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Steady growth in broadband revenue has helped cable operators offset a stagnant pay-TV market in recent years. But now, the industry is resisting pressure from local governments, businesses and universities to offer ultrafast Internet service, opening the door to new competitors.
Google and a host of smaller companies working in partnership with cities like Seattle and Urbana (IL) are building fiber-optic networks that offer speeds of a gigabit per second. That's more than three times as fast as the maximum speeds available to residential subscribers of major cable or phone companies. Other Internet services, such as Verizon's FiOS, which already bring fiber lines all the way to customers' premises, could be boosted to gigabit speeds relatively easily by upgrading the equipment in central offices and consumers' homes, experts say. Cable companies, meanwhile, are holding back. To offer the faster speeds across their service areas alongside other services like television, cable operators would have to spend billions more on their networks. Unlike fully fiber Internet service providers, cable companies typically run fiber to neighborhood "nodes." Less-efficient coaxial cables connect those nodes to what can be hundreds of subscribers, who effectively share bandwidth. About half the nation's cable systems would need more fiber before they could deliver gigabit speeds to all customers and continue offering television, says John Dahlquist, vice president of marketing for Aurora Networks Inc., a company that sells network infrastructure to both fiber and cable operators.
Speedier Internet Rivals Push Past Cable
Red Wing (MN) is one of many city governments, schools, hospitals and local businesses that are pushing for ultrafast broadband networks.
Partnerships such as U.S. Ignite, a group backed by the National Science Foundation, are leading the way to connect communities with researchers and designers creating high-bandwidth software in fields like education, public safety and health care. While cable executives say there aren't enough applications requiring gigabit-a-second speeds, many of these groups disagree. They argue, for example, that high speeds could support more-sophisticated severe-weather alert systems and allow high-quality, virtual doctor-patient consultations on a large scale.
Cities, Schools Seek Faster Broadband
Time Warner Cable, which had warned of its intention to drop little-watched TV channels, agreed to at least temporarily extend carriage of several such channels ahead of the Dec. 31 deadline for renewal.
While the cable operator dropped independently owned channel Ovation at midnight Monday night, as it had previously said it would, it agreed to temporarily keep two channels owned by AMC Networks Inc., IFC and WE tv, on its lineup, the companies said Dec 31. Time Warner Cable also reached a deal with Crown Media Holdings to continue carrying Crown's channels, including the Hallmark Channel. Current TV, the news channel cofounded by Al Gore, also remained on the air. Current TV's carriage deal wasn't up for renewal but it was at risk of being dropped due to an unusual condition in its contract with Time Warner Cable that it needs to meet minimum audience thresholds.
Time Warner Cable Keeps Some Small Channels
[Commentary] Internet Service Providers (ISPs) regularly insist that data caps are a legitimate tool to ease congestion on their networks and an effective way to signal value to consumers. But, as we have argued, data caps do not resolve congestion, are confusing to consumers, and lend themselves to unfair and anticompetitive behavior. In light of this disagreement, it is a promising sign that a recent study published by the National Cable & Telecommunications Association (NCTA) and co-authored by Steven S. Wildman, the new Chief Economist of the Federal Communications Commission, moves beyond some of the previous rhetoric and takes a significant step towards focusing the debate on real areas of conflict. Unfortunately, it stops short of recognizing a critical distinction in understanding the heart of the disagreement.
The debate around usage-based pricing can only move forward when people stop talking past each other and start focusing on real policy differences. By moving past congestion and examining price discrimination, this report marks a significant step towards that goal. However any argument that focuses on price discrimination alone, or that relies on assertions that are merely true for price discrimination generally, do this issue a disservice. Hopefully the next report from ISPs will try to explain why usage-based pricing, and not just price discrimination, is a reasonable way forward for the broadband market.
The Question at the Core of the Data Caps Debate
[Commentary] Can usage-based Internet pricing create a win-win for low income and minority consumers? Since cost is a predominant factor in encouraging broadband adoption, it can.
Internet service providers are turning to usage-based Internet pricing structures to meet the demands of today’s data thirsty consumers. Usage-based pricing places the burden on the heaviest users to pay the higher prices instead of everyone paying the same flat rate. This pricing structure may help to preserve what has been called the “minority wireless miracle,” a phenomenon that describes a relatively higher smartphone adoption rate by minorities, who use smartphones to access the Internet in higher proportions than other populations. Experts such as professors Daniel M. Lyons of Boston College and Steven Wildman of Michigan State suggest that usage-based pricing provides more affordable plans for light users or new users and may encourage Internet exploration for anyone in search of content relevant to their lives. Based on the data, it seems clear that usage-based Internet pricing is a win-win for everyone, from minorities and low-income individuals to the companies themselves. While the heaviest bandwidth users will be footing more of the collective bill – proportional to the amount of broadband they’re using – this also means that other users will no longer be subsidizing their usage.
Usage-Based Pricing Plans Are Essential to Bridging the Digital Divide
[Commentary] The two kinds of Internet-access carriers, wired and wireless, have found they can operate without competing with each other. The cable industry and AT&T- Verizon have divided up the world much as Comcast and Time Warner did; only instead of, “You take Philadelphia, I’ll take Minneapolis,” it’s, “You take wired, I’ll take wireless.”
At the end of 2011, the two industries even agreed to market each other’s services. Comcast and Time Warner Cable will bundle Verizon Wireless services with their own, and by 2015 the cable companies will have the option of selling mobile services under their own brands. Both the wired and wireless Internet-access businesses are concentrated and highly profitable. AT&T and Verizon Wireless together control two-thirds of the wireless marketplace and generate 80 percent of its revenue, while enjoying profit margins of about 40 percent. Sprint and T-Mobile trail far behind, and the barriers to entry for any new national player are probably insurmountable. The major wireless carriers, like the major cable distributors, have enough market power to raise prices at will.
Now, the communications industry is at a point of equipoise. Each of the major actors is too big for any of the others to swallow or crush. Profits are climbing, allowing the companies to pay ever-higher dividends. Cash is piling up; investment in infrastructure is down, because there is no competitive pressure to increase it. Increasingly, poor and rural people are being left behind or relegated to second-best wireless substitutes for high-speed Internet access. But those zippy iPad apps look just great.
How AT&T and Verizon Manipulate Your Smartphone
In the US, there are now more gadgets capable of connecting to the Internet than there are people, a survey finds.
According to data from research firm NPD Group, 425 million Internet-connected devices reside in U.S. homes. By comparison, the Census Bureau lists the U.S. population at more than 315 million. Desktop and laptop computers continue to dominate the space, although mobile devices are slowly catching up. The survey finds 183 million of those Net-connected gadgets are computers, followed by 133 million smartphones. Video game consoles are a distant third with 39 million and tablets reaching just over 31 million.
Survey: U.S. Web-connected devices outnumber people
Samsung, the world’s largest seller of mobile phones, said it will start selling smartphones this year featuring the Tizen operating system backed by Intel.
“We plan to release new, competitive Tizen devices within this year and will keep expanding the lineup depending on market conditions,” Samsung said. The company didn’t elaborate on model specifications, prices or timeframe for their debut. The new handsets will come as Samsung looks to reduce its reliance on Google’s Android operating system after the Internet search company acquired handset maker Motorola Mobility Holdings Inc. for $12.5 billion in May. Executives from Intel, Samsung, NTT DoCoMo and Vodafone Group Plc formed the Tizen Association last year to support the open-source software.
Samsung to Sell Tizen-Based Handsets After Motorola Deal
How are the next few years looking for telcos? Not so hot overall, according to a new forecast from Ovum. That said, the analysts do highlight one or two silver linings – the main one, by far, being mobile broadband.
First, a look at the overall picture. Ovum estimates that telecom industry revenues for 2012 will have totaled more than $2 trillion, which is up marginally from 2011′s $1.96 trillion, and capital expenditures should also be up from $314 billion in 2011 to more than $330 billion last year. Not stellar – that revenue growth is two percent, down from seven in 2011 – and in fact, the analyst house is warning that growth may flatline over the next five years. However, Ovum also reckons that there’s significant growth to be had in specific sectors. Number one for the operators is mobile broadband – here, Ovum predicts a very healthy 19.2 percent compound annual growth rate between now and 2016, generating $123 billion in incremental revenue during that period.
Where’s the money for telcos? Mobile broadband and cloud
A remarkable new tool is becoming increasingly available to help end extreme poverty and ensure dignity and opportunity for people around the world—a tool that few people think about when they consider how to bolster international development efforts. That tool is data, and in particular “open data“—data freely available in formats that are easy to use in new and innovative ways, while rigorously protecting privacy.
The possibilities are truly endless—it could be regional epidemiological statistics being made available to community health workers; or real-time weather information being made available to small-holder farmers; or loan information being made accessible to first-time borrowers. In these and countless other arenas, open data has the potential to not only improve transparency and coordination, but also dramatically accelerate progress in development. In order to explore new ways of leveraging open data for development and to help strengthen our commitment to open data with others inside and outside of government, we joined with colleagues from the U.S. Agency for International Development (USAID) and the White House Office of Science and Technology Policy on December 10 for a DataJam at the White House. This unprecedented event brought world-class innovators and entrepreneurs together with U.S. government leaders and decision-makers to discuss the impact that open development data has already had on strengthening entrepreneurship in the United States and in developing countries—and the additional impact that can be had going forward.
At Datajam, Innovators and Entrepreneurs Unleash Open Data for Global Development