Satellite providers Dish Network and DirecTV are raising prices, effective early February, for the fifth consecutive year. DirecTV is hiking its two most popular packages 11.1% and 10%, while Dish is increasing the price of three of its four packages an average of 5.9%. However, that’s probably new news, if you rely on consumer press for such coverage. A quick search of recent articles about cable and satellite price increases reveals decidedly one-sided coverage. We found scant coverage specifically about the satellite increases, and those articles generally featured no commentary, no quotes, no consumer reaction. Conversely, a slew of articles about cable price increases included a heavy helping of commentary and quotes from consumers, consumer advocates and regulators. (Much of the coverage was driven by the FCC’s cable pricing survey, released in December, that excludes satellite TV prices.)

Beyond the disparity of press coverage, the satellite price hikes underscore an important and frequently glossed-over reality: the pressure of rising programming costs. All video providers purchase the same networks from the same owners and therefore face the same reality of rapidly rising wholesale programming costs. When Verizon recently increased its video prices 8%, wholesale costs were a big factor, just as they are with the satellite providers’ latest increases. Until content providers drop their wholesale prices, or reduce their price increases, it’s unrealistic to expect retail video prices to drop significantly—whether the provider is cable, satellite or telco.

Richard Sandomir wrote in The New York Times Friday about a reported deal between DirecTV and Major League Baseball for exclusive carriage of the Extra Innings PPV package (“Extra Innings Throws a Curve, and Fans Cry Foul”). There has been no announcement from MLB or DirecTV, and cable companies are continuing to negotiate with MLB to retain the carriage rights they’ve held since 2002. Assuming the reported deal is true, fans are understandably irate that that MLB would rip the games away from a cable audience that’s more than five times the size of DirecTV’s subscriber base. From Sandomir’s NYT piece:

[Yankees fan Jeanette] Bottone is part of the resentment expressed on fan forums, blogs and inside my e-mail inbox against a pending seven-year, $700 million deal that would shift Extra Innings this season into an exclusive arrangement with DirecTV after five seasons of being available to 75 million cable, DirecTV and Dish homes. A writer on the Cards Fan Union blog said, “I feel as though I’ve just had my teeth worked on with a drill that entered my body through my big toe.” On the umpbump.com fan site, a screed against the deal was titled, “MLB Only Needs 700 Million Reasons to Tell You to Drop Dead."

Fresh back from CES, and with the turn of a new year, it's worth reflecting on where we as an industry stand. One of my favorite mental exercises is to reflect on how far we've come in the last ten years. In 1996, we were in the analog video delivery business. Period. Yes, we had some other business activities, but I'd bet that 90+% of our revenues were pure analog video. Then I fast forward and look at today: digital video, on-demand, program guides, high speed data, telephony, advertising, commercial services, cellular... the list goes on. It's truly mind-boggling.

The fun part is to extrapolate; where will we be 10 years from now? If you're not careful, it's easy to think we'll be a powerful full-fledged telecoms provider, but largely still providing the same services that we do today (albeit with many enhancements). However, when you ponder how much has changed in the past 10 years, coupled with the pace of change that you can observe at CES, you can reach a different conclusion: that we will look vastly different than we do today.

Not unexpectedly, network neutrality is back on the legislative agenda. In response, two academics—David Farber from Carnegie Mellon University and Michael L. Katz from University of California at Berkeley—authored a thoughtful Washington Post column (“Hold Off On Net Neutrality”) on Friday. In it, they caution that unintended consequences could result from misguided legislative intervention.

The Internet needs a makeover. Unfortunately, congressional initiatives aimed at preserving the best of the old Internet threaten to stifle the emergence of the new one.... Network neutrality is supposed to promote continuing Internet innovation by restricting the ability of network owners to give certain traffic priority based on the content or application being carried or on the sender's willingness to pay. The problem is that these restrictions would prohibit practices that could increase the value of the Internet for customers.

Click here for the entire column. And click here, here and here for past posts in which we’ve expressed similar caution about network neutrality and argued that the marketplace—not legislation—should be the arbiter of what’s best for consumers and for the Internet’s future.

One last topic before we officially stop talking about CES: TVs. At the show, it’s easy to get lost in the broad spectrum of products on display. Televisions, however, are impossible to miss. From the practical to the purely for show, screens of all resolutions, sizes, shapes and technologies were set up for viewing. Here’s a roundup of the television trends and innovations I saw this year:

If bigger is better, then the pair of Sharp 108” Aquos LCD displays at the entrance to the Sharp booth took the cake. The sets will ship this summer at a price yet unannounced. In light of a shifting market, Toshiba is dropping plasma technology in favor of the growing LCD market. Toshiba cites risk of burn-in and reflected light on retail floors for its weak sales in the plasma market. Meanwhile, Panasonic, the sales leader in plasma displays, hoped to restore some of the image of their screens with an expansive display highlighting the strengths of plasma over LCD.

At one point during CES, I was asked if I was tired yet of hearing about the “connected home” and the “next generation” of electronics. My reply was an exasperated “yes.” While I’m excited to experience the whole new world of media made possible by the marriage of television and the Internet, I’m troubled by the lack of innovation beyond the current HD obsession. It was exciting back when the products finally bridging the gap between TV and PC were merely ideas and sketches in the R&D departments of consumer electronics companies, but as the dreams of the consumer electronics idealist become more and more of a reality, it’s impossible to ignore the big question of “what’s next?”

Pat Esser
President, Cox Communications

It took a little while to decompress following the overwhelming spectacle of CES, but with the benefit of a couple of days of calm, here’s some reflection on the highlights and themes that resonated with me during and after last week’s show:

 For me CES began, surreally, in Barry Manilow’s green room at the Las Vegas Hilton Theater, site of the “Pipelines Power” session. The area is adorned with seemingly hundreds of photos of the star with other stars, which provided some light escapism and mood-calming before we were ushered onto the stage and into the spotlight before a large crowd wanting to hear how cable, telco and satellite execs view convergence. As I stated then, as service providers, we must deliver the benefits of convergence minus the “hassle factor” for our customers. Throughout the week, as I viewed thousands of gizmos, gadgets and random awe-inspiring products—most of which likely will never make it to market—I was even more convinced that while consumers may welcome “wow,” above all they just want it to work. It won’t matter how amazing these converged products are if they don’t interact properly.

A recent Wall Street Journal editorial (“Franchise Freedom”) was a wake up call for those of us who communicate about Cable. In a few short paragraphs, the editors somehow managed to color the mammoth and glacier-like former Bell companies as the champions of competition and cable companies as anti-competitive incumbents who are “crying foul” at the prospect of having to earn our customers’ business. An opinion on the FCC’s recent ruling on video franchising, the editorial goes so far as to levy accusations that Cable is blocking the franchise applications of the RBOCs by pulling the strings of the local franchising authorities (LFAs) – causing them to slow roll applications and make unrelated demands for things such as parking garages and community swimming pools.

To conclude my visit to CES, I’ve made it a tradition to stop by the Innovations exhibit to end the show with a final look at what’s coming next. Tucked away at the Sands Expo center, the exhibit is nestled in among the much smaller companies peddling anything from virtual reality video games to tasers for personal security. Innovations is the showcase for the best products at CES, as voted by the Consumer Electronics Association. It’s a good way to make sure you haven’t missed anything big.

What I found were robots that sweep, vacuum and wet mop your floor; remote control moving wall mounts for flat panel televisions; surveillance cameras that monitor your home and report to you via IP; speakers disguised as tattered books and floor lamps; and a virtual keyboard that projects a full-sized laser keyboard onto any surface—perfect for entering data into a Blackberry or PDA. It turned out to be exactly what I expected: a lot of interesting stuff just waiting for the right marketing.

If there’s one thing I personally think the older generation of large corporate executives doesn’t understand, it’s the gaming sector of consumer electronics. With that in mind, I spent my morning exploring the latest wares from Intel, HP, Microsoft and Sony. By far the biggest trend I experienced is total immersion in gameplay. Since video games are all about escaping reality—or at least entering a different reality—it makes sense to try to completely envelop the user in lifelike graphics, audio, and aesthetic. The aesthetic, totally immersed experience goes far beyond the standard combo of console and TV. Sure, there’s the 40” HDTV and games rendered in full HD, but when you throw in vibrating controllers, scene-dependent lighting, fans to simulate movement, and mechanical gamer chairs, the experience becomes all the more real.

For the ultimate aesthetic setup, Philips’ amBX speaker system combines active peripheral lighting—imagine Ambilight for your PC—with rumble simulators and breeze fans to create the aesthetic. To experience the technology, I climbed aboard a full-scale mockup of a Formula 1 car. In the cockpit of the Intel-powered F1 simulator, I felt a real breeze as I sped around the track. For the times I was doing less speeding and a little more off-roading, a powerful subwoofer let me know I was busy tearing my beautiful car to pieces. And all the while, colors were changing in my peripheral vision to match the overall scene. The experience was exhilaratingly realistic; so much so that I demanded a second try.

As a follow up to Jay Rolls’ earlier post about “slinging” content around the home, I set out today to learn more about the different ways companies are bringing media into the home and the different options for sharing that media between interconnected peripherals. One approach is to implement a shared media vault—essentially storing all media on a centrally located hard drive shared over a network by any televisions and computers in the house. Maxtor, HP, and Microsoft all offer these solutions—and those are just the companies I stumbled across.

Another approach is to network between the digital set-top box and the home computer, allowing a two-way viaduct of television shows, movies, audio, and personal files. There are several ways to network, including the 802.11 wireless standards, powerline networking, and traditional hard-wired connections. Scientific Atlanta, Motorola, Apple, Microsoft, RCA, and Toshiba offer this type of sharing, and those are again just the companies I stumbled over.

The message here is that options abound for creating the ultimate media system, and many of the components are already in place. Where the consumer must make a decision is in how to implement such a network and how to tailor it to his individual needs.

CES is a swirling mass of sensory overload this year, as it has always been. We spent 10 hours on the floor visiting with 26 different companies yesterday. As has also become customary, HDTV was everywhere, and large displays dominate many of the large consumer electronics companies’ booths. Displays are more stunning, and on-screen navigation appears crisper and easier to read and use. I noticed examples of companies capitalizing on the buzz of High Definition, offering other Hi Def capabilities such as Hi Def voice. If there’s any overarching theme that I could detect thus far, it’s that companies are struggling to figure out more and diverse ways to get content to the home and then to “sling” it around the home once there. Of course, the Internet and IP are central to most mechanisms for shuttling content to the home. Many companies announced ways to do direct downloads to their devices off the Internet, Sony being one of the most notable.

Just beyond the Intel and Microsoft booths where gaming is the major emphasis, little innovations are making a big splash at the LG and Panasonic booths. For the consumer too impatient to wait for the Blu-Ray/HD DVD dust to settle, LG’s Super Multi Blue player may strike just the right chord. It was only time before someone jumped on the dual-format wagon, and it seems LG has found a compromise worthy of the consumer market. Outside of listing specs, I can say the player performs exactly as it’s supposed to. Every disc put into the drive is treated the same way on the screen, offering care- and worry-free operation. LG accomplished the feat by producing a dual-laser read head; one for HD DVD and one for Blu-ray. The player automatically chooses the correct format of the disc after it is inserted. Also available is a combination drive for PCs, offering Blu-Ray rewritable capability as well as HD DVD playback. For televisions, LG and Panasonic are showcasing technologies that almost completely remove the motion blur most flat panel plasma and LCD screens are prone to showing. The resulting picture is cinematic and shockingly life-like—as close to a "perfect" picture as I’ve experienced thus far.

The 2007 International CES has just officially begun, but the buzz has been building for weeks, and the press releases and covers of the show dailies tell the story. This is the year of 1080p, of the final battle between Blu-Ray, HD DVD, and—finally—of mobile integration. For the past few years, each of the aforementioned technologies was nothing more than an idea or a not-so-distant pinnacle of development. Televisions capable of displaying the 1080p standard, a “full HD” picture, are just now becoming more affordable and moving toward market penetration. LCD is pushing plasma aside as companies such as Toshiba are dropping plasma production altogether.

Blu-Ray and HD DVD are in the midst of their format war, with the Sony PS3 and Microsoft’s Xbox 360 at the center of the battle. Blu-Ray backers are calling a premature victory based on sales of the Sony console, but it’s obvious the conflict is far from over as companies on both sides continue to debut disc players that constantly become less and less expensive.

In the realm of mobile electronics, the idea of a do-all device has been around for years but only now is it becoming a viable reality. Most progress has been centered around the cell phone, and coupling a music/video player with the already feature-rich modern mobile phone is the logical next step. There should be big news out of CES this year in this sector, especially in response to the rumored release of Apple’s own foray into the mobile phone market later this week during MacWorld in California.

Now, it’s showtime!