In an investor conference in New York last week, DirecTV made some announcements and a non-announcement that clearly indicated the company is feeling some heat. The emerging threat of video services from the RBOCs seemed to be fueling the announcements, as well as the existing competition from Cable’s robust bundles of services.

DirecTV and DISH both have reported significant reductions in net subscriber growth in the last few quarters. Of course, DirecTV has a pretty strong balance sheet and, therefore, the ability to throw money at its problems – thus last week’s announcements.

First, the non-announcement: CEO Chase Carey started off by saying, “We don’t have a broadband announcement” to make. Of course, in early January, Rupert Murdoch said DirecTV might be willing to spend a billion dollars on some sort of broadband network and that an announcement may be coming by the end of February. It hasn’t yet, although Carey indicated last week the company clearly understands the need for a wireless broadband offering to compete with Cable and the RBOCs. He did say they’re in “active discussions” on wireless broadband.

Nothing's worse than paying too much for TV, according to the new DISH Network advertising campaign. While I can think of a few things that might be worse – like no TV, a bikini wax, trip to the dentist or raw oysters – I have to assume that no one wants to overpay for anything. That’s why it’s so funny and ironic that DISH has chosen this angle for its new ad campaign.

The facts: DISH will again raise its rates in 2006. Prices will increase on average $2.31, more than a 4% increase. The America’s Top 60 package price is going up 9%! Pretty surprising (and hypocritical) coming from a company with a slogan about paying too much…and you’re not even getting all the good stuff! Plus, customers have to pay extra for additional outlets and HD channels. Cox Communications doesn’t charge for additional outlets or HD programming – neither do most Cable providers.

For me, nothing could be worse than being without TV, except maybe having to read the DISH disclaimer -- it's 2,867 words long! Bottom line: with Cable, no fees for HD, no fees for additional outlets, no fees for locals, no 2,867 word disclaimer. Now what could be better?

In “Why a la carte cable TV is a nutty idea – Unbundling cable is about politics, not about driving down prices,” FORTUNE senior writer Marc Gunter debunks some of the arguments and political maneuvering driving the a la carte push. It’s a must-read.

“Every Sunday morning, The New York Times lands on my driveway with a thud. I customarily discard the Styles section (no interest in weddings), the Travel section (no vacations being planned) and the Sports section (dull, dull, dull). But it never occurred to me -- until now -- to call up the people at The Times to tell them that I would like to buy only certain sections of the newspaper and not others. And if The Times were to tell me the paper is an all-or-nothing deal, well, maybe I should ask my Congressman to require The New York Times Co. to sell its newspapers a la carte.”

Great argument. Of course, there’s much more to the a la carte issue than whether consumers should be able to choose individual channels, per their individual tastes. If there are consumer benefits to an a la carte option in cable TV, then the marketplace will drive it. What’s disturbing is Washington’s apparent intent to mandate a la carte and dictate how customers are to manage what their family sees, and doesn’t see, on TV. The FORTUNE piece definitely opines on the political agenda of a la carte. [Click here for the complete article.]

As we’ve been talking about for some time, Verizon, AT&T and the other RBOCs are hiding behind so-called “consumer" groups to push their business agendas. [Click here, here, here and here for our past posts on these misleading tactics.] Cable is fighting back with a campaign of TV commercials, print ads and a new web site exposing this “Phone-y Baloney.”

From the web site: “What's a Phone-y Baloney? It's a group the Bell phone companies pay to serve up baloney about the Bells' legislation -- groups like Consumers for Cable Choice. Groups like FreedomWorks, Internet Innovation Alliance and the Phoenix Center. The truth is that, in most cases, the legislation sponsored by the telephone companies will mean higher telephone rates and competition for fewer consumers.”

On the site, check out the commercials featuring a phone company-backed fat-cat who actually speaks the truth. In case you’re wondering, these materials do in fact go out of their way to disclose that they’re sponsored by the National Cable and Telecommunications Association, unlike, of course, the funders of the shady RBOC "consumer" groups.

A California judge has granted Time Warner Cable a preliminary injunction against a DirecTV dealer's misleading telephone listings. As we reported last month [here and here], Time Warner had filed a lawsuit alleging false advertising by DirecTV reseller LA Activations, which had registered its toll-free number in Southern California under names very similar to Time Warner Cable. When consumers dialed directory assistance and asked for the cable company, they could have been directed unwittingly to the DirecTV dealer. Time Warner had received a temporary restraining order, and late last week the company was granted the temporary injunction. It bars LA Activations from using the numbers in question and the fake names, including "Time Warne" and "Time Warned," pending a trial.

Today, the FCC released the “a la carte” report that its chairman, Kevin Martin, promised in the Senate Commerce Committee’s Open Forum on Decency in November. Surprisingly, the report contradicts a 2004 FCC report by then-chairman Michael Powell and another independent report requested by Senator John McCain (R-AZ) and issued by the Government Accounting Office. Unlike those findings as well a large body of analysis by other academic economists, the Martin report claims that cable customers would pay less if allowed to choose channels individually. Minutes later, Senator McCain announced he would ignore his GAO report and the 2004 FCC analysis and introduce legislation requiring multi-channel video providers to offer consumers an a la carte option.

The head of the National Cable & Telecommunications Association (NCTA), Kyle McSlarrow, vehemently blasted the new FCC report. “Most studies conclude that a mandated a la carte regime would be more expensive for consumers and result in less diversity in programming. It is disappointing that the updated Media Bureau report relies on assumptions that are not in line with the reality of the marketplace.... The notion that the government knows better how to improve on a competitive marketplace is not supported by the evidence,” McSlarrow said in a statement. [Click here for the NCTA brief, "The Pitfalls of A La Carte."]

Of course, this unwarranted interest in a la carte got turbo-charged two years ago by the “wardrobe malfunction” at the Super Bowl halftime show. Ever since, the rhetoric has been loud and fairly constant, fueled in huge part by a small band of special-interest activist groups.

Several farm groups recently asked lawmakers to “encourage competition in the cable industry that will speed deployment of advanced communication services to rural America.” Among the groups mentioned in a press release were the American Corn Growers Association, California Farmers Union and The Soybean Producers of America.

In theory, this "grassroots campaign” sounds good. But in practice, it's being fertilized by Consumers For Cable Choice, a group largely financed by Verizon and AT&T (formerly SBC), and directly supports those companies’ money-making agenda.

Who can argue against invoking the American farmer on behalf of a cause? Certainly not the message maestros at the RBOCs. But is this just another deceptive tactic in the ongoing telco land grab? Yes, we think it is.

The breeze you felt coming from the Northeast earlier this week may have been the huffing and puffing of AT&T's chief technical officer. Speaking to analysts in New York about his company's fiber-to-the-home plans, John Stankey audaciously predicted that Cable will need to invest upwards of $20 billion in plant upgrades to keep up with AT&T. "Skeptical" is a conservative summation of the reaction from here to Stankey's boasts and predictions. We'd like to suggest some recommended reading: this paper from Cisco Systems' chief architect and distinguished engineer, in which he concludes that Cable's HFC plant is currently being utilized at less than 2% of its inherent capability and that the industry has "only scratched the surface of its bandwidth capacity potential." He further concludes, "Fortunately for the cable industry, the answer does not lie in replicating its $80+ billion investment to add new physical capacity on top of existing networks or matching the $10 to 20 billion telcos will invest in fiber-based IP services. The answer lies in unleashing the full power of the cable industry's existing hybrid fiber coax (HFC) networks." Certainly, bandwidth management will grow more challenging with all of the new services, features and capacity demands on the horizon, but Cable is and will continue to be well positioned to do it all -- despite the self-serving hyperbole blowing in from AT&T.

The mayor of Red Bank, N.J. received some 200 letters from citizens expressing support for cable franchise reform. Upon closer examination, he discovered more than half of the letters were sent from non-existent addresses. Further, a large number of the people whose names appeared on the letters later told him they’d never even heard of New Jersey Consumers for Cable Choice, the Verizon-funded “consumer group” whose cause the letters supported. One resident reportedly said Verizon had even fabricated phony stationery to make it appear her letter to local officials was a personalized note. For more, check out this article from The Record. It documents several holes in Verizon’s campaign and concludes with these questions from a local lawmaker: “Has Verizon committed mail fraud? Is Verizon secretly...funneling money through a front group? Has New Jersey Consumers for Cable Choice violated state law by failing to disclose their funding? These are the crucial questions for which we must demand answers.” According to the article, Verizon says it’s conducting an investigation....

Stewart Schley, DST Correspondent

When the first cable TV companies set up shop in the late 1940s to help people in isolated towns improve their TV reception, the prevailing approach was to provide signals over the same frequencies over-the-air stations used. As a result, once a coaxial cable was attached to a TV set, users could tune to their local stations using the tuning dial that was built into the set.

But once cable companies began to deliver extra channels like HBO and CNN in the 1970s, that approach changed. Customers required a new sort of TV tuner that would pick up signals outside of the normal broadcast TV frequency band. Thus was born the cable TV “converter,” a rectangular box that sat atop the TV set to perform its essential function: It converted higher-frequency signals that flowed over the cable to frequencies TV sets could accommodate. Ever since, a never-ending cycle of product improvements has been in motion, and hundreds of millions of cable “set-top” receivers have been installed in households across the U.S. If you’re like most U.S. residents, you have several set-tops in your home today. Today’s most sophisticated cable set-tops do much more than simply convert TV signals. Many include embedded computers that process digital TV signals, record television programs on computer-like storage disks, manage high-definition TV signals and allow customers to order movies and TV shows on demand, all with a few clicks of the remote.

But even as cable set-tops become more capable and sophisticated than ever, there’s an important change in the works. At the recent Consumer Electronics Show in Las Vegas, the top executives from several U.S. cable companies – including Cox Communications – announced a sort of back-to-the-future migration. After nearly a decade of development and complicated negotiations with consumer electronics companies, the cable companies unveiled a new way of distributing and controlling signals that could do to the set-top box what local Las Vegas showmen Penn and Teller routinely do on stage to an unwitting rabbit: make it disappear.