Earlier this week in a Providence Journal column, "Cable TV: A new economic divide," Clifford Montiero appears to have swallowed—hook, line and sinker—the Bell monopolies' national talking points on why they should be given sweetheart deals from regulators and Congress to provide cable-television service. However, his commentary misses the mark entirely when it comes to broadband competition in Rhode Island.

Mr. Montiero, president of the Providence chapter of the NAACP, cites national pricing information and bemoans the lack of similar data for Rhode Island; his research apparently was confined to a cursory search of the Public Utility Commission's Web site. However, had he been a bit more diligent in his search for the facts, Mr. Montiero would have realized that while nationally, cable prices may have risen 25 percent over the past five years, in Rhode Island that increase has been a considerably more modest 13 percent. He also would have learned that over the past five years, Verizon has increased its price for the average residential telephone customer by as much as 15 percent -- even as the price of phone service nationally has declined over that same period.

Mr. Montiero implies that the Bell monopolies will ensure that cable will be "accessible" to African-Americans and other minorities. This is a dubious suggestion in Rhode Island, where nearly 100 percent of the residents enjoy access to cable television and other broadband services today.

The House Energy and Commerce Committee yesterday rejected a network-neutrality amendment that would have prevented cable and telecom providers from charging Internet content suppliers for priority treatment or faster delivery. The amendment from Rep. Edward Markey (D-Mass.) was voted down 34-22. It was backed by content powerhouses including Google, Yahoo!, and eBay. But while the amendment’s defeat is being hailed as a win for broadband service providers, it’s important to note there’s no single industywide position on net neutrality; “net neutrality” means different things to different people, and different companies view it in different ways. Cox Communications’ position has long been and continues to be that we observe net neutrality and are committed to delivering “best effort” services for all of our high-speed Internet customers. Our customers can visit any legal web site they wish on our open network, and we have no intention to block them. The only exception, of course, is that we’re legally required to block access to illegal websites (such as child pornography) when reported. The fact remains that consumer needs and uses of the Internet are still evolving. Imposing government mandates, as urged by net neutrality proponents, would be both unnecessary and counterproductive. The beauty of high-speed broadband is lightning-fast access to a world of compelling content. That’s what our customers love, and we have no intention of changing that—except that we want to meet even higher speed demands and enable even more robust features for our customers.

The Markey amendment was just one of many the House committee considered on a day that ended with their approval of a telecommunications bill, sponsored by committee chairman Joe Barton (R-Texas), granting telcos national franchises to offer cable-like video services. Unlike earlier versions of the bill language, the bill approved by the panel yesterday would grant cable companies a national franchise immediately in markets with another wireline video provider.

John Fountain, Vice President of Technology, Cox Business Services/Hospitality Network, Las Vegas

The telcos are trying to make inroads into the cable-dominated video market by transmitting MPEG-2 and MPEG-4 signals over an IP infrastructure using their age-old traditional twisted-pair network and hoping to achieve a home-grown triple play. Their attempt at IPTV gets a lot of attention, and they go out of their way to position cable technology as less robust. But Cable already has the triple play that the telcos are attempting to replicate. And the telcos don’t have the corner on IPTV, either. Cable is now successfully incorporating these IP technologies; just look at Hospitality Network (HN) in Las Vegas (purchased by Cox in 1998 and now part of Cox Business Services).

Pat Esser, President, Cox Communications

Well, the NCTA National Show has come and gone. Although Atlanta was a late-in-the-game substitute for New Orleans, I think Cox’s hometown was a great host city. The weather was perfect, Atlanta’s top-flight restaurants impressed guests, and the Georgia World Congress Center proved a convenient, efficient conference site. And, as I wrote before the show, we all got our opportunity to prove why Cable is the best choice for consumers and businesses (now and in the years ahead), and why the marketplace—not ceaseless lobbying by deep-pocketed telcos trying to change the regulatory and legislative rules—should determine which companies win and lose. We probably won’t know how successful we were on the latter goal for some time, but I do think we made our case strongly. We had many guests with key regulatory responsibilities and legislative leadership roles. They seemed impressed by Cable’s progress, and we thank them for taking time to visit with us.

I had the opportunity to sit on a panel of cable industry leaders to discuss the state of our industry and where we’re going. Not surprisingly, we spent a lot of time on competition and regulation. I think those topics are critical, but I’ve also spent a lot of time recently talking more in-depth about some of the related issues that I think are the underpinnings of Cable’s competitive strength: market share, brand loyalty and operational excellence.

As you might expect, some of the National Show buzz this week was devoted to wireless opportunities. Cable’s joint venture with Sprint Nextel got lots of attention during several panel discussions, and the show floor offered numerous examples of programming networks’ plans to offer content via cell phones and other portable devices. That’s not surprising, given that 85% of 13-to-54 year-olds own a cell phone, and surveys indicate strong consumer interest in using phones for much more than wireless calls.

Sixty-four percent of wireless subscribers show a willingness to pay for Internet access from their wireless phones. Close behind is interest in emergency alerts, roadside assistance, and family safety and security. Where does Cable fit in? Cable is in a position to create compelling content, service and pricing models bundled with existing cable services, as the Cable-Sprint Nextel JV is in the process of developing.

The cell phone in the future will likely become a full-service media device with games, GPS, text messaging, photo capabilities, video, Internet access, and music services. One obstacle is creating content specifically for phones, as the small screen leads to a shorter attention span per user. There will definitely be some challenges in making these services compelling and convenient for users, but it was clear at the show that the wireless revolution is here, and Cable must innovate or be left behind. The Sprint Nextel JV is a good first step, but we have to do more than simply add cell phones to the bundle—we’ve got to enable greater mobility, and allow customers to enjoy all of our services anywhere, any time.

Tony Brown, DST Correspondent

I am a teenager, and I am addicted to text messaging. It’s not just texting that gets me high; I’m an instant message junkie too. I spend more time a day online than I do in school, and even at work I’m sneaking my way onto AOL Instant Messenger to chat with my friends. Why? In one word: convenience. In another, efficiency. Why pick up the phone, dial four different numbers, engage in conversation, and slowly form plans for a trip to the mall when you can talk to each participant online, all at the same time. Better yet, consolidate the four separate windows into a single group chat. Businesses spend millions to streamline communications in ways teens and ‘tweens alike have mastered and discovered by age 12.

Text messaging is simply a form of mobile IM, an abbreviated form of mobile-to-mobile e-mail. I found it very interesting that while sitting in the opening session Sunday at The National Show, in the very midst of texting my friends back at home, the audience received a lesson in text messaging. Suddenly, I was the spotlight of attention, with my immediate neighbors eyeing my phone’s full QWERTY keyboard and rapid movements of my fingers as I rapidly tapped replies to incoming text messages on my archaic Nokia 6820.

Eight people on one panel is at least four too many. I understand the politics of it all, but the more people you pile onto the stage (no matter how brilliant and deserving each is of being there), the more disjointed the session and less memorable its take-aways. With that complaint registered, however, I think the heavy-loaded panel sessions at The National Show this week have actually been good. Today’s densely-populated session was moderated by former FCC Chairman William Kennard. It would have been very interesting had the panelists turned the tables on Kennard and asked his opinions on the FCC of today. Alas, Kennard was the one asking the questions, and they ranged across the expected spectrum: competition...net neutrality…national franchising…obliteration of the traditional TV advertising model…the cable industry’s ongoing punishment by Wall Street.

On competition, Cox Communications President Pat Esser called the competitive pressure from the RBOCs “one of the biggest myths” in the marketplace. “Aspirational press release after aspirational press release from the RBOCs tends to wear on you after a while,” he said, but noted that it has been Cable, not the telcos, that has delivered true competition. He relayed that within three months of passage of the Telecom Act of 1996, Cox had the pieces in place to begin delivering local phone service, and within eight months had signed up its first customer. Tom Rutledge, COO of Cablevision, said the cable marketplace is bigger than most people realize, and he cited the tremendous opportunity of the commercial business, which he said is as big or bigger in local markets than Cable’s residential opportunity.

Here are a few other sites with comprehensive coverage from The National Show—to visit after you finish Digital Straight Talk, of course:
paidContent.org
The National Show Insider
The Cable Channel (videos of major sessions and other happenings )

Mark Cuban, the always-entertaining president & chairman of HDNet and owner of the Dallas Mavericks, offered a very plausible theory today about what’s driving ABC-Disney’s decision to broadcast its most popular shows over the Internet. While at Broadcast.com in 1998, Cuban fielded research in which 93% of respondents said the computer was the primary media device in the office. “And that was 1998,” he stressed today, suggesting that the percentage would certainly be even closer to 100% now. “So, if I missed ‘Desperate Housewives’ last night, I’m just going to watch it at work.” The audience at the National Show session laughed, then laughed even harder when Cuban’s fellow panelist, Insight Communications President & CEO Michael Willner, replied emphatically, “There will be absolutely no watching of ‘Desperate Housewives’ within any of the Insight offices between 9 to 5.”

BIZARRE MARKETING IDEA #1
You expect clever and interesting marketing tactics at The National Show, but Mav TV has taken the cake. Or, I guess, delivered it. In the men's restrooms, the network has installed talking urinal cakes. Yes, I said TALKING URINAL CAKES. You know, those things that are supposed to keep bathrooms fresh. Every time a restroom patron, shall-we-say, visits, the urinal replies with a blurb about Mav TV. It's the first time I've gone and gotten a reply. Anyway, this tactic raises some big questions. Who thought of this? Who wants to change the cakes? Where did they find a company to do this? Could this be a metaphor for what the industry is doing to their channel? You can thank me now for sparing you the accompanying photo. Tuesday, 1:35 p.m.

Sitting on yesterday's CTO panel, Cox Communications Chief Technology Officer Chris Bowick said the RBOCs are “feeling pressured” to compete with MSOs for video marketshare given Cable's significant inroads in telephony; hence their bold claims regarding the yet-to-be-proven benefits of their fiber rollouts and video services. When asked what’s a better network: Cable HFC (hybrid fiber-coax) or telco FTTP (fiber to the premise), Bowick chuckled and reminded industry professionals of Cox’s success in pioneering the full bundle of services over HFC. He cited Cox's Orange County, Calif., system, where the company's phone service has penetrated 40 percent of the market in some places. Michael LaJoie of Time Warner Cable was less diplomatic in his response, saying “coax is better–because it actually exists.” And while both men agreed competition will actually be good for the industry, Bowick said MSOs “have never taken [the telcos] lightly.” Bowick revealed the effects of Hurricane Katrina gave Cox the opportunity to consider implementing FTTP in the company's network rebuild in New Orleans. However, after extensive research, Bowick said it became clearer than ever that HFC was still the best choice.

Keeping teens tuned in may be as complex as keeping their hand out of your wallet, but companies think they’re beginning to figure it all out. On hand at the National Show are several demos of technologies and services aimed at keeping the "echo boomer" generation seated where we want them: in front of the television and computer; cable at their fingertips. Whether educational or entertainment based, information-enriched content is beginning to find a home alongside linear television. Here's a sampling:

Discovery's Cosmeo service is essentially homework help via an extensive library of age-appropriate documentaries, accessible via the Internet. For $9.95 per month or $99 per year, users can create a profile, input simple information such as age and skill level in school subjects, and then access a database of knowledge filtered by a custom curriculum. Think of it as tutoring via documentary—a perfect solution for summer months.

Turner has rolled out a gaming service called GameTap, a playground of old video game titles from Pac-Man to Sonic the Hedgehog to Crazy Taxi. Accessible via broadband, the gaming arena features 400 games, all licenses harvested from the recycle bins of arcade, console and PC game developers. I’m having a tough time seeing people shell out $10 a month to play essentially outdated titles, but Turner says subscriber numbers are consistent with projected numbers.

ESPN360, a VOD and exclusive content delivery service has grown in leaps and bounds since its re-launch earlier this year. Available as a virtual channel, ESPN360 streams VOD content via broadband, with an extensive library of exclusive broadcasts, as well as broadcasts, highlights and shows from the ESPN networks.

In a panel moderated by Rafe Needleman of CNET Networks, Inc., the overwhelming feeling was that online gaming is a cable technology here to stay, one just waiting for the correct platform to really take off. The greatest frustration gamers face in playing intense first-person shooter games against opponents over the internet is latency, the pause or “lag” created by lost packets and slow transmission. Many networks have tailored the architecture of their networks to reduce latency, and some have added a higher tier of service to their network offerings that increase data rates specifically for gaming. Cablevision is one such company, offering Optimum Online Boost, a service that increases transmission speed to up to 30 Mbps downstream and 2 Mbps upstream.

Another issue facing developers of online games is the idea of in-game purchases. The idea of perhaps purchasing, with real world money, a better weapon in a video game has met both philosophical and logistical opposition. While many gamers see the idea of buying their way through a game as cheating, developers see it as a humongous source of potential revenue, where financial commitment determines the level of involvement in a game.

“A very successful game would be one that is free to play, and the amount of money spent determines the amount of involvement, with a billing system that makes sense with microtransactions,” said Eugene Evans of Mythic Entertainment.Mythic Entertainment is the creator of the Dark Age of Camelot, a massively multiplayer online roleplaying game. Issues with billing present a challenge for both developers and operators to overcome, as credit card companies in the U.S. aren't set up to handle a large number of small transactions, and neither consumer nor operator would enjoy a six-page cable bill listing hundreds of one-dollar purchases. The task at hand remains finding an efficient and streamlined method of processing numerous small (less than $5) transactions per user over a period of several days or months.

Anne Sweeney, president of Disney-ABC Television Group, graces the front page of The Wall Street Journal today. So, naturally, the announcement that landed here there was a hot topic in this morning’s National Show general session, in which Sweeney was one of six panelists. The announcement: ABC’s decision to deliver episodes of its most popular shows—including “Lost” and “Desperate Housewives”—free on the company’s web site, starting the day after they air. The service is expected to launch on a redesigned abc.com late this month. [Here’s the link to the WSJ article, but you’ll need a subscription to view it.]

What does the move mean for cable operators? Comcast Chairman & CEO Brian Roberts happened to be sitting beside Sweeney on the stage. Neither they nor the other panelists seemed concerned that ABC’s announcement or similar copycats sure to come would drive a bigger wedge between cable ops and programmers. Roberts said he seriously doubts the marketplace is headed toward a model where “if distribution is up, then content’s down, or vice versa. We need each other.” Richard Parsons, Chairman & CEO of Time Warner, used a phrase he attributed to his predecessor, Gerald Levin: “If content is king, distribution is the power behind the throne.” Parsons called alternative content delivery mechanisms “additive.” He said they help “make the pie bigger” and predicted there will be plenty of pieces for all players—distributors, content providers, equipment manufacturers, etc. “We’re not fighting over a static pie,” he noted.

In his remarks to a large crowd in the massive Georgia World Congress Center hall this morning, Kyle McSlarrow, President & CEO of NCTA, said he's received frequent questions about why NCTA chose “A Great American Success Story” as the theme of Cable’s ad campaign in D.C. That suggests, at least to me, that some have questioned the rationale of the “rag-tag group of dreamers” motif of the campaign created in response to the RBOCs' ceaseless noise machine in D.C.

“First, it’s important for those outside our industry to understand our roots, and for all of us to value and build on our strengths, because they suggest what our future can look like. A future that will continue to be entrepreneurial, involving risk and opportunity…a future that in all likelihood will take off in unexpected directions,” he said. “It’s also important to tell our story to public policymakers. We will always have specific issues and specific battles back and forth, but industries are defined in many ways, and in the policy environment, if you don’t define yourself, others certainly will.”

He added that, “If it feels like we’re at the center of the storm, well, we are, and for good reason. What other industry has created the template for the greatest diversity of programming and married it to the most versatile distribution platform in the world? What other industry is as well positioned for an age of convergence….Other industries [read: the RBOCs] understand this, and the simple truth of the matter is they want what we already have, without the hard work and without the risk.”

Signaling that the industry can and will go beyond the positive message of the “Success Story” campaign and meet fire with fire, McSlarrow said, “I have some fundamental views about policy fights. First, no false claim is going to go unchallenged. And, second, no false and negative ad campaign is going to go without a response.” He showed a commercial, “Meet the Phoneys,” that does just that. [Click here for the full transcript of McSlarrow’s remarks.]

Interactive gaming is sure to be a popular topic at the show, with an entire pavilion devoted to it, as well as one of the show's first sessions. While one of the last places you might think to sit down and play a game of Texas Hold’em would be your living room in front of the good ole’ TV, if the folks at several companies perched at the forefront of interactive gaming have their way, cable operators will capitalize on a promising new revenue source.

Interactive TV is a genre that encompasses everything from thoroughbred arcade gaming to merely adding an interactive element to popular TV shows. One such enhancement, created by students at Georgia Tech, enabled viewers to participate in episodes of ABC’s "The Mole," voting and betting on the events of the show. Points would be accumulated by placing correct bets—such as choosing the winning team of a particular challenge—and viewers with the most points at the end of a show would be displayed on a leaderboard.

Deployment of interactive TV has been slow in the U.S., but overseas viewers have been quick to adopt. Israel especially has seen growth in triple-play gaming, with cross-platform games that can be played over broadband, TV, and cell phone. Players can start a game on TV and continue it later on their cell phone, all while playing against another subscriber over broadband.

A Texas Hold’em game carried by Blue Ridge Communications created in a partnership with Buzztime Entertainment, Inc., showed that 5.2% of all households on the network played over eight hours of the game in one month. The average amount of time spent playing the games per household was 45 minutes per month, a statistic that rivals the most popular of VOD titles.

Malcolm Gladwell, National Show keynoter and brilliant author of The Tipping Point and Blink, kicked off the show this afternoon with a history lesson about how future radio pioneer David Sarnoff engineered the medium’s first live sports broadcast, a boxing match between Jack Dempsey and Georges Carpentier, in July 1921. Faced with a lack of interest from his superiors at RCA and virtually no resources, Sarnoff cobbled together borrowed equipment to broadcast the 10-minute, four-round fight—a feat that would change the course of radio and all mass media. Gladwell said Sarnoff’s story holds at least three key lessons for Cable today: 1) Change can come about quickly. Sometimes the challenges you think are going to take years and millions of dollars to conquer are met because of one seemingly insignificant, innocuous event. 2) “Active re-framing” can almost always be found at the beginning of any revolution, just as Sarnoff’s boxing broadcast re-framed radio in everyone’s minds and laid groundwork for the media revolutions to come. 3) Although a future pioneer, in 1921 Sarnoff didn’t have significant political power or resources. “What he had,” Gladwell emphasized, “was social power and vision.”

Pat Esser, President, Cox Communications

As Cox’s hometown readies the welcome mat for The National Show this weekend, my excitement level about the state of our industry is extremely high. However, so is my level of impatience about the undue influence the telcos are exacting on the regulatory and legislative agendas.

Thanks to the formidable force of the telcos’ noise machines and press release factories, I fear an inordinate amount of time and effort are being devoted to the regulatory environment at a time when far more important priorities should be taking precedence. The shall-we-say “aspirational” claims of AT&T, Verizon and others frequently don’t correlate with reality, yet still often weigh disproportionately on matters regulatory and legislative.

I’m so glad that FCC Chairman Kevin Martin and several FCC commissioners are coming to Atlanta for the show, and I welcome our opportunity to demonstrate to them the amazing progress Cable is making in delivering competition and fulfilling consumer demands. I hope they take from Atlanta a renewed sense that a balanced combination of minimal regulation and a free marketplace remains the ideal way of encouraging competition, furthering technological innovation, and empowering consumers.

So this is it, colleagues: our prime opportunity to re-shape the discussion, to demonstrate the power of Cable, and to shift attention and action back to substantive matters. And back to ensuring a fair, level playing field where the consumer—not telco bluster—is the power broker that determines which companies and products are successful, and which are not. For those of you making the trip to town, welcome. Enjoy Atlanta!

A recent Bank of America equity research report concluded that Verizon’s launch of its FiOS video service has “elicited thinly advertised, yet highly competitive pricing responses for incumbent cable providers” (including Cox Communications). It’s a nuanced statement referring to “save” pricing that companies offer reactively to customers considering a switch to another provider. At Cox, it’s a practice used in response to multiple competitive providers—not just Verizon. Indeed, save offers are commonplace, not only in Cable and telecom (Verizon certainly uses save offers itself), but in virtually all businesses.

Despite what the BofA report may imply, the fact is that while Cox does offer save pricing, there has been no change in prices in response to Verizon’s video entry into Northern Virginia. Unfortunately, when an already misleading statement gets fed through RBOC spin machines, there’s a very good chance it will be reported as fact. And soon it’s being cited in the RBOCs’ ongoing campaigns to get a sweetheart deal from policy makers to boost their entry into the video marketplace.

The truth is the NoVa market has been one of the most highly competitive in the country for years—well before Verizon's video service came to town—and Cox has used save pricing there for a long time. And of course, satellite TV competition in the market has long been fierce. So, RBOC claims that there’s no competition in the cable marketplace are ludicrous, as is the contention that the RBOCs need special regulatory favors to enter the business.

My wife and I fight over what to watch on TV. I like Battlestar Galactica. She’s a fan of Grey’s Anatomy. But one thing we agree on is we don’t want the government in our fight. Results from a new TV Watch poll show we’re not alone. Only 12 percent of registered voters support government regulation of TV content. The rest of us had rather fight among ourselves to determine what to watch and what’s best for our children to see.

Are we concerned about what our kids watch on TV? Yes. That’s why we use parental controls. With three easy clicks, I programmed my cable receiver to block shows with ratings I don’t want my kids to see. When it’s time to watch Battlestar Galactica or Grey’s Anatomy, we enter our secret code and up pops the show. That’s all the filtering I need. In fact, it’s exactly what I need because I customize it to my standards. Eighty-seven percent of people in the TV Watch survey agree that existing methods and technology—such as show ratings and V-chips—are adequate for parents to control what their children see.

It’s good to see a group like TV Watch back up with data a fact that we already know. We have the tools we need to control the TV in our homes, and parents want to be the filter—not government.