[opendtv] Re: Congress to cable customers: Stop your whining | InfoWorld

From: Craig Birkmaier <brewmastercraig@xxxxxxxxxx>
To: opendtv@xxxxxxxxxxxxx
Date: Sat, 23 Jan 2016 09:11:29 -0500

On Jan 22, 2016, at 9:32 PM, Manfredi, Albert E
<albert.e.manfredi@xxxxxxxxxx> wrote:

Craig Birkmaier wrote:

With Sling TV you can only access one stream at a time.

Or you can buy another subscription. The point is, Craig, you seemed to have
been trying to generalize that as a limitation of OTT site, or of broadband.
Which is of course absurd, right?

No Bert. It is a limitation of the Sling TV service, which is one reason the
price can be much lower than traditional MVPD bundles.

What we are talking about here is the perceived value of a service. Let me take
a shot at Apple for a change...

Apple launched Music, their all you can eat streaming music service last
summer. It provides access to millions of songs and customized streaming music
"stations" for up to four users. It costs $9.99/mo.

My wife is not a big music fan, and the kids have moved out. So for me the
value is not that good. I pay $25/yr for iTunes Match, which stores all my
music in the cloud; it also included customized ad free streaming stations. But
the streaming stations are being killed at the end of this month. So I would
need to subscribe to Music at $120/yr to replace the feature they are killing.

Apple also allows parents to set up iTunes accounts for their kids - it is not
uncommon for parents to put $10/mo into these accounts, or to give them those
iTunes gift cards to buy music. So for a family with two kids, Music is a good
deal - a net savings.

Sling TV may be a good deal for a single Millennial, but when they start a
family it comes up short. A traditional MVPD bundle let's each member of the
family watch their favorite channels - no limit on the number of
viewers/streams. This is why we are seeing Millenials signing up for MVPD
service as they get a bit older and start families.

As we move to the world you envision, where everything is streamed over the
Internet, it is important to recognize the usage patterns and how they impact
both broadband provisioning and the way content will be sold. A family of four
will need a much bigger data bucket than a thirty something that is single. And
they will need a faster service to support multiple simultaneous users. On the
other hand, a retired couple that watches TV ten hours a day or more may need
more data, but only one or two simultaneous streams.

We will see many new ways to address these competitive options...

You will have to be a lot more specific to convince anyone of that, Craig.
What matters most is congestion, to the ISP networks.

Same thing. Congestion may be caused when you have a bunch of homes on a node
all streaming video simultaneously; it only gets worse if some of those homes
have 2-4 people each viewing different programs.

Each node has a finite amount of bandwidth for broadband; at some point all of
that bandwidth may be in use, which results in congestion during peak demand
periods. If this happens every night something has to give. Customers may
switch to another service or the ISP must upgrade service to those homes.

If everyone consumes their allotted bits simultaneously, every day, it's
quite different from consuming those exact same bits on a staggered schedule.

Of course. But you cannot force people to use their broadband in staggered time
slots. Peak demand for TV entertainment is typically in the evening. If
everyone consumes their allotted bits at the same time, the node must be
designed to handle those peaks; the rest of the day traffic on the node will be
well below peak capacity.

Hate to burst your bubble, but this is why the "broadcast" MVPD bundles use the
bandwidth they are assigned very efficiently. Lot's of users accessing the
service simultaneously.

So I do not buy that caps are the best way to charge for service, although in
conjunction with speed, the ISPs can sort of muddle through and approach
something relatively "fair." Another obvious approach would be to charge
different rates at different times of day, for example.

In general, I think the current data caps are fair. I've never reached them on
my wired ISP service. We have a family plan with four phones - the kids moved
out but mom still pays for their phones. We had a plan where each line had an
individual cap - we were getting overage charges every month on one or two
lines. We switched to a less expensive plan with a 10GB shared but bucket; we
have never exceeded the cap and unused data rolls over, so we can splurge
occasionally and stream video on our phones or our tethered iPads.

Time dependent pricing may be a partial approach - that is what the electric
utility industry is moving towards. But the power industry has a different
"problem." They may need to bring another generation unit online to meet peak
demand for short periods of time; but that generator has excess capacity that
can be sold at other times. For business users it is possible to stagger some
demand and take advantage of lower rates. For example, I could run the chillers
at the brewery during off peak periods, as they are essentially storing BTUs.

Businesses already pay a premium for broadband service, but their peak is
mostly during the day when the networks serving homes are underutilized. The
real costs of running the Internet - and they are considerable - are power for
the huge server farms, interconnect bandwidth, and the last mile
infrastructure. The last mile does not consume much power, so time based
pricing may not have much appeal. But interconnect bandwidth is metered, which
is the reason there are significant benefits to edge servers that can take
traffic off the backbone.

Do you really not understand how the scheme is easily abused? Really, Craig?

I understand that competitive markets usually deal with such abuse. Where we
see abuse is when there is no competition. That's why we have anti-trust laws.

It is when government creates monopolies and oligopolies that we see the worst
abuse - for example the high cost of MVPD bundles.

The courts have NOT decided if the FCC exceeded its authority
...again.

You're dreaming. The courts DID NOT EVEN IMPLY that the FCC couldn't mandate
neutrality.

To date the courts have only said the FCC lacks the authority to regulate net
neutrality under the classification they were using. The companies that have
taken the Title II classification to court are basing their cases on their
belief that the FCC does not have the authority to classify broadband under
Title II.

The courts will decide, and depending on the outcome, Congress may come up with
a legislative solution.

But they never did.

Actually in a few cases they did. But they really could not do anything, as the
content owners and MVPDs took advantage of a gaping loophole in the law to keep
increasing rates - they just had to add a few new channels every year.

Maybe they should have, I completely agree. You continue to miss that the
rates charged by non-competing services cannot naturally self-regulate. Maybe
you need to be well versed in control theory to ghet this pointy intuitively.

I have not missed this. I talk about it all the time.

The problem is that the content owners are allowed to leverage a few popular
channels to force everyone to buy a bunch of channels hardly anyone watches.
About a third of the cost of a MVPD bundle is subscriber fees paid to the
content owners. The rest is to cover infrastructure and operations, and there
is not a great deal of difference between the cable, DBS and FIOS systems with
respect to these costs.

You again miss the point. With dial-up, any individual home had access to a
virtually unlimited number of ISP networks.

So?

The service was VERY limited and largely undifferentiated. AOL did try to
create added value by building a walled garden for content, but the open Web
proved to be the best solution. As soon as alternatives became available
consumers stopped using acoustic modems. I was one of the first AT&T DSL
customers in Gainesville; I was fortunate to live close to a CO and did not
have to wait until AT&T built risers to extend the range from the COs.

With broadband service, instead, the FCC did not insist that the provider of
that wide pipe had to allow any and all Internet providers access to it. So
this benefitted the broadband providers greatly, allowing them to monopolize
Internet access in that neighborhood.

Actually they did require the telcos to open up their networks. For a period of
time there were third party resellers of DSL. But the telcos took it to court
and won. The FCC could not do this for cable broadband as cable is not
regulated under Title II.

This is a major reason the Courts may block the FCCs latest reclassification of
broadband - it all depends on whether the courts decide that the FCC now has
authority to classify broadband under Title II.

It would take an IDIOT!

Another absurd comment. All it takes is an excess of greed. It was beginning
to happen already. Sometimes companies simply become too greedy for their own
good. Just as MVPD rates continue to rise considerably faster than inflation.
Or do you think that too would "take an idiot"?

excess of greed = idiot

Especially in a "market" that operates as an oligopoly created by politicians
and regulators at all levels (city, county, state, federal).

There is a well orchestrated dance that allows this situation to exist. The way
the cable industry frustrated the mandate to open up the market for STBs is a
great example. Likewise, the use of retrans consent to take control of cable
content, then keep driving up rates is another example.

So everyone keeps pushing the limits, but they are not idiots.

Give it up Bert. They are not listening to you.

The same odd, frightened comment you've made many times. And how have I
answered it every time, Craig? LISTEN TO THEM. What has you so terrified?

I do listen to them.

Les Moonves explaining why CBS will not license content for Apple's TV service:

“This will happen,” he said. “It has four major networks and 10 cable networks,
let’s say, and the price point will be in the $30s, $30 to $35, $40 maybe.
People will not be spending money on channels they don’t want to watch."

But he went on to say that we're not there yet. It will happen...

someday.

You still don't get it. What is upstream of the DSLAM? Something dedicated to
each household?

No. Connection to the Internet.

The simple fact is that the trade scribes never understood this point. But
instead of informing yourself, you took them at their word. Let me try this:
the ATM pipe ends at the DSLAM. When using ADSL, you DO NOT have a dedicated
circuit, let alone one with QoS guarantees, all the way to the video server
or other Internet source. That's not how it works, Craig.

Nobody has QOS guarantees all the way to the source on the public internet.
Only private dedicated networks can do that, and they can still break. It is up
to the telco to properly provision the CO to assure that there is adequate
Internet access for their customers. The point is that customers are not
competing with one another for bandwidth, unless the telco has problems with
the interconnects to the Internet. And yes, I did experience this from
time-to-time with DSL service.

I have only two companies to choose from, for any Internet service: Cox and
Verizon. It's not possible that you can't understand this. It's also not
possible that you can't see how this is drastically different from the days
of dialup.

So you do not have Verizon FIOS in you neighborhood, only Verizon twisted pair
telephones service?

Wrong. Only the laggards still use acoustic modems.

That's simply not a credible option. It is even unreasonable to install the
periodic OS updates with dialup.

Yup. That's why I said it was an interim solution, not the real enabler of the
Internet. It was sufficient to get some of us hooked on the concept, which in
turn created the demand for broadband.

More absurdity. Just ask people, for heaven's sake.

You might not like the answer...

Regards
Craig

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References:
- [opendtv] Re: Congress to cable customers: Stop your whining | InfoWorld
  - From: Manfredi, Albert E

[opendtv] Re: Congress to cable customers: Stop your whining | InfoWorld

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