more on : Strung Up With Cable TV

[Dave Farber <dave () farber net>]

-----Original Message-----
From: David Rosensweig <david () dlr endjunk com>
Date: Tue, 24 Feb 2004 16:47:24 
To:rob () twp com
Cc:dave () farber net
Subject: Re: Strung Up With Cable TV

rob,

i'm an american expat who recently moved to london (and a native
washingtonian). interestingly, parts of the scenario you describe seems
to already exist in the UK, where satellite is the incumbent and cable
the underdog: lower entry point for basic cable and everything is
digital. 

i subscribe to telewest, one of the two national cable companies (NTL 
is the other). both of them invested ambitiously in broadband and
infrastructure and have gone through massive bankruptcies and then
debt-for-equity swaps in the past year(s). since the dust has settled,
all TV is digital and the cost of cable TV is fairly low. i pay
monthly:

£25 for 500 kbps broadband
£13.50 for basic cable + basic phone line 

channels i get are:
http://www.telewest.com/html/sorter/sorter_package.htm#187

you can also subscribe to just the cable and phone line for 
£13.50/month (its priced so you have to get a phone line). that's
generally equivalent to $40 for broadband and $25 for tv, in terms of
equivalent UK spending power, despite being 1.9 dollars to the pound
right now. i should point out that the telewest organization is a
complete disaster (read: nightmare) in terms of ordering, provisioning,
customer service, billing, response to repair problems, and use of the
internet to accomplish all of the above -- but this
is all typical here.

david


> -----Original Message-----
> From: Dave Farber [mailto:dave () FARBER NET]
> Sent: Monday, February 23, 2004 8:05 PM
> To: ip () v2 listbox com
> Subject: Strung Up With Cable TV
>
>
>
> Delivered-To: dfarber+ () ux13 sp cs cmu edu
> Date: Mon, 23 Feb 2004 12:02:13 -0800
> From: Ray Everett-Church <ray () eprivacygroup com>
> Subject: FW: Strung Up With Cable TV
> To: dave () farber net
>
>                                        |Certified Trusted Sender(tm)|
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>
> Dave (for IP):
>
> A very intersting inquiry. But that's par for the course with Rob
> Pegoraro... a
> great tech writer.
>
> -Ray
>
> -----Original Message-----
>
> Strung Up With Cable TV
> by Rob Pegoraro
> Washington Post
>
>     When I awoke more than a week ago to hear that Comcast, the cable
> giant,
> proposed to buy Walt Disney Co., I couldn't help wondering: If this
> company
> could find enough change under the sofa to buy one of the biggest
> names in
> Hollywood, haven't I been paying too much for cable?
>
>   My own financial records say as much: Since 1997, my monthly bill
> for 
> expanded
> basic service plus HBO has gone from $44 to $70, including taxes.
> That's in 
> line
> with the 40 percent increase in cable rates from 1997 to 2002 that
> the
> General
> Accounting Office reported last fall, a price hike "well in excess"
> of the
> 12
> percent inflation rate over that period. Why is this service not
> following
> the
> better-faster-cheaper path of the rest of the telecom universe?
>
>   My cell phone costs less than it did in 2000 and now works across
> the
> country
> without roaming charges while providing me with free long-distance
> calling.
> My
> Internet-access costs have gone up, by $10 a month -- but in return
> for
> upgrading from a dial-up account on a second phone line to a DSL
> connection,
> I've seen an 11-fold increase in speed.
>
>   Satellite-TV customers have benefited from this trend too. DirecTV
> reports
> that, since it began carrying local broadcast channels in the
> Washington 
> area in
> late 1999, the price of its equivalent of expanded basic plus HBO has
>
> dropped $2
> a month, to $52.
>
>   Meanwhile, cable prices have remorselessly ratcheted up every year,
> as if 
> they
> were college tuition rates, health care premiums or property taxes.
> This has
> been good for Comcast, which netted a 38 percent "operating cash
> flow"
> margin
> last year on its cable services. But what about the rest of us? Why
> do cable
> rates stay so high?
>
>   Brian Dietz, the National Cable and Telecommunications
> Association's
> senior
> director for communications, pointed to three factors (after
> expressing 
> surprise
> at the size of my cable bill): programming, customer support and
> system
> upgrades.
>
>   The price of content has definitely gotten out of whack, up by as
> much as
> 34
> percent from 1999 to 2002, the GAO found. Sports broadcasts increased
> the
> most,
> up to 59 percent. (One reason, the Federal Communications Commission
> noted
> in a
> study three weeks ago, is "rising players' salaries" -- yes, part of
> this is
> George Steinbrenner's fault.)
>
>   But cable and satellite operators are in the same boat: About a
> third of
> Comcast's operating costs last year went into programming, but
> DirecTV had
> to
> spend still more, about 40 percent.
>
>   Another reason is escalating customer-support expenses, as cable 
> operators have
> added 24-hour, toll-free help desks. But this isn't unique to cable
> either.
>
>   The best explanation lies in cable operators' system upgrades and
> rebuilds
> --
> $85 billion worth since 1996, Dietz said. This has allowed them to
> offer
> such
> add-on services as digital cable, video on demand, high-definition
> TV,
> Internet
> access and even telephone service.
>
>   As a result, cable has become a tough rival to Verizon in Internet
> access;
> it
> also has rolled out much better video services. But is it fair to
> pass the 
> costs
> of these extras on to people who aren't using them? Verizon, which
> lives in
> a
> stricter regulatory environment, couldn't do this; jacking up phone
> rates to
> cover upgrades to its DSL or wireless operations would be illegal.
>
>   Comcast's corporate communications director, Tim Fitzpatrick, said
> the 
> ability
> to upgrade to these extra services is itself of value and worth
> paying extra
> for: "It's choice, convenience and control," he said Friday.
>
>   Focus on that first factor when you decide what to do about cable's
> cost.
> If
> you can get DSL or another non-cable broadband Internet service and
> can
> receive
> a satellite signal, you don't need cable. So get rid of it. Satellite
> does
> the
> same job as cable TV for a lot less, which is why it has gobbled up
> about 22
> percent of the so-called multichannel video market since 1993.
>
>   If your home is like mine, without the clear view of the southern
> sky
> needed
> for satellite TV, you're still not totally out of luck. The biggest
> secret
> in
> the cable business is that you can purchase just basic cable, then
> add HBO,
> Showtime or another pay channel, sparing yourself the $30-and-up cost
> of
> expanded basic service.
>
>   Last, you can always retreat to over-the-air TV. Or not watch TV at
> all.
>
>   Neither Comcast nor the cable industry as a whole promises any
> quick
> relief
> from this inflationary spiral. But there are two steps these
> companies could
> take.
>
>   The easy one would be to give customers more than three or four
> tiers of
> programming to choose from, instead of marketing the myth that we
> should buy
> TV
> in 50-channel blocks. (Who has time to watch them all?)
>
>   The harder one would be to use their capacity more efficiently by
> finally
> retiring analog cable, passing the savings to customers. While
> digital cable
> is
> sold as an extra, each basic-tier channel continues to go out in
> analog
> form,
> sucking up eight or nine times the bandwidth of a digitally
> compressed
> channel.
> Only the satellite services and the few built-from-scratch cable
> systems,
> such
> as Starpower, are all-digital -- and, not surprisingly, cheaper.
>
>   For an established cable system to go fully digital, all its
> customers
> would
> need digital converter boxes. But even with that hassle, "you could
> still do
> basic cable digitally for much less," said Dick Green, chief
> executive of
> CableLabs, the industry's Louisville, Colo.-based research and
> development 
> body.
>
>
>   Then there's plan C for the cable industry: Keep raising prices as
> if its
> monopoly still endured, and watch the remaining customers flee to 
> satellite, DVD
> rentals, the Internet and technologies not even invented yet.
>
>   Living with technology, or trying to? E-mail Rob Pegoraro at
> rob () twp com.
>
> Would you like to send this article to a friend? Go to
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> 2004
> Feb21&sent=no&referrer=emailarticle
______________________________________________________________________
> From: ray () eprivacygroup com
> To:   dave () farber net
> Date: 23 Feb 2004
>
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