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Comcast Folds. No Dancing In the Streets Yet

by Jean-Louis Gassée

We may have dodged the Comcast/Time Warner bullet but we’re still far from getting rid of the antiquated set-top boxes and cable modems that only exist to protect juicy old business models.

We can breathe a sigh of relief: The proposed $45B merger between Comcast and Time Warner Cable (TWC) is dead. When the merger was announced with size-appropriate fanfare just before Valentine’s Day, 2014, normal humans saw the deal as clearly dangerous. How could “Concast”, a company that’s unanimously despised and indisputably abusive, be allowed to bear down with even greater weight on our collective neck?

In a salvo of Orwellian doublespeak, Comcast assured us that less competition and a more dominant provider would translate into a dream come true for consumers and competitors:

“Transaction Creates Multiple Pro-Consumer and Pro-Competitive Benefits, Including for Small and Medium-Sized Businesses…This transaction will be accretive and will yield many synergies and benefits in the years ahead.”

This Freedom Is Slavery agitprop is evidence of Comcast’s belief in our passive idiocy — but it’s more than that. It’s a testament to the company’s faith in its political chicanery. Combined, Comcast and Time Warner Cable spent an outlandish $25M trying to persuade lawmakers to endorse the deal, and showered campaign donations on both parties – a little bit more on Democrats. (And let’s not forget that Comcast CEO Brian Roberts is President Obama’s golf buddy.)

The political machinations don’t stop there. As uncovered by The Verge, Comcast ghostwrote pro-merger letters that were delivered to the FCC:

“…Mayor Jere Wood of Roswell, Georgia, sent a letter to the Federal Communications Commission expressing emphatic support for Comcast’s controversial effort to merge with Time Warner Cable… Yet Wood’s letter made one key omission: Neither Wood nor anyone representing Roswell’s residents wrote his letter to the FCC. Instead, a vice president of external affairs at Comcast authored the missive word for word in Mayor Wood’s voice.”

Dipping into this bag of tricks has worked before. After all, Comcast got away with an anti-competitive deal when it acquired NBC in spite of the obvious anti-competitive distribution advantage stemming from its huge Cable TV footprint.

Yet, Comcast insists that the sentiments are genuine, an “outpouring of thoughtful and positive comments“. The company pronounced itself “especially gratified for the support of mayors and other local officials, […] underscoring the powerful benefits of this transaction for their cities, constituents, and customers.

As Consumerist reminds us, this is the company that resorts to tortuous customer rentention tricks and foments a culture of customer disrespect. We’ve all experienced the poor customer service and bad attitudes, the last minute appointment cancellations, the phone reps who know nothing about our accounts. During a visit to Comcast Palo Alto,  one rep tells me I can self-install while another rudely insists that I ignore what I’ve just been told.

I can’t blame the customer service employees. Deprived by management of any ability to access data or to exercise judgment, they’re just following the script and emulating the examples set by their bosses. I blame the execs who don tuxedos and put on airs of benevolent prosperity at charity balls in Washington and Philadelphia. They’re the ones who created the culture and then feign bewilderment and concern when they discover that customers don’t like Comcast. About a month ago, when the merger hung in the balance, the @ComcastCares Twitter account suddenly displayed increased activity, after repeated apologies and the appointment of a Senior VP of Customer Experience last September.

But arrogance, mendacity, and poor customer service weren’t enough to stop the merger. ‘Twas Net Neutrality killed the Beast.

The Comcast/TWC deal was initially seen as a Cable TV merger, with a combined market share that approached 30% of Pay TV. But Pay TV is sliding into the past. Internet connectivity, broadband speed, and reliability are what matter now, and an expanded Comcast would have garnered more than 40% market share. That’s a portion that can’t be squared with the concept of a free (as in freedom, not free beer) and open Internet. After the FCC issued Net Neutrality rules — which were immediately challenged by our freedom loving carrier friends — the notion that 40% of public access and about 50% of “triple play” services would be handed to a single company became intolerable.

So, we dodged that bullet. But entrenched players and their convoluted business models still keep us far from where today’s technology wants to take us.

First, an old issue: Extortionate channel bundling. Why must we buy a bunch of channels we’ll never watch just to get the few we actually want? A la carte distribution should be the norm.

Second, everything ought to be on-demand from the Cloud. It’s not that much of a fantasy: today, I can set up a recording from my Xfinity set-top box and then watch it from my laptop or tablet anywhere in the world — especially in places where Internet access is better and less expensive than in the US. See the following graph and sigh:

Broadband Worldwide Price Performance

As Joe Palmer, a former colleague and current friend likes to say: It costs more, but it does less.

Lastly, our regulators should force carriers to let users connect a Brand X, Y, or Z box to the Cable network. Why must we put up with the clutter of a Comcast Internet modem and Wi-Fi access point, an Xfinity set-top box and DVR, and a Microsoft Xbox? Satya Nadella would love to sell us a single, universal Xbox. I have no doubt Tim Cook would look kindly on an all-in-one Apple “iBox” that replaces the two Comcast boxes and combines it with an Apple TV and a Time Capsule.

There will be dancing in the streets when we throw away today’s cable modems and set-top boxes. It will happen…but I won’t hold my breath. It will take time and repeated attempts to tear down the blockades erected by Comcast, AT&T, and the other carriers.

JLG@mondaynote.com

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TV Done Right: Still A Dream

 

As the strong reactions to even the slightest Apple TV rumor demonstrate, there’s a vigorous appetite for a simple, modern Internet TV experience. The technology is ready but carriers aren’t.

Last week started with Big Apple TV News in an authoritative-sounding Wall Street Journal article:

“Apple Inc. is in talks with Comcast Corp. about teaming up for a streaming-television service that would use an Apple set-top box and get special treatment on Comcast’s cables to ensure it bypasses congestion on the Web, people familiar with the matter say.”

Search for “Comcast” in a news aggregator such as Feedly (there are many other good choices), and you’ll see a wide range of reactions to the Apple-Comcast rumor. Given the heat the article generated, it’s odd that there has been zero follow-up from the main players — nothing from Apple and Comcast, no additional information in the WSJ or any other journal. When a deal of such importance is in the works, “people familiar with the matter” have a strong incentive to keep talking, to add color, to spin their side of the story. Of course, no one expects Apple to do much leaking, but the radio silence from Comcast spinmeisters is another matter entirely.

Philip Elmer-DeWitt offers the most likely explanation: The Wall Street Journal got played by someone intent on throwing a wrench into Comcast’s plan to acquireTime Warner’s cable operations. (This wouldn’t be the first time: Cellphone carriers have repeatedly used the WSJ to air their perennial Poor Me complaints about excessive smartphone subsidies.)

Echoes of the WSJ non-story ricocheted around the blogosphere. Some, such as this BBC article, make painful points about the abuse that US consumers undergo at the hands of broadband carriers:

Broadband Cost

As a sharp-witted Be engineer liked to remark: “It costs more… But it does less.”

Carriers take too much money for a user-hostile experience simply because they can. In most locations, cable companies have little or no competition, so there’s no reason for them to do anything more than milk the most profit from a cheap infrastructure. As Apple Insider’s Neil Hughes reminds us, the user experience isn’t a priority for cable providers. Indeed, as I write this from Paris, I have to juggle set-top box restarts and malfunctioning secondary content subscriptions only reluctantly allowed by the main provider.

It doesn’t have to be that way. No miracle is required to make our Cable TV experience easy and gratifying.

Consider today’s cable arrangement, simplified for our discussion. A coax cable is strung from the street into your basement or crawl space. You plug the coax into a signal splitter, connect one output to your cable modem for Internet access, while the others feed the TVs in your household.

Next, you run an Ethernet cable from your modem to your WiFi access point and maybe you also run a wire from the access point to your “most trusted” computer. Upstairs, we see a set-top box, an Internet TV streaming device (Roku, Apple TV, Boxee, or other), and, if your TV is of a certain age, a digital adaptor.

That’s four or five devices that you have to connect and, when things go wrong, disconnect, power down, and restart in the “proper” order.

It’s only too easy to imagine how a next-generation Apple TV could collapse this maze of impenetrable interfaces into one box: Coax in, Wifi and HDMI out and, miracle, one and only one remote! This is something that Apple seems to have the taste and resources to do well.

There are no technical obstacles, no new technology is required, no new software platform, just a careful integration job. I realize I’m veering dangerously close to the “mere matter of implementation” deception, but regardless of the amount of work it would take to integrate the various technologies, the benefit to the user would make the engineering effort worth it.

And there are many benefits:  We can throw away our DVRs as content becomes an app that we can stream whenever we want — the 60 Minutes iPad app is an elegant, flexible exemplar of the type. Rather than paying for a “package” of channels that are selected by the cable provider, we’ll be able to buy a la carte shows, series, and channels through iTunes or similar content vendor. We’ll be able to watch the free-with-ads version of a show, or we can pay for the ad-free edition.

Some day, the status quo will break, perhaps as the result of a patient encirclement and infrastructure buildup — a better, vertically integrated Content Delivery Network, both very much compatible with Apple’s playbook. As the reactions to the (possibly planted) Apple-Comcast rumor amply demonstrate, users are becoming increasingly aware of the disconnect between the experience that the cable companies offer and TV Done Right.

JLG@mondaynote.com

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Comcast and Us

 

Comcast tells us how much better our lives will be after they acquire Time Warner. Great, thanks! Perhaps this is an opportunity to look at other ways that we can “acquire” Cable TV and Internet access.

Comcast CEO Brian Roberts thinks we’re powerless idiots. This is what his company’s website says about the planned Time Warner acquisition :

“Transaction Creates Multiple Pro-Consumer and Pro-Competitive Benefits…”

Don’t read the full legal verbiage that purports to explain the maneuver. A more productive use of your time will be had by reading Counternotion’s pointed summary in Obfuscation by disclosure: a lawyerly design pattern:

(tl;dr: According to Comcast, the merger is “pro-sumer” if you “get past some of the hysteria,” it’s “approvable” by the regulators and won’t “reduce consumer choice at all”. Will it raise prices? “not promising that they will go down or even that they will increase less rapidly.” Given the historical record of the industry, it’s Comedy Central material.)

Let’s not loiter around Comcast’s lobbying operations, either — the $18.8M spent in 2013, the pictures of Mr. Roberts golfing with our President, the well-oiled revolving door between the FCC and the businesses they regulate. Feelings of powerlessness and anger may ensue, as trenchantly expressed in this lament from a former FCC Commissioner.

Instead, let’s use our agitation as an opportunity to rethink what we really want from Cable carriers. The wish list is long: TV à la carte instead of today’s stupid bundles, real cable competition vs. de facto local monopolies, metered Internet access in exchange for neutrality and lower prices for lighter usage, decent set-top boxes, 21st century cable modems, and, of course, lower prices.

These are all valid desires, but if there were just one thing that we could change about the carrier business, what would it be? What would really make a big, meaningful difference to our daily use of TV and the Internet?

Do you remember the Carterfone Decision? For a century (telephone service started in the US in 1877), AT&T reigned supreme in telecommunications networking. (I should say the former AT&T, not today’s company rebuilt from old body parts.) The company owned everything along its path, all the way down to your telephone handset — only MaBell’s could be used.

Then, in the late fifties, a company called Carterfone began to sell two-way radios that could be hooked up to a telephone. The device was invented by a Texan named Thomas Carter as a clumsy but clever way to allow oil field owners and managers sitting in their offices in Dallas to reach their workers out at the pumps.

AT&T was not amused.

“[AT&T] advised their subscribers that the Carterfone, when used in conjunction with the subscriber’s telephone, is a prohibited interconnecting device, the use of which would subject the user to the penalties provided in the tariff…”

Carterfone brought an antitrust suit against AT&T… and won. With its decision in favor of Thomas Carter’s company, the Federal Communications Commission got us to a new era where any device meeting the appropriate technical standards could connect to the phone network.

“…we hold, as did the examiner, that application of the tariff to bar the Carterfone in the future would be unreasonable and unduly discriminatory.”

The regulator — an impartial representative, in an ideal world — decides what can connect to the network. It’s not a decision that’s left to the phone company.

Back in the 21st century, we need a Carterfone Decision for cable boxes and modems. We need a set of rules that would allow Microsoft, Google, Roku, Samsung, Amazon, Apple — and companies that are yet to be founded — to provide true alternatives to Comcast’s set-top boxes.

Today, you have a cable modem that’s so dumb it forces you to restart everything in a particular sequence after a power outage. You have a WiFi base station stashed in among the wires. Your set-top box looks like it was made in the former Soviet Union (a fortuitous product introduction days before the merger announcement doesn’t improve things, much). You have to find your TV’s remote in order to switch between broadcast TV, your game console, and your Roku/AppleTV/Chromecast…and you have to reach into your basket of remotes just to change channels.

Imagine what would happen if a real tech company were allowed to compete on equal terms with the cable providers.

Microsoft, for example, could offer an integrated Xbox that would provide Internet access, TV channels with a guide designed by Microsoft, WiFi, an optional telephone, games of course, and other apps as desired. One box, three connectors: power, coax from the street, and HDMI to the TV set. There would be dancing in the streets.

But, you’ll object, what about the technical challenges? Cable systems are antiquated and poorly standardized. The cables themselves carry all sorts of noisy signals. What tech giant would want to deal with this mess?

To which one can reply: Look at the smartphone. It’s the most complicated consumer device we’ve ever known. It contains radios (Wifi, Bluetooth, multi-band cellular), accelerometers/gyroscopes, displays, loudspeakers, cameras, batteries… And yet, smartphones are made in huge quantities and function across a wide range of network standards. There’s no dearth of engineering talent (and money) to overcome the challenges, especially when they’re tackled outside of the cable companies and their cost-before-everything cultures.

Skeptics are more likely to be correct about the regulatory environment or, to be more precise, regulatory capture, a phrase that…captures the way regulators now work for the industries they were supposed to control. Can we imagine the FCC telling Comcast: “Go ahead and buy Time Warner…just one little condition, make sure any and all of your connection protocols and services APIs are open to any and all that pass the technical tests listed in Appendix FU at the end of this ruling.”

That’s not going to happen. We must prepare ourselves for a sorry display of bad faith and financial muscle. Who knows, in the end, Comcast might give up, as AT&T did after telling us how pro-consumer the merger with T-Mobile would be.

JLG@mondaynote.com

@gassee

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