Fast Net News, DSL Prime, DOCSIS Report

Washington, D.C. January 19, 2008 21:30 "Cable rates are 50% higher, even when adjusted for inflation," Kevin Martin wrote Congress a few hours before he left office. He also proposed fines because "9 out of 13 cable companies did not provide the Commission with all the information we asked." Some just say "Martin hates cable." The problem with attributing this to Martin's animosity is that his comments here (and on issues like open set tops, must carry LPTV by 2012, etc.) have substantial truth.

The right answer is to solve the problems, tone down the rhetoric, and stop suing the FCC unless desperate. Nearly none of these decisions have a big impact on cable's bottom line. Most would barely be a footnote on a financial report.  Comcast has gone nearly "neutral" without issuing a profit warning, and DOCSIS 3.0 upstream probably solves the problem. Cablecards are expensive, but the cost could have been avoided by providing enough support so that downloadable access (DCAS) wasn't delayed for years. Today, adding the low power TV stations creates bandwidth problems, but when switched digital becomes standard in almost every network the cost will be minimal. A la carte is a silly issue to fight so hard. They tried it in Hong Kong, and nearly everybody took the package anyway. As cable has been arguing in D.C., the package is a much better deal for most people.

Above all, cable should provide policymakers the information they need to do a good job. In France and Japan, public records show in detail where broadband is available. They would be horrified if the data were held back as "confidential." British Telecom cooperated closely with the government supported BSG to provide the cost data to decide broadband policy. In Canada, Bell was required to provide extensive details of their network internals. They clearly disproved that eliminating throttling would be inexpensive. They had congestion at less than 5% of their DSLAMs, all of which were scheduled to be replaced already. In the U.S., Comcast would not provide their actual traffic growth statistics to me as a reporter or to the FCC. No other country would allow companies to hold back from the regulator key information on important issues. They can't do a good job without the information.

In return, cable can look for help on some of the really big issues, like the $4B retransmission consent fees the local stations are asking.  Giving station owners such a windfall was a bad policy mistake. The stations are asking 35 to 75 cents per month per subscriber for each station, and it's choking the smaller cablecos. To recover that cost would require price hikes of  $3-7. Comcast and Time Warner are facing retran requests of over $B; upgrading CMTS for virtually eliminate congestion probably would cost a tenth of that. The price cable pays for using electric and telephone poles would double and triple under some plans; the FCC can make sure those fees are reasonable. The FCC under Martin established rules that would prevent cities from "unreasonably" denying franchises for cable expansion. The definition of "unreasonable" wasn't clear, but they could be a major ally in future battles. Time Warner just had to take a $15B writeoff for the calue of cable franchises. That's a great deal of money. (It wasn't because of franchise issues, however. They had overpaid for Adelphia and other acquisitions and wanted to get them off the books begore they split with the mother company.)

There's $6B on the table this year for "broadband stimulus." That money is targeted to the unserved 5% of the country and can be thousands of dollars per line. The government is ready to pay for expansion to those areas, and also for upgrading the 3% who can get cable video but not a modem. (I think those are mostly old, small analog systems, but can't get good information. Pointers to data very welcome.)  They must spend the money to create jobs within the next 6-12 months, so cablecos ready to move quickly can really cash in.

Every FCC commissioner believes their responsibility is to provide great service at affordable prices to everyone in the country. The way to influence them is to do just that. Make sure your DOCSIS 3.0 build includes 50 meg upstream as well as downstream, which will also be a key competitive advantage over the telcos. Verizon will soon be selling 20 meg upstream to one fifth of the nation, but AT&T is sticking with 1 meg or so. Cable can clobber them. Follow Comcast by increasing the focus on better customer support. Everyone at the FCC reads the surveys and news articles that have been lambasting cable, not without reason. Match Verizon in the support cable's D.C. people offer the policymakers. Verizon's David Young is extremely effective, because he is a senior engineer in a town of lawyers who don't understand networks. Comcast had nine lawyers on the Net Neutrality filing and not a single engineer. Comcast's claims looked very silly when MIT professors Clark and Reed pointed out serious errors. They are two of the most respected network engineers on the planet. Clark actually was a leading skeptic on NN because he believes in minimal regulation, but he wanted to get the facts right.

Martin may or may not hate cable, but the incoming Obama team will be much tougher. Susan Crawford on the transition team was one of the most eloquent proponents of Net Neutrality, and new FCC Chair Jules Genachowski made sure it was in the Democratic platform. Blair Levin on the transition team signalled last week they will expand, not decrease, efforts to build competition. Everyone on the team is in favor of more voices reaching every home. Nearly all FCC folks on the transition team have more than a decade of experience and will presumably choose their peers for permanent appointments. No one at the FCC will be like Commissioner Tate, easy to win over because she had no depth on the issues. The folks coming in range from extremely intelligent and skilled to positively brilliant; I know most of them as a reporter, and these are some of the best people in the business. They have the ear of the President and a strongly Democratic Congress.

The President mandates they make changes. The first substantial change due to the new regime was a few weeks ago. The team yanked $10B in "broadband stimulus" set to go to the Bells despite enormous political pressure. They are privately but deeply committed to increasing wireless spectrum by half or more to bring in new entrants and services. They wrote the rules for the 1996 Telecom Act which created unbundling and required telcos to share the connection home. That may seem unlikely in the U.S., but the Dutch are doing just that and Dutch broadcasters RTL and SBS have backed the plans after difficulty getting carriage. The policy people here are watching.

A different approach will be needed for a different administration. Obama and his people are not wild-eyed radical, particularly in communications policy. But they are far from the business-loving regime we've had the last eight years. The old tactics that did poorly with Martin will do even worse with Genachowski.

Robert Briel reported the Dutch broadcasters backing open cable.