Ars Technica reported two excellent stories about Time Warner Cable and bandwidth caps this past week.  After several complaints and a few senators’ involvement, TWC finally abandoned the use of explicit bandwidth caps last week.  Though the move was applauded by many including consumers, Senator Chuck Schumer and the the National Cable & Telecommunications Association, some users still face issues.  Though the cap was removed, the company still maintains its “Acceptable Use Policy” which has led to frustrated user Ryan Howard seeing his internet connectivity shut down.  In this case, Ryan was explained that he download 44Gb of data in one week which apparently causes a trigger within TWC’s systems.  Though the full story goes into further details but we certainly feel that ghost caps that consumers are penalized for certainly is a turn for the wrong direction.  Though we will keep following bandwidth cap issues here, a blog recently started about that very topic should you wish to learn more about that specific issue, check out StoptheCap.com.

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There has been a debate brewing for decades about the importance and the role of networks who provide content and that of those who transmit it to end-users.  Each side, of course, supports its own self-interest.  Over the past few days, several fairly heated discussions have occurred between companies on both sides.  Most notably, Viacom recently threatened to pull some programming from Time Warner Cable.  In light of these problems, the news of CBS and Time Warner Cable reaching a fresh broadcasting deal without major fireworks led to a large sigh of relief from the industry and all of us as consumers.  

Cable companies have also been increasing their rates, a move parallel and related to these discussions.  As we’ve mentioned, Comcast (Etilities Forum) is planning to raise rates in February, and today Time Warner Cable (Etilities Forum) announced a planned increase in fees as well.  A spokesperson for the company explained that the move is required in order to overcome higher fees from programmers: “The programmers, we are wholesaler distributors of them, we have to purchase their product, biggest expense”.

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Compared to the slew of new media delivery solutions that have developed over the past few years like  iTunes (Etilities Forum), Netflix (Etilities Forum), Hulu (Etilities Forum) or Joost (Etilities Forum), Cable TV seems a bit like a dinosaur.  Along with radio, it is one of the older content delivery services, and it shows.

Research group Parks Associates released a study in late October explaining that Cable TV has customer satisfaction issues compared to Satellite TV and IPTV providers.  Although the details of the study are not publically available, my thought is that this is primarily due to a shift in how much control consumers expect to have on what they watch and when they watch it.  The old, familiar model is that you need to tune in to the right channel at the right time.  You arrange your schedule around the TV network schedules and hope you don’t get interrupted.  What products like Tivo (Etilities Forum) and the Apple TV have introduced is the ability to make your own entertainment schedule.

The answer to this was Digital Cable, specifically Video On Demand (VOD) offerings which let you select movies, TV shows or documentaries out of a library of media that your subscription gives you access to.  But there are still problems.  First, VOD tends to have a more limited selection than the alternatives listed above.  Second, the interface is often sluggish and poorly designed.  Lastly, and perhaps most importantly, this offering still rides on a service that is very expensive: according to the FCC, cable prices have more than doubled over the last decade!

The main thing Cable TV has going for it is that it has a very large established consumer base, and old habits die hard.  But Cable providers should probably realize, for their own good, that we are in the middle of the danger zone: a tough economic downturn that makes everyone try to save money.  Once enough people realize the alternatives out there, Cable TV will need to make a choice: adapt or wither.

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Variety reports that Time Warner Cable (NYSE:TWC) is reducing the time between releasing the physical DVD and Blu-Ray versions of movies and the corresponding online, on-demand versions of the same titles in order to fight piracy.  Certainly, By increasing the availability of their material, this move – albeit late by several accounts – is anticipated to reduce the “need” to steal it.

The article explains how and why Time Warner is implementing this program and the competing offerings from other companies who have teamed up with Comcast (Etilities Forum).  It also provides an excellent high-level view of the video rental/sale/download market.  The only question left unanswered is how cable providers will reconcile the fact that it’s good business for them to make more material available online while at the same time restricting the bandwidth available to customers.

It certainly seems that by doing this, the cable operator hopes to charge you for downloading a movie and charge you again for exceeding your allocated bandwidth – a definite concern of consumers.  What’s also left to be seen is how the FCC may view the next logical (and, at this time theoretical) step, which would be that a cable provider only allows fast or unmetered access to online rentals of movies by its own studio.  For example, Time Warner Cable and Warner Brothers Studios are both subsidiaries of Time Warner, Inc. (NYSE:TWX).  This kind of self-favoring treatment would clearly run afoul from the hopeful environment of network neutrality.

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The seemingly unending debate over network neutrality heated up this week as the Federal Communications Commission (FCC) blasted Comcast (Etilities Forum) regarding their undisclosed limitation of Peer-to-Peer (P2P) traffic.  This type of traffic is often used to exchange large files and media, and generally requires a tremendous amount of network bandwidth.  In the past, Comcast had targeted certain P2P applications such as BitTorrent, LimeWire, and Vuze, degrading the performance of their consumers’ Internet connections for those and similar applications.  Such targeted enforcement violates the fundamental premise of the “net neutrality” concept.  That concept, although simple, strives on the idea that a provider should not restrict access to specific content, sites, or platforms.

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Time Warner Cable seems to be making the news lately.  A New York Times article today announced that the “City of Los Angeles Sues Time Warner Cable” poor customer service.  Though the consumer community in the general Los Angeles area has been generally dissatisfied with customer support, the city took action accusing the cable company of “unlawful, unfair and fraudulent business acts and practices and deceptive advertising” bringing general cheers across the existing customer base hoping to see changes.    

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The rest of the IT industry, from entertainment brought to the home, or IT infrastructures brought to large corporations focus on “on-demand” services, a term coined not so long ago by IBM.  ”On-Demand” often refers to the pay-per-use concept which is applied to utilities such as electricity, water, gas, whereby you pay what you use, no more, no less.

At home, things such as pay-per-view, online movie rentals, and others are considered on-demand items.  The concept of on-demand has been difficult for many companies to implement due to the additional burden placed on the provider to plan appropriately over large quantities of users.  So instead of planning appropriately, many providers, particularly in the cell phone industry use the overage system whereby the onus is on the individual consumer to select an plan that they will use and any minute above the basic plan and the rates are exponentially expensive.

©2008-2009, Gallop Services, Inc. All rights reserved.