HomeVideo Savant Week in Review: Comcast Dissembles, Sputters and Blusters
Week in Review: Comcast Dissembles, Sputters and Blusters
Written by Video Savant
Saturday, 27 October 2007
By any measure, the past week has been something less than "Comcastic" for the US market's largest pay television company.
The first warning signs that things were going wobbly at Comcast emerged late last week, when separate investigations by the Associated Press and the Electronic Frontier Foundation revealed that Comcast appeared to be routinely interfering with -- without directly blocking -- certain types of network traffic being generated by its broadband Internet customers. The first Comcast customers to notice the problem were users of the file-sharing software BitTorrent. While it was these grumbles that set off the AP and EFF sleuths, it was eventually determined that Comcast's actions were also impacting traffic generated by Gnutella and Lotus Notes.
It appears that whatever Comcast is doing is motivated primarily by network traffic management concerns rather than a desire to play undercover copyright cop. But because Comcast executives have stonewalled and have reportedly instructed its customer service staff to do the same, no one really knows for certain what's going on or why. This clearly falls into the category of avoidable and fixable problems, but the public relations beatings are likely to continue until Comcast embraces truth and accountability.
Then, on Thursday of this week, Comcast released its third quarter earnings report that revealed the loss of 65,000 basic cable subscribers during the quarter and slower-than-expected Internet access sales along with higher-than-expected capital spending -- all in all, a bad combination. Comcast investors reacted quickly, marking shares down to a 52-week low, which dragged other cable company stocks down in concert.
As noted in last week's review, Comcast previously announced plans to increase cable subscription prices by up to 7.5 percent, based in part due to higher costs related to HD programming. Increasing prices and attributing it in any way to HD programming seems more than somewhat ill-advised in light of the ongoing rollout of dozens of new HD channels by DirecTV (more than 70 at the moment, with at least 100 promised before the end of the year).
But the Comcast rationale for that became a bit clearer this week when Comcast President Steve Burke told financial analysts "We are clearly the high-def leader." Burke justified his claim by saying that Comcast serves more HD subscribers than DirecTV and DISH Network combined. Comcast is the largest pay TV provider in the US, at 24 million subscribers, compared to 16 million for DirecTV and 13 million for DISH Network.
While it's certainly possible that Comcast would have a higher HD penetration than either DISH and DirecTV alone, a claim that it has more than both combined just don't add up. Of Comcast's total subscriber count, only 13 million are "HD ready" digital subscribers, while all DirecTV and DISH Network 29 million subscribers are digital. This means that Comcast would need to convert digital cable subscribers to its HD package at a rate nearly 2.5 times [Edit: shud be nearly 1.5] higher than its satellite competitors. Because none of these companies break out their HD subscriber numbers separately, no one knows for sure what sort of HD customer conversion rate these companies are achieving.
But the Comcast HD subscriber claim, lacks credibility and smacks of wishful thinking -- the same sort of wishful thinking that leads to the belief that its Internet controversy will go away as long as the company continues to ignore it.
Of course, Comcast isn't the only company capable of making high-profile mistakes and looking bad in front of all the world -- just look at Sony and its rootkits, and even Apple with its premature iPhone price cut. The key to these sort of problems, is getting out in front of them, fixing them and containing the damage. DISH Network provides another good illustration of how this should work.
Earlier this week, a DISH customer service rep informed a Southern California couple that they would have to pay a $300 charge for the loss of a satellite receiver that was destroyed when their home burned to the ground during local wildfires. Naturally, it didn't take long for this story to make the online rounds, but fortunately someone at DISH corporate was paying attention and put a quick stop to the bleeding. While this sort of thing will undoubtedly have a near-term impact on DISH's reputation, the fact that it wasn't allowed to spread and fester puts a lid on the potential damage...
Wall Street continues to keep an ear to the ground about the possibility of AT&T buying DISH Network, and early speculation increased after a report in the Wall Street Journal indicated the company is seriously reviewing the options, including the possibility that it might try to buy DirecTV instead...
On the other hand, investors in Cablevision appear to have snuffed out any near-term prospect of the company's founding family to buying out shareholders and taking the nation's fifth-largest cable television company private. Cablevision also announced on Friday afternoon that it plans to increase cable subscription fees by 4.7% in early 2008, attributing the increase to rising programming costs, which is says have risen 13% during the past year...
In a break from several weeks of HD channel release announcements, DirecTV this week rolled out its new video-on-demand service to qualifying customers in the Mountain time zone. The VOD service, which is expected to be made available to all of the satcaster's HR20-700 DVR customers throughout the US before the end of October, includes around 2,000 programs and movies from a range of content providers. No HD VOD offerings as of yet, though a DirecTV spokesman says "we're working on it..."
Although it's only a single source reporting it, the hard times may be getting harder still for Charter Communications, as the 24/7 Wall Street financial news site suggests Charter is headed toward bankruptcy. Already struggling under the weight of nearly $20 billion in debt and a market cap of just over $1 billion, the Comcast-related knock on cable company stock prices this week hit Charter particularly hard, shaving nearly 25% off its value in a single day. Charter announces its 3Q operating results November 8...
Frankly, not much in the way of interesting news on the HD programming front during the past 7 days. Time Warner in San Antonio announced that it was adding Food Network, HGTV, History Channel and Lifetime Movies. It appears that San Antonio was an underserved TW market, so these additions probably shouldn't be viewed as a precursor to more systemwide HD additions...
A similar story for Comcast in Houston, which added seven new HD channels to systems there, including A&E, CNN, Food Network, HGTV, History Channel, National Geographic and USA. Comcast recently acquired the Houston area systems from Time Warner, and the additions there are presumably to bring Houston into line with other Comcast markets around the country...
Also, Superstation WGN announced that it would be available in HD beginning next month. No indication yet on who will be carrying the superstation when it debuts, but this is great news for displaced Chicago sports fans...
iSuppli reports on the the surprising return of the sub-37-inch plasma panel, a development that the forecaster says is largely being driven by LCD shortages at that size. LG is the first to re-introduce a 32-inch VGA-resolution plasma panel into the consumer market, but iSuppli believes that other manufacturers will follow the LG lead if they gain sales traction, with China viewed as a prime market...
CNET provides an interesting article that sets out to counter some of the common myths and misconceptions surrounding LCD panels, motion blur and the the highly hyped 120Hz refresh rate...
Remember when bigger was better? It appears that Thinner has sued Bigger for equal time, and now there's all-out race on among LCD manufacturers to produce flat-panel screens that just about disappear when you look at them sideways.
But the thinning trend for LCD panels seems clear, as Sharp has announced that it has managed sub-millimeter thickness (0.68mm) for a 2.2 inch LCD intended for use in phones or digital cameras. No doubt that breakthrough will be leveraged to produce even thinner LCD HDTVs...
Meanwhile Samsung has begun to show off a prototype of an OLED-based panel that's not just thin, it's bendable...
Another week, another opportunity for a Hollywood movie studio to shoot itself in the foot.
This time the focus of self-inflicted foolishness is Universal Pictures, which sadly discovered that its highly anticipated "American Gangster" release has been available via both downloads and street corner vendors for the past week, even before it's arrived at the local cineplex. And this latest bout of piracy isn't the product of clandestine videocam bootlegs of pre-screenings -- based on the quality of the pirated product, this was an inside job carried out during the post-production stage. (Wall Street Journal online subscription required).
I'm sure I'm not the only one who feels abused by the film industry's insistence on increasingly inconvenient copyright protection on products intended for consumer use, when the industry can't even police its own backyard for activities that aid and abet professional pirates. For me, it's yet another reason to remain indifferent to Blu-ray and HD DVD. Not that I actually need another reason...
The MPAA has also recently covered itself in PR stink, amid revelations that it hired Robert Anderson, an employee at BitTorrent, to spy and collect information about BitTorrent business operations, in return for promises of wealth and power. After the MPAA filed suit against BitTorrent, BitTorrent countersued under the Federal Wiretap Act, and the case is now winding its way through the court system. Wired Magazine's online site carries an exclusive story, based on an interview with Anderson...
Techdirt also provides examples of how two music genres -- traditional classical music and Brazilian tecnobrega -- have recently gained in popularity by embracing file-sharing, rather than battling it...
The leading news on the HD Disc battlefront this week was the release of data from Home Media Research detailing sales results for Blu-ray and HD DVD discs during the first nine months of this year. As expected, Blu-ray outpaced HD DVD units sales, by roughly a 2-to-1 margin, at 2.6 million to 1.4 million...
Several analysts noted that the year-to-date sales picture might begin to shift toward HD DVD, due to Paramount's recent decision to support HD DVD exclusively, and more immediately by way of a boost from last week's highly anticipated release of Paramount's "Transformers" HD DVD. However, even that high-profile HD DVD release wasn't enough to swing the weekly sales tally in favor of the HD DVD format, as Blu-ray still accounted for a majority of all HD discs sold during the week. So, even with the expected lift from "Transformers," HD DVD lagged Blu-ray, though the margin was considerably narrowed from the year-to-date trend.
Home Media also took issue with Paramount's claim that 190,000 HD DVD copies of "Transformers" were sold, suggesting that 115,000 was the correct number.
CNET writer Don Reisinger, creator the of the company's "The Digital Home" blog, joins the small but growing group of observers who are reaching the "so what?" point when it comes to following the ins and outs of the HD disc wars. Reisinger's conclusion? "Worrying about the high-def format is a waste of time."
So then, why am I bothering to spend 30 minutes a week on pulling together this section of the news summary? It's a good question deserving of a good answer. But even without one, I press on...
Following rumors last week that Toshiba and Microsoft were collaborating on a new Xbox 360 model that would include a built-in HD DVD player, a company spokesman on Wednesday said Toshiba isn't involved in such a project and indicated that Microsoft didn't favor an integrated HD DVD player "so as not to limit the user's experience" (whatever that means). But then, on Thursday, Toshiba's UK public relations firm tried to clarify matters by denying Toshiba's denial of an XBox HD DVD console by not very helpfully noting, "the Xbox 360 is not a Toshiba product."
Aren't you glad they cleared that up?...
The fate of another high-profile HD DVD rumor has turned out a bit more conclusively, as Gizmodo is reporting, with photo, that beginning on Nov 3, Wal-Mart will sell a Toshiba HD DVD player for just $198. But it's strictly a one-off deal (for now), with each store limited to just 18 units at that price...
TWICE online is reporting that Samsung has decided to streamline its Blu-ray product line by eliminating a mid-tier player that it previously had planned for release. Could this decision be driven by earlier reports that Blu-ray manufacturers will be aggressively dropping prices in order to put a final, fatal squeeze on HD DVD during the end-year holiday selling season?...
During its quarterly conference call with financial market analysts, Netflix said it is evaluating the distribution of movies and other content directly via the Internet to game consoles and other types of set-top boxes, in addition to its current method of winging the actual atoms to your mailbox...
Click here for Engadget's weekly summary of the Nielsen Videscan market share numbers for Blu-ray and HD DVD...
It seems like FCC Chairman Kevin Martin has been jawboning forever in favor of an FCC order that would require cable systems to carry all parts of a local station's digital broadcast signal, including subchannels made possible through multicasting. Martin hasn't succeeded , but he also doesn't appear ready to give up either. In the past year, Martin has refashioned his support for multicast "must carry" by talking up the potential benefits it could bring in the form of increased TV station ownership by minorities.
On the other hand, cable television companies have adamantly opposed multicast "must carry," due to the additional bandwidith it would require and the potential competitive conflicts it might create.
This week a number of organizations have come out in formal opposition to Martin's plan, including the Americans for Tax Reform, the American Conservative Union and the National Taxpayers Union,
Leaving aside the political angles on this, anyone who really appreciates the beauty of true, unadulterated over-the-air high-definition broadcasts should be against a multicast "must carry" regime, as it would lead to proliferation of digital subchannels that steal away the bandwidth required to deliver the true potential of HDTV programming. If broadcasters aren't guaranteed subchannel carriage, they won't be so quick to bear the cost of developing the additional programming that subchannels would require...
It seems that after several weeks of Sony bogarting the game console price-reduction spotlight, Microsoft has filled the void, confirming rumors that it will begin selling a $280 Xbox 360 Arcade edition aimed at the growing casual and family-oriented segment of the video games market...
Video Savant 
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