried by a cable operator, then that network has to make its pitch. It has to demonstrate the value it will deliver and then an agreement is negotiated. An OTA broadcaster can choose between Must Carry or Retransmission Consent status in order to gain carriage. As NCTA President & CEO Kyle McSlarrow pointed out in testimony earlier this year, “it’s not a free market negotiation.” For example, if negotiations between a cable operator and a broadcaster go badly, that operator can’t turn to an out-of-market broadcaster that carried the same programming.

You can argue that the average viewer doesn’t need to know the difference. They watch what they want to watch and they don’t care whether the programming is cable or broadcast. But you cannot ignore the impact of these differences. They can be seen all the time.

I’ve mentioned the issue of must carry/retrans, which I blogged about earlier when clashes between Time Warner Cable and broadcaster LIN TV were in the news. I’ve written multiple times about the distinction between the broadcasters’ Digital TV Transition and the cable industry’s migration to digital; just recently, my colleague Michael Turk responded to a Consumers Union letter that seemed to combine the two. I’ve written about the so-called “cord-cutters,” who aim to get all their TV via the Internet; I mentioned how little cable programming is available online as compared to broadcast television – an issue which is a direct result of their differing business models. (Will Richmond writes about this issue in more detail today.)

When discussing television, and the impact of various policy proposals, it is useful to be aware that the telecommunications and television industries are still rooted in historical traditions, no matter how much it seems like all the old rules are gone. While public policy may eventually catch up with the rapid changes of the last decade, we’re not quite there yet. We must remain cognizant of that in applying a one-size-fits-all model to services that vary greatly – whether you can see the differences or not.

On Thursday, NCTA responded to the Senate Commerce Committee in regards to a Consumers Union complaint about cable’s migration to a digital platform. The CU has questioned the impact of our migration on the simultaneously occurring digital transition for broadcast signals. In the letter, we sought to specifically address the Consumers Union allegations that our migration is an attempt to surreptitiously game the broadcast transition to fleece our customers.

My co-author Paul has written repeatedly on the distinction between cable’s migration to a digital platform and the broadcasters’ transition to digital broadcast. While the two share one common element – the movement from increasingly obsolete technologies to delivery methods that greatly increase consumer value – they are two completely different events.

You can refresh your understanding of the differences between the two by reviewing any of the following posts.

• Clearing up the DTV Transition
• The two digital transitions
• Separating the two transitions
• Once more - there are two transitions…
• More DTV Confusion

Without dwelling on the point, cable’s migration away from an analog platform to digital began years ago, in the mid 1990’s. Since 1996, cable has spent $130 billion dollars to create a robust platform not only for digital delivery of video, but to also provide valuable services like high-speed Internet and telephone service. We have been upfront about our plans to migrate our delivery to digital and the fact that 60 percent of cable customers now have digital is a pretty good indication that consumers also like it.

Cable operators could have simply set a date, contacted their customers and said, “On this date, you’ll need a box. If you don’t have one, you won’t get cable.”  Instead, we took a gradual, phased approach to the upgrade in an effort to cause minimal disturbance to our customers.  We recognize that no matter how carefully we manage the switch to digital some customers will be inconvenienced. Even a gradual shift to this new technology will cause some disruption.  However, the industry has done all it can to be upfront about the process, and to ensure that the unfortunate overlap of our ongoing migration and the rapid shift in broadcast technologies do not harm our customers.

Many of the complaints about our move from analog to digital center around the fact that customers will be required to obtain a set-top box, while they do not currently need one. This is true.  Note that all of cable’s competitors - satellite video services, Verizon, etc. - run on all-digital platforms and require every subscriber to obtain a set-top box.  By contrast, many cable companies plan on retaining at least some analog services.  No box will be needed to receive those services.

In contrast to cable’s digital migration, the DTV switch will occur on a flash-cut basis on set date, February 18, 2009.  The DTV transition was handled that way out of necessity - needing to free spectrum for emergency services and others – there has been a fair amount of confusion and fear of possible disruption. We have worked tirelessly to minimize the effects of that rapid change on consumers. We joined with the National Association of Broadcasters, the Consumer Electronics Association and a host of other organizations to educate consumers. We have aired public service announcements valued at hundreds of millions of dollars, and used many other tactics to help ensure that the American people are not inconvenienced by the cut over from analog to digital broadcasts.

The fact that a hard date was set for the DTV transition just as cable’s migration began accelerating does not mean that the two events are related.

Like the DTV shift, however, ours is also being done out of necessity. Our companies have millions of customers who are looking for faster Internet, less expensive phone service, increased hi-def viewing options, and more video-on-demand content. To meet that demand, it is critical for cable operators to free up the space consumed by analog channels.

Technologies like DOCSIS 3.0 - cable’s wideband Internet service - make use of the freed analog space. For example, for every four analog channels, DOCSIS 3.0 channel bonding can deliver 160 mbps - typically 10-50 times faster than current cable Internet service. In video terms, for every channel delivered in analog, cable operators can deliver 6 digital channels.

Analog channels, viewed through that lens, end up costing cable operators more in terms of lost opportunities for other services. They become more expensive to maintain, and that expense increases rapidly.

Think about it this way. Horse-drawn carriages were once a popular method of getting around. As people adapted to the new technology of automobiles, things began to change. Different types of road construction may have increased wear on parts. Parts for the old buggies may have been harder to obtain, or more expensive. The technology simply outpaced many consumers who were loyal to what they knew.

This migration is no different.

Today’s telecommunications platform requires hardware to connect. The cable industry (through CableLabs) has worked with the consumer electronics industry to develop technology to allow you to connect to digital service without a STB – first with the one-way Digital Cable Ready sets and now the interactive tru2way televisions. The first sets with this technology are already for sale in Denver and Chicago.  We are confident that consumers will find tremendous value in the digital services you will be able to get using these devices.

While there will, as mentioned, be some customers who are inconvenienced during our migration, cable has done all it can to keep the number impacted, and the disruption they experience, to an absolute minimum. Cable continues to feel the pressure of competition from both satellite and the phone companies. Our customers have choices, and we do not take that for granted. We work every day to provide great products with great value, and strive to keep every customer happy.

We often discuss the use of technology for purposes of entertainment, but it’s important to recognize that it can also be used for educational purposes.

Our sister organization Cable in the Classroom, the U.S. cable industry’s education foundation, is dedicated to this mission: To foster the use of cable content and technology to expand and enhance learning for children and youth nationwide.

A few years ago, CIC launched the Leaders in Learning Awards (LIL) in order to recognize outstanding educators, administrators, policymakers and other community leaders at the forefront of innovation in education.

There are profiles of this year’s winners on here; there is a short video and an audio interview on each winner.

All of which is simply prelude to announcing that the application process has opened for the 2009 LIL Awards. LIL winners - who typically represent a national cross-section of cable systems, programming services, schools and other educational institutions - are recognized annually in Washington, D.C., at the annual Leaders in Learning Awards Gala, scheduled for June 10, 2009. Winners receive a $3,000 cash stipend, an all-expense-paid trip to D.C., and the chance to visit with Members of Congress and other federal officials.

The application period will expire on Wednesday, December 17, 2008. If you know of a deserving educator, administrator, public official, or community leader at any level, in all disciplines, and in all kinds of learning settings, then suggest that they enter.

As with many other issues, cable leads the way in providing comprehensive coverage of the current U.S. presidential campaign. As the results come in tonight, cable will provide a wide variety of choices to follow events as they occur.

The CYNOPSIS newsletter provides a comprehensive list of cable networks who will be providing coverage, which will include (in addition to the usual wall-to-wall coverage from the cable news outfits) BET, TV One, Comedy Central (live one-hour special with Jon Stewart and Stephen Colbert), BBC America, HDNet, Current TV, and others. The Wall Street Journal provides some details of the networks’ plans: TV Networks to Boost Glitz for Elections.

User generated content will also play a role. Current TV will include content drawn from Twitter and Digg. NewTeeVee reports something else that sounds awesome:

Instead talking heads blabbing away, it will instead a provide a pulsating map set to a live DJ set by Diplo. Contributions will pop up from users on Digg, Twitter and 12seconds.tv.

Holy smokes.

Contentinople’s Steve Donohue takes a look at how CNN is “reaching next-generation viewers [by] relying on more user-generated content and social networking sites such as Facebook and Twitter.” Did you know that CNN’s Rick Sanchez has almost 30,000 followers on Twitter?