May 2012

[Commentary] Here’s four developments in the telecommunications marketplace that have made Lee reexamine the state of US broadband:

1. The Berkman broadband report: In 2009, a team led by Yochai Benkler at Harvard's Berkman Center produced a voluminous report on the subject which found that broadband service in the United States was distinctly mediocre.
2. Verizon Halting FiOS builds: In 2010, Verizon announced that it would stop installing fiber without reaching some of its most important markets, including Baltimore, downtown Boston, and Philadelphia. It now appears that none of the "Baby Bells" have any further plans to run fiber optic cables to peoples' homes. That means only the minority of households with FiOS service (and perhaps some of AT&T's U-Verse customers) have an alternative to their local cable company for faster-than-DSL connectivity.
3. The Level 3/Comcast dispute: Comcast forced Level 3 to pay it for connectivity in 2010. There's still significant dispute about what happened and whether Comcast did anything unethical or illegal. But the incident is a clear sign of Comcast's growing bargaining power relative to other major networking firms. And that's cause for concern because, while there are plenty of alternatives to Level 3's transit services, only Comcast can deliver traffic to Comcast's 17 million broadband subscribers.
4. No "third pipe": For a long time there’s speculation about whether anyone will enter the broadband market to compete with incumbent phone and cable companies. At various times, people have touted broadband over power lines, satellite-based broadband, and wireless services like WiMAX as candidates to be a third player in the broadband market. Others have predicted that someone will actually dig up the streets and lay their own fiber. This is happening in a few places. Kansas City is getting Google-installed fiber, and a handful of communities can get broadband service from WOW or Sonic.net. But these examples are the exception that proves the rule.

The US Court of Appeals for the DC Circuit has set a briefing schedule for Verizon and MetroPCS' challenge of the Federal Communications Commission's network neutrality rules, and that schedule suggests there won't be a decision until sometime in 2013.

According to a copy of the schedule, released May 25, initial briefs are due July 2, with final briefs due Nov. 21. One attorney following the case says that signals oral arguments in the January-February time frame. The parties had agreed on a briefing schedule in April, which they submitted to the court. The court essentially approved that schedule. The court also agreed to let MetroPCS file a separate reply brief. Free Press will also get to file a separate reply brief since it opposes the FCC for entirely different reasons.

The New Orleans Times-Picayune is stopping the presses for good on Mondays, Tuesdays, Thursdays and Saturdays this fall. The risk is that taking four days off the table could further accelerate readers' shift away from print -- even on the days that advertisers still want it. When advertisers buy print, they pay higher ad rates than they would for the web.

That's partly why The Times-Picayune collected $64.7 million in print ad revenue last year but only $5.7 million on its website, according to Kantar Media estimates. But print is only as compelling as its audience. So a lot ultimately will ride on how The Times-Picayune -- like its three Advance siblings in Alabama that are also cutting print to three days a week -- deploys its savings. New Orleans' broader interest in capable, robust news coverage is also at stake. Advance Publications disputes the idea that cutting four costly days of print will do anything but help the business and the newsroom. "For people to equate not delivering a print publication seven days a week with somehow lessening our commitment to trusted, credible content is flat-out wrong," said Randy Siegel, president for local digital strategy at Advance Publications. "This is about doing more journalism on more platforms," he added, "not clinging to this rigorous orthodoxy that the only way to serve a community is to print a newspaper seven days a week." Expect others to follow. The Times-Picayune and the Alabama papers are actually only following the lead of papers in Detroit and elsewhere in Michigan. "It's not at all surprising that Detroit and New Orleans are in the vanguard of this, because those markets have had some fairly catastrophic problems," Mr. Mutter said. "You'll see this happen in markets that are economically less robust, where publishers don't want to fight the headwinds of print and want to just get ahead of the migration to digital."

[Commentary] In a rare moment of candor, and departure from the usual languid "Try rebooting the box" communication expected from cable companies, Time Warner Cable CEO Glenn Britt apparently said at the National Cable & Telecommunications Association annual cable show: “There are too many networks.” “There are a lot of general-interest networks that have lower viewership, and the industry would take cost out of the system if they shut those networks down and offered lower prices to consumers,” he said. “The companies involved would make just as much money as they do now because of the costs.”

Most cable subscribers are forced to pay for hundreds of networks, but they routinely watch less than 20. So why not allow consumers to choose cable channels on a channel-by-channel basis (so-called a la carte offerings)? The blame is often laid at the doorstep of the content providers that bundle little-watched channels with more popular networks. Kind of like when the nets say you can only have ad inventory on hit prime-time shows if you also buy some in other, far less popular dayparts. Then there is that dumb-assed argument that bundling supports diversity of programming, providing comfort for the 12 people out of 3.5 million subscribers who want to watch something in Hindi or Urdu.

[Simpson is the president of George H. Simpson Communications]