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Where's
the Beef? Not in Residential Phones, That's For Sure The major US telcos - Verizon, SBC, BellSouth and Qwest - seem to repeatedly underestimate the cable TV companies. The cablecos have major content partnerships, increase their broadband speeds and find other ways to ensnare customers, while the so-called Baby Bells seem to think that lowering their DSL prices and announcing some far-off fiber optic scheme is enough to compete in the broadband market. Louisiana local phone company Eatel is busy installing fiber optic cable to every home it passes and planning to launch a TV service as well. Essentially, this tiny telco is doing is what the major telcos need to do in order to successfully compete with cable - sharpen their shovels and start digging trenches. It is surprising that the telcos are investing billions of dollars to buy up other phone companies. What they should do, perhaps jointly, is buy one of the satellite TV services ,in order to gain access to TV programming, and TiVo, in order to get some market-leading DVR technology. The satellite TV services have managed to do in the subscription TV market what the phone companies have not managed in the broadband world - take market share away from the cable TV companies. The Baby Bells don't need more phone business - they need access to content (entertainment and information) to deliver over their networks and they need the most advanced set-top box with built-in DVRfunctions. That's where the future is. The most likely acquisition candidate would seem to be EchoStar with its Dish Network. However, Rupert Murdoch, whose News Corp controls EchoStar rival DirecTV with 34% ownership, has always been willing to do joint deals to help him achieve a competitive advantage. There is no certain future for the telcos in making mere marketing/money collection deals with the satellite TV services as each has done. The satellite TV services clearly intend to offer broadband too. DirecTV is putting up enough satellites to become a force in broadband. The fact that it recently hired a high-level broadband VP is a strong signal of its intent. The residential landline phone business is dying. Consumers will no longer pay big bucks just to pick up the phone and make a call from point A to point B. The future, as the cable TV companies discovered some time ago, is in broadband access and delivering entertainment to the home. I, as many others have done, recently cancelled my home phone service - I'm rarely there and even then it's better to call me on my cell. At the same time, my DirecTV bill runs over $100 a month. Compare the two: Zero for phone service but over $1,200 a year for entertainment and another $500 or so a year for Internet access. Where's the beef? There's certainly none left in residential phone service. PS: While they're in the acquisition mode, one or several of the telcos ought to buy TiVo and thus obtain state-of-the art DVR technology. The integrated DVR/set-top box with dual tuners that TiVo developed for DirecTV several years ago still beats anything the cable TV companies have come up with. There are unconfirmed reports that TiVo is about to land a major deal with Comcast - it had the deal in hand some time ago, according to the New York Times but TiVo founder and then-CEO Mike Ramsay, who recently resigned his position, turned it down because, reportedly, he didn't want to spend engineering time doing a Comcast box. Once TiVo gets the Comcast deal, if it does, it's going to be politically difficult for the phone companies to acquire it. Entertainment/information
delivery networks and DVRs - that's where the beef will be.
Back
to Headlines BT Putting Artificial Caps on Broadband Downlods Faster broadband - up to 8 Mbps - coupled with limits on download volumes will be coming soon from BT, according to various reports. BT and consequently its broadband resellers will reportedly change from billing subscribers based on their access speed to billing them based on how much they download. BT seems to anticipate increasing amounts of video downloads and is licking its chops. The telco recently set-up its own BT online video download service called BT Entertainment. DSL access speeds are governed by, among other things, the distance to the user from the phone company's nearest central office. One complication to the idea of changing by download volume is the differing access speeds each subscriber will have based on how far they are from the nearest central office. Users near a central office will get higher speeds at the same price than more distant users pay for slower speeds. In April, BT will begin testing an upgraded ADSL network with speeds from 2 Mbps to 8 Mbps. Some of the company's ISP resellers such as PlusNet expect the higher speeds to be widely available this summer, according to CNET. PlusNet this week said that starting in April its broadband customers will be able to get speeds of up to 8 Mbps "where available." "Speed will no longer be a factor in how people buy broadband," PlusNet marketing director Marco Potesta said, echoing what BT execs have recently been saying. PlusNet, like BT, has until now priced its broadband based on the access speed, ranging from £22 ($42) a month for 512 Kbps to £40 ($76) a month for 2 Mbps. Beginning April, 22 pounds will buy 30 gigabytes of peak-time download data per month plus another 230 GBs during off-peak hours. Users can pay more, of course, to get more download volume. Another scheme is to pay £15 ($28) a month plus an additional £1.50 ($2.84) for each gigabyte of download. No point in making the choices simple, is there? All this is also complicated by the fact that BT still doesn't know where it can deliver 8 Mbps. One certain result is that two people paying the same, based on their download volumes, will be getting substantially different access speeds. According to Dave Burstein of the DSL Prime newsletter, "The news from BT, of a cap that limits Internet video to less than 50 minutes, is distressing. The BT broadband team are among the world's most knowledgeable Internet executives; they know bandwidth is now cheap enough that the cap is unjustified. There's no good reason for a BT's move other than to make life harder for video competing with the service they are going to offer later this year or early 2006. They previously hoped to block outside video by limiting speeds to 512 Kbps, a third the typical US rate and a tenth what most of Paris can get. But Bulldog and others started grabbing share with higher speeds." Burstein touches on what seems certain to become a major controversy in the broadband industry - the attempt by the broadband services to control the content that is distributed over their infrastructure. Perhaps the broadband services are even thinking about extracting a "tax" on content providers for the use of their broadband network. Burstein says that in order to make the issue clear to consumers, the caps on download volumes should be measured in terms of video time, not gigabytes. Standard definition video such as Movielink pre-encoded video downloads requires between 1.3 Mbps and 2.1 Mbps using state-of-the-art MPEG-4 or Microsoft's WMA 10 encoding. Coincidentally, that is the same as SBC's data rate for Lightspeed. Converting from megabits per second to minutes of video, 1.3 Mbps is 4.68 gigabits per hour, or 0.585 gigabytes per hour (plus overhead). The higher speed of 2.1 megabits is 7.56 gigabits, or just under one gigabyte per hour. That means 25 hours per month of video at the lower speed; 15 hours per month of video at SBC's higher speed. Burstein contends that BT knows that there is no cost justification for the 15 gig cap they've imposed on their BT Retail customers because the effective cost of bandwidth to an operation like BT is now about 25 cents a gig and dropping rapidly. The lower costs of bandwidth means the video Internet is finally ready to explode. "Customers hate bandwidth caps," Burstein says, "so they disappear where competition is strong." BT gets away with it because it has a monopoly in much of Britain. It's cable competitors also limit bandwidth severely despite the criticism they receive. He says that BT "couldn't get away with the caps if someone like Free.fr was a player in the UK market. "BT's proposed new pricing structure is carefully crafted to keep competitors out," Burstein said. "BT has fiber in place to essentially every exchange and sufficient volume to be profitable in the vast majority, which means they have low marginal costs throughout the system. So the recent price cut, for larger exchanges only, is clearly an attempt to dissuade any new entrant such as Cable and Wireless' Bulldog or NTL from putting in facilities. There's a minimum cost for each exchange they have to meet, requiring a certain volume of customers, so all new carriers begin in the larger territories." UK citizens' best hope is more
competition. Perhaps the electric utilities can get their act
together with Powerline technology. Perhaps the satellite TV
services will see the broadband opportunity. Lastly, perhaps
the kinks in WiMAX technology get worked out and someone other
than BT will build a national wireless broadband network.
Back
to Headlines "Sony will buy Apple" - That one keeps popping up. What Sony needs is a Steve Jobs or his equivalent to drag the company into the digital media era, something that current Sony president Kunitake Ando has been unable to do. It's 2005 and Sony still does not have a successful entry in any of the digital media product categories - portable media player, DVR, media server, home networking, online music service or entertainment PC. "Apple will buy TiVo" - A new rumor, possibly started by those who paid $8 a share or more for TiVo stock that hovers in the $4's. TiVo's problem is something that Apple could solve. It has become apparent that DVRs are going to be sold by the cable and satellite TV services, not by the retailers that TiVo was hoping for. Without a new deal with such as Comcast or a re-energized deal with DirecTV, TiVo simply won't have the necessary distribution channel regardless of how much technology it has. TiVo's dual-tuner DirecTV model is generally rated as the best integration of DVR and set-top box. No doubt Apple could have made the software smoother and more intuitive - but it's unlikely that Apple could add much assistance to landing a big deal with a cable company. After all, the cable companies already have two technology giants, Motorola and Scientific-Atlanta, willing to do their bidding. Then there's Paul Allen's Digeo with its DVR software that'll have an insider's advantage with most of the US cable companies. Who Should Buy TiVo - The companies that need TiVo or a TiVo equivalent product are the telcos - Verizon, SBC, BellSouth or Qwest - individually or in some joint effort. If they want to compete with the cable TV services in offering broadband delivered entertainment - DVRs that function as home media centers The cable TV services through their two set-top box suppliers, Motorola and Scientific-Atlanta, have already locked up the two best alternatives to TiVo's technology. Motorola recently acquired Ucentric for its DVR and home networking technology. The other significant DVR technology is Digeo, in which Paul Allen's Vulcan Ventures is the main investor. Allen also runs cable TV company Charter Communications. Digeo has licensed its technology to Scientific-Atlanta, which has sold about 70,000 Digeo-based boxes to Charter. That leaves the phone companies
with slim pickings unless they can get access to TiVo
technology. The best way to do that would be to buy the
company - and buy it before one of the cable TV companies such
as Time Warner Cable or Comcast. Back
to Headlines CEA, Retailers to Develop Training Programs The Consumer Electronics Association (CEA) and the North American Retail Dealers Association (NARDA) agreed to partner to "leverage the training and educational efforts of NARDA and CEA to provide the best tools to strengthen retail and service management skills," among other things. Goodness knows that the coming avalanche of digital media products will require well-trained sales, support and management people in the electronics retail stores. The two groups agreed to create programs and training to build the electronics industry. Training and educational programs will include such as NARDA's Institute of Retail and Service Center Management and CEA's CEknowhow.com. NARDA members operate some
3,000 stores and generate over $10 billion in sales. CEA has
almost 2,000 corporate members involved in the $113 billion
consumer technology industry. Back
to Headlines Nielsen Delays Measuring DVR Usage Nielsen, which measures TV and
Internet audiences, has postponed until 2006 a new service
that would measure DVR usage. It will earmark part of a
planned $2.5 million investment into the accuracy of its TV
ratings for additional development of the digital video
recorder measurement service. The DVR usage service will offer
same-day ratings. The two satellite TV services DirecTV and
EchoStar have been particularly aggressive in pushing DVRs,
and consequently the cable TV services have begun doing so
also. Back
to Headlines The digital media age is about the Internet delivering music, movies, games, other entertainment and information on-demand. Consumers will gain control over what they get, when they get it and where they get it. 1) Wireless networking. Entertainment will be the driving force for installing wireless networks in millions of homes particularly as network speeds increase to 100 Mbps, permitting movies, TV shows and home videos that are downloaded or stored on a PC to be played on TV sets in other rooms. 2) Built-in digital video recorder functions à la TiVo will be included in entertainment appliances such as TVs and set-top boxes. By connecting them to the home network, consumers will be able to access movies, TV shows and other TV-broadcasted content in any room at any time. 3) A digital media interconnection standard, probably a combination of Windows and UPnP, that will automatically synch up connected multi-vendor digital entertainment products and display a common user interface menu for operating any connected device - a standard that could lead to (gasp!) a universal remote control. 4) Handheld personal video players such as those from Archos and HandHeld Entertainment. Millions will use them to watch downloaded and pre-recorded video. 5) Digital Media-enabled cell phones that let you talk, play games, take pictures, personalize ringtones, surf the Web, listen to music, watch news and sports and preview movie trailers. 6) Streaming media for accessing Web-based radio, news and sports highlights, plus dedicated music genre channels. Streaming will one day deliver full-length movies, music videos, TV programs and information videos to millions of Internet-connected homes around the globe. 7) Smaller, less expensive
storage products with larger capacities such as DVDs, tiny
hard disks and memory products that will drive down costs and
increase both capacity and fidelity - in other words:
"More, better, cheaper."
Back
to Headlines Preview of Looming Battle Between Cable TV, Phone Companies A preview of the looming major battle between the phone and cable TV services is taking place in a small, sparsely populated parish in Louisiana. The preview promises to show what the phone companies and cable TV services are willing to do to protect their future - perhaps even their existence. Eatel (nee East Ascension Telephone), a tiny local phone service provider located in southeast Louisiana, will offer TV service to its phone service subscribers in Ascension parish by March 1. Eatel has been installing a fiber-optic network to deliver TV programs and broadband access in competition with major cableco Cox Cable. Eatel marketing manager Jason Domangue said the service will be available to about one-third of the homes in Eatel's territory when it goes live. OK, Cable TV! Match This Service
Monthly
Services Cox $131.95 unlimited phone, basic TV and 4 Mbps broadband Domangue says Eatel's fiber optic marketing will be based on value, not price. It will offer discounts for service bundles. Eatel says its high-speed Internet access will be twice the speed of Cox' and that it will offer more TV channels than Cox for the same price. Eatel's basic bundle phone service, 10 Mbps broadband and TV, will be $100 a month. Its digital TV service starts at $50 a month. For $90 a month, Eatel subscribers can get most channels including the premium ones such as HBO and Cinemax. Eatel's other competition for TV will be EchoStar and DirecTV, the two satellite services that have taken market share from the cable TV services. Eatel still considers Cox as its primary competitor, however. Cox Cable, which competes with
TV-challenged BellSouth in the adjacent East Baton Rouge
parish, charges $131.95 a month for unlimited phone use, a
basic package of TV channels and 4 Mbps Internet access.
Back
to Headlines Verizon Signs with TVN Entertainment Verizon has done a deal with digital content aggregator TVN Entertainment to provide video-on-demand (VoD) programming and services for Verizon's upcoming FiOS TV service. TVN will provide Verizon with VoD programming including new film releases, a library of previous releases, independent films, family and children's programming and a number of free on-demand networks. FiOS TV will also offer digital TV channels, high-definition programming and an electronic program guide (EPG) over Verizon's fiber-to-the-premises network. Verizon's fiber network in now under construction in parts of 12 states. Customers will be able to buy FiOS TV as a stand-alone service or packaged with voice and FiOS high-speed broadband - both of which are already available in some areas. Terry Denson, VP of marketing
and programming for Verizon FiOS TV, said that FiOS TV
customers would be delighted at how easy it will be to choose
from thousands of hours of VoD programming. Verizon will also
use other TVN services such as its TVNow rapid-turnaround
service that enables subscribers to order news and events,
such as the presidential inauguration, within hours of their
occurrence. Back
to Headlines Is 2005 the Year of Broadband over Power Lines? Few have taken seriously the possibility that the electric utility companies can develop satisfactory broadband technology that will run over the electrical grid and throughout the home, making every AC outlet a network connection and a gateway to the Internet. Even fewer think the conservatively run utility companies can find the initiative- the spunkiness- to take on the cable TV and phone companies in what is already a competitive market. The skeptics point to the difficulty the US phone companies had to getting focused on residential broadband, a lapse that let the cable TV companies gain, uniquely in the world, a big market share. Most doubters think the electric utility companies' management is even more "dinosauric." The possibility of broadband over powerline (BPL), as it's come to be called, keeps popping up. It may be "primed for real growth in 2005 and beyond" across the United States, according to a new white paper released Thursday by the New Millennium Research Council (NMRC). It says that trials and actual commercial deployments of BPL systems are on the rise, with over 20 projects in operation in 2004 and more expected to come online in 2005. By one estimate, roughly a quarter million homes in the United States already had the opportunity to choose BPL services in 2004. "Is 2005 the year of BPL?" is the question the report attempts to answer. Titled "Powering the Broadband Market in 2005 and Beyond," the NMRC white paper says there are a number of signs that suggest this could be the time the technology begins to emerge as a viable competitor in the broadband market. It posits that electric utilities across the country are currently deploying the necessary technology to provide broadband and other advanced communications services, such as voice-over-Internet Protocol (VoIP), via the power lines. If BPL becomes viable, it could dramatically change the landscape of the broadband market, offering competition to the phone and cable TV companies by delivering high-quality service to remote areas. The report says that BPL technology already is available in sections of New York City (Ambient) and, in the first citywide commercial BPL network in the US, in the suburban Washington, DC community of Manassas, Virginia (Communication Technologies, also known as COMTek). The report profiles both companies. COMTek president and CEO Joseph Fergus said, "The industry is finally moving beyond the theoretical stage to the real thing - actual commercial deployments of BPL that are being pioneered today by companies like COMTek. BPL isn't the answer for every community and, in some cases, the technology is likely to be blended with other broadband platforms in order to provide the widest possible coverage. But the bottom line is unmistakable - BPL is finally here in a real way that will touch the lives of millions of additional US consumers and businesses in 2005 and beyond." Robert Olsen, professor of electrical engineering at Washington State University, said it was possible to deploy BPL networks that offer connection speeds comparable to those of the phone companies' DSL or the cable TV systems. "It is doubtful, however, that data rates significantly higher than this will be possible without a very significant investment in 'conditioning' the power system," he said. "While numerical limits on electromagnetic emissions set by the FCC can be met, it will depend upon exactly how the FCC defines harmful interference." Barry Goodstadt, VP and senior consultant with market research firm Harris Interactive, said, in conjunction with the issuance of the report, that "There are challenges that remain for BPL, including mitigating interference and constructing viable business models to attract more customers and create more revenue. Experts feel that while the technology might be ready, electric utility companies and their partners still need to find ways to effectively compete in the broadband market. Regulators and policymakers are working to create clear rules for BPL and this could help utilities develop business plans that work." BPL's status and future still seem uncertain: -Speed - It can compete with the current phone and cable TV companies' technologies but probably not against the faster speed both are planning for the near future such as that offered by fiber optic wiring. -Interference - There are still some unresolved issues with the AC power interfering with the broadband data. -Range - If feasible, BPL could bring high-speed Internet access to many homes that the cable TV and the phone companies cannot reach. -Home Networking - With BPL, every home is networked with one or more network outlets already installed. -Cost - Prices seem comparable to existing DSL and cable TV technology. -Management Spunk - Executives at the electric utilities, by most any count, would rate third in "spunkiness" behind the cable TV and phone companies. Companies that come out of highly regulated, "un-competitive" industries generally don't fare well when they enter a market with entrenched competitors. How BPL Works By bundling radio-frequency (RF) energy on the same line with the electric current that is already being carried, data can be transmitted without the need for a separate line. Since the electric current, which is used to provide power to the end users, and RF energy signals carrying the data operate at different frequencies (with electric current traveling at lower frequencies and data at higher levels), the two don't interfere with each other. Technological advances in the
past several years have enabled electric companies to place
devices along existing wires and poles to provide broadband
services. Known as Access BPL, the systems require a
connection from the Internet backbone at a power substation,
repeaters (in some cases) and couplers along the medium
voltage power lines that transmit the data signals, and then a
final converter that transfers the signal from the medium
voltage to the low voltage lines that go into homes. Once
inside the home, the signal can be accessed at any electrical
outlet with a BPL modem. Back
to Headlines Telcos Competition Needs Strong to Move Forward "Jason Meyers of Telephony laments 'how the spate of mega-carrier mergers could threaten innovation and slow the adoption of new technologies: It appears to be happening already. As it prepares to merge with Sprint, Nextel reportedly is ending its trial of Flarion's Flash-OFDM broadband wireless technology. ... None of this can be good news for the acceptance and integration of new technologies-at least in the short-term.' "Everything I've learned
covering telecom suggests the best way to move the industry
forward is with strong competition, which means the mergers
that cut US wireless carriers from six to four should never
have been allowed, and the coming demise of AT&T and MCI,
both already half-dead, will compound the problem. Pip Coburn
of USB has a explanation of this the business schools will
soon glom on to, that mega-corporations only move forward when
they have enough pressure to overcome the 'total perceived
pain of adoption' of something new. Ideally, that pressure is
strong competition (possibly cable in the US; Free.fr in Paris
and Yahoo BB in Tokyo); when competition is weak, you need an
active government agent, currently out of style in the
west." - Dave Burstein in his DSL Prime newsletter
Back
to Headlines Hughes to Provide Direcway Broadband to Airplanes Hughes Network Systems has
signed up aviation services provider Row 44 to use its
Direcway satellite broadband service. Direcway will give Row
44 high-speed connectivity of up to 30 Mbps to the aircraft.
Row 44 will use it for in-flight entertainment, consumer
connections and flight deck data. Hughes has about 750,000
Direcway broadband users in 85 countries. It's available on
five continents. Back
to Headlines The Vision Thing: 'Worrying Not about Bandwidth But about Content by Year-end' The next 12 months will be the key, says Andrew Burke, CEO of BT Entertainment, a new broadband education and entertainment division that BT formed last year to develop, license and deliver content such as on-demand music, gaming, TV and movies, according to MediaGuardian.co.uk. "Broadband is getting bigger and bigger for us. As bandwidth increases, it becomes much more video-ready as a medium. The ability to deliver niche content to particular communities is becoming a reality," Burke is quoted as saying. MediaGuardian goes on to report that BT is testing MPEG-4 so it can deliver more content of higher quality. BT Entertainment recently bulked up its executive staff by adding the Dan Marks, president of Universal Studios Networks UK, to develop its video-on-demand over broadband strategy. People are after more than merely high-speed browsing and music downloads, according to Burke. "This year is about taking community, communications and entertainment and putting them together," he said. MediaGuardian points out as an example of Burke's vision a site that the Philharmonia orchestra recently launched. The Sound Exchange, at www.philharmonia.co.uk/thesoundexchange, is a free site that provides new ways of interacting with audiences. Funded by BT and five years in development, the Sound Exchange offers musical education in chat rooms and question-and-answer sessions with the musicians, plus video demonstrations by the orchestra. Users can submit their own compositions and choose from thousands of free music downloads. The site will also host live, interactive concert Webcasts, the first of which is scheduled for April 23. BT's Rich Media unit is the technical platform for Sound Exchange. BT and other broadband ISPs on both sides of the Atlantic and Pacific are counting on the ability to serve niche markets to help grow their business. The webzine quotes Burke as saying, audience is getting much more spread across all ages and demographics. It used to be young, Internet guys on their PCs, but it isn't now." "It's a vision
thing," Burke told the paper. "There is so much
going on in the content area not just by us but by everyone,
which is why by the end of this year we will be worrying not
about bandwidth but about content propositions."
Back
to Headlines The DSL Demonstration of the Year
Dave Burstein of DSL Prime says that the DSL demonstration of
the year will take place Tuesday morning March 8 at the Fast
Net Futures conference in San Jose. Metalink and Ikanos are
promising to show a DSL network with 100 Mbps - up and down -
using simple circuit boards, wire spools long enough for
almost any apartment building and a computer attached to show
the throughput. Last year, the two companies used similar gear
to show a throughput of 107 Mbps downstream, 30 Mbps upstream.
Reportedly there are customers waiting for the technology in
Seoul, Tokyo and Hong Kong. Burstein says that the 100 Mbps
symmetrical service is the natural choice for customers in
apartment buildings in California, London, Paris and his block
in Manhattan. He calls it "the choice for fiber to the
curb or basement." Back
to Headlines RIAA Pocketing an 'Easy $25,269,000' in US Suits The RIAA and the major record labels will pocket an "easy $25,269,000" if all 8,423 of the people they have threatened to sue settle for what the RIAA says is an average settlement of $3,000, according to the University of Texas newspaper The Daily Texan. The paper calculates the cost of legal filing fees at $200 per 50 filings because the RIAA was able to file multiple subpoenas before November. It reports that federal courts in Austin, unlike others, decided that the RIAA may not file blanket-style subpoenas but must file separate paperwork for each IP address. The way the deal works is that the RIAA files a subpoena against the ISP of an alleged copyright infringer to force the ISP to reveal the offender's identity and location. The RIAA can then file suit against the alleged infringer. However, before filing the suit, the RIAA must write the infringer and offer to settle. Assuming each person receives a letter that includes a phone number of a settlement center, each person decides to pay a little now instead of a lot later by settling and each person settles for the average $3,000, then for $200 the RIAA could make an easy $150,000. The Daily Texan, of course, omits the costs of legal fees - big ones, we'd bet - that the RIAA and the labels are forking over to their law firms. According to the paper, in the letter the RIAA sends to those whose identities it has obtained there's a phone number to a settlement center. The settlement center reportedly tells those who call how many files they were sharing. It says that if the caller had shared 500 or fewer tracks, then the RIAA may have overlooked them. The settlement company sends out a packet of settlement documents with the warning that the alleged infringer has 90 days to settle before a case against him, using his real identity, is filed in court. Andrew Tran, a reporter with the paper, called the settlement center pretending to be a distressed student. The following dialogue occurred, as reported in the paper: When Tran asked the man answering at the settlement center what the documents meant, the man said, "There has been a John Doe lawsuit filed against your IP address. The letter you have received from Time Warner is an indication to you that the law firm of Mitchell, Silberberg, and Knupp in Los Angeles, attorneys for the record company, is seeking the personal information associated with that IP address." When Tran asked for an explanation of what that means, he was told, "Time Warner will turn that info over to the law firm in a matter of days, and the letter is your opportunity to appear in court, if you wish to argue why or why not that information should be leaked. Nobody has won that argument, yet." Tran told the settlement center representative that he could not possibly be guilty and suggested that perhaps it was one of his roommates. The settlement rep said, "If this is a roommate situation, you are still the one singled out, because you are the account holder for the Internet connection. You are responsible for activity on that account." When Tran told him that it didn't seem very fair, the man replied, "You should settle with us and dispose of the situation, sir. If your roommates were the ones who actually did the downloading, and you never partook in downloading or listening to music or what not, you might be able to approach them and say, 'we have a problem, help me out here.' But at this point in time you will be the one who will remain on the subpoena." Tran says that the man did not tell him that it was a fact he could bring up in court, but rather tried to sell him on settling. The settlement rep also told Tran, "And the roommates. We don't have any information pertaining to them, and they will not be pursued at this time." Tran then asked him whether his credit would be affected, whether he would be reported to any credit agencies. The settlement guy replied, "Not at this time; you are a John Doe. If the situation moves forward where I am not able to negotiate a settlement with you, it will go into a named situation, where you will be named in a federal lawsuit." Tran said that he could feel his shoulders getting heavier and his heart beating even though he was only pretending to be sued. As to what would happen next, Tran was told, "You will be served with a complaint and a summons to appear in court, and by that time your name will be public knowledge to all those people interested in who's being sued by whom. It won't affect your credit at this point. But if you are named in a federal lawsuit, it could also affect your job opportunities, because on employment applications, many times they will ask, 'have you ever been party to a lawsuit?' And you would have to check 'yes' at that time, because that would be public knowledge." The man warned Tran that he
should settle after Tran thanked him for his time and said
goodbye. Back
to Headlines Copyright Enforcement Comes to Russia Russian authorities are reportedly investigating the Russian Web site Allofmymp3.com for selling downloadable digital copies of copyrighted music illegally. The site's principles are believed to be offering the music both in Russia and internationally without the authorization of the rights holders. The Computer Crimes unit of Moscow City Police, which was doing the investigation, turned the investigation's report over to Moscow's City Prosecutor's office on February 8. The International Federation of the Phonographic Industry (IFPI), on behalf of its members, also submitted a formal complaint to the prosecutor's office on the same day, urging prosecution. The prosecutor has 30 days from the date of receiving evidence to decide whether to proceed with a criminal prosecution. IFPI's complaint alleges that Allofmp3.com has not been licensed to distribute its members' repertoire in Russia or internationally. IFPI Moscow regional director Igor Pozhitkov said, "We have consistently said that Allofmp3.com is not licensed to distribute our members' repertoire in Russia or anywhere else. We are pleased that the police are bringing this important case to the attention of the prosecutor. We very much hope and expect that the prosecutor will proceed with this case, which involves the sale and digital distribution of copyrighted music without the consent or authorization of the rights holders." IFPI, headquartered in London,
has a regional office in Moscow plus others in Brussels, Hong
Kong and Miami. The Miami office covers Central and South
America. The organization has 1,450 members in 75 countries
and affiliated industry associations in 48 countries.
Back
to Headlines Professor: Take the Labels at Their Word University of Ottawa professor Michael Geist's latest column in the Toronto Star weighs in on the Canadian recording industry's rejection of alternative compensation systems because it prefers to rely on the free market. Geist points out, however, that "In fact, contrary to claims of faith in the free market, the music industry has been a leading proponent of government involvement, consistently seeking both financial support and legislative intervention from the federal government." He says that Canada "has never adopted an exclusively market-oriented approach to copyright and culture. As recently as last November,
the Canadian recording industry "urged the government to
expand its scope and funding of the Canada Music Fund, calling
for at least $35 million in annual support." He says that
the record companies, instead of focusing on new performers, a
better economy, reduced pricing and improved marketing,
continued to focus on government intervention As Canada heads
toward yet another round of copyright reform, he warns
policymakers and politicians to be mindful that they have
already used legislative intervention to establish many rights
and protections that have tilted the copyright balance heavily
toward creators at the expense of users. His conclusion is
that the "government ought to take the industry at its
word and stay on the sidelines." Geist is also Consulting Editor
to the Bureau of National Affairs and its BNA's Internet Law
News daily newsletter. Back
to Headlines LIES, DAMN LIES, AND STATISTICS Market research shop Verdict
reports that the Net was the fastest growing retail sector
last year, attracting one in four shoppers and attaining a
27.4% growth rate. Verdict said that the figures for buying
online are six times better than for the traditional retail
market over the last year. It also said that shopping via TV
channels such as QVC also grew by nearly 15% last year.
Back
to Headlines Video Ads Increasing Rapidly on the Net Online video advertising will surge over the next three years because consumers will seek more product information on the Net, according to Internet marketing company Viewpoint. The company cautioned that marketing execs have yet to master the new form of video commercials. "2004 was the year of people testing the water with Internet video ads," said Viewpoint CEO Jay Amato. "You will see more of this in 2005, and I think 2006 to 2007 will be a breakout time." Video ads usage increases as the number of broadband-connected households grows. Broadband-connected homes use the Net far more frequently to do product research - where, when, what and how to buy as well as doing product comparisons. Amato predicts that online advertising will begin cutting into the $60 billion spent on TV commercials. "People want to take TV experiences to the Web, but in a targeted way," he said. He says that Internet advertisers place ads within Internet videos that provide sought-after information, such as how-to demonstrations of cooking or home renovations, as well as news or entertainment. TiVo is experimenting with
downloaded videos that provide more details about products and
services than TV commercials do - and that can be targeted to
those who are interested in making a purchase.
Back
to Headlines European Landline Revenues To Drop $13b Research shop IDC says European
landline revenues will decline by $13 billion over the next
five years. Broadband and TV/video content are the only two
things that can fill the vacuum for the affected telcos.
Back
to Headlines Chinese Phone Companies Add 11.3m Broadband Customers China Netcom added 3.6 million subscribers in 2004, per Alastair Lynch of Merrill Lynch, and should do about the same in 2005. It reportedly charges about $10 a month for phone service. China Telecom, according to
Merrill Lynch, added 7.7 million customers, bringing its total
to 14.7 million, with a reported take of $11.50 per month per
user. Back
to Headlines Content Protection Revenues To Exceed $2b Digital Tech Consulting
forecasts that the global digital content protection market
will generate about $2 billion (€1.5 billion) by 2009, up
from an estimated $925 million (€701 million) in 2005, $460
million (€347 million) in 2003 and $600 million (€453
million) in 2004. The two fastest growing categories from 2003
to 2004 were digital pay TV and DVDs. Fast growing areas in
the future will be high-definition TV (HDTV), video-on-demand,
online music stores and smartphones.
Back
to Headlines Online Advertising Spend Tops $10b US online advertising grew to
about $10 billion in 2004 in compared with $7.3 billion in
2003, according to PricewaterhouseCoopers in a report
sponsored by the Interactive Advertising Bureau UK. It
estimates that online advertising increased by about 32% in
2004, six times faster than the overall US advertising market,
which increased only 5.6%.
Back
to Headlines Archos Selling 100GB Pocket Video Recorder/Player Archos is making it easier for consumers to take all their digital media content with them on a single device that weighs less than one of those 12-ounce bags of Starbucks coffee beans you can pick up at the grocery store - but costs nearly 10 times as much. The new Archos Pocket Video Recorder AV4100 is the first such portable media player/recorder to boast a 100GB hard drive. As with the other Archos PVRs, the AV4100 lets users record and play TV shows, music, movies, photos and data. The amount of content it can store, however, is in a realm of its own. Thanks to the 100GB hard drive on the AV4100, users of the 11.29-ounce (320 gram) device can: -Record up to 400 hours of TV
shows and other video content
The AV4100 100GB Pocket Video Recorder The AV4100 features advanced multimedia functions including recording and scheduling capabilities, full audio recording and playback, photo viewing and data storage. Users can transfer photos from a digital camera and data files from a PC or Macintosh with the included USB cable. The digital video recorder (DVR) functionality on the gadget lets users record TV programs and movies directly from a TV, VCR, cable set-top box or satellite receiver via the AV4100's TV Cradle. The unit boasts a 3.8-inch TFT LCD screen, an external speaker for listening to music and watching video without headphones and a built-in CompactFlash reader for transferring photos from digital cameras. The AV4100 measures 4.9"x3.1"x1" (125 mm x 78 mm x 26 mm). A single battery charge is good for up to 16 hours of music playback or four-and-a-half hours of video playback on the built-in LCD. Archos expects the AV4100 to
hit retail shelves and Web sites worldwide at the end of
February for roughly $800. Back
to Headlines Pace Micro Technology is making
Foxtel's cable TV-based DVB DVR. Foxtel is Australia's leading
subscription TV service provider. As reported last week, the
DVR will have a 160GB hard drive, record digital-quality
programming and have two tuners so that users can "record
one, watch another." The other usual DVR functions are
also included - pause live TV, instant replay and review, fast
forward, rewind, time-shift and automatic recording of
multiple episodes of a TV series. It will also record radio
programs. Back
to Headlines 'Where Are You?' Voice Activated Remote Controls Coming Opera Software has unveiled a voice-activated "Electronic Program Guide" (EPG) for media devices such as DVD players, DVRs and digital TV set-top boxes. Opera says it eliminates the need to "negotiate an array of remote controls." In addition to speech, it can also accept input from a keyboard or handwriting - so called "multimodal." "Opera is a leading player
in making technology easy and accessible for people in their
everyday lives, and the voice-enabled EPG is not science
fiction, but a compelling demonstration of what you can do
with Web technologies for home media," says Igor Jablokov,
director, Multimodal and Voice Portals, IBM Software Group.
Back
to Headlines Apple Seeds iPod Family with New mini, photo Models Apple made a big splash this week when it unveiled new members of the iPod family. Just about a year after introducing the 4GB iPod mini, the company has come out with the "second generation" of the petite portable digital music player - including the first for under two hundred bucks. The 4GB mini has been slightly revamped and now shares its name with a 6GB model as well. Both models feature increased battery life - up to 18 hours of playback on a single charge, twice that of the earlier version. They also boast an "ultra-portable, lightweight design" in four colors - silver, pink, blue or green. Making the iPod mini even more competitive against all the wannabes, Apple dropped the price of the 1,000-song, 4GB model to $199. The 6GB iPod mini, which holds 1,500 tracks, is $249 - the same that Apple used to charge for the 4GB model. In addition to the new mini models, Apple also spruced up its relatively new iPod photo line, with a slimmer 30GB version and a new 60GB player. The iPod photo, first introduced in October, is currently the only member of the iPod family with a high-resolution color display for viewing digital pictures and slideshows. As do its brethren, the iPod photo works seamlessly with Apple's iTunes jukebox software, which provides direct access to the iTunes Music Store. The unit comes with Apple's Auto-Sync technology, which lets users automatically download their complete digital music library onto the iPod photo with a single click and updates it whenever the device is plugged into a Mac or Windows PC. Apple also introduced the iPod Camera Connector, a new accessory that connects the iPod photo to a digital camera for importing pictures onto the iPod without having to first download them to a PC. Both models of the iPod photo hold up to 25,000 digital photos, which opens up a world of storage for digital camera users. The new, slim 30GB model holds
up to 7,500 songs and retails for $349. The 60GB model, which
sells for $449, can store 15,000 songs. Both are available
now. The iPod Camera Connector will be available in late march
for $29. Back
to Headlines PocketSensei Puts VideoHound on the iPod PocketSensei, which delivers digital versions of VideoHound's Golden Movie Retriever movie guide for the Palm OS platform, has released its first so-called MoviPod module for the Apple iPod. The print edition of VideoHound's Golden Movie Retriever provides reviews of more than 26,000 movies with ratings ranging from "Woof!" to "four bones." The comprehensive guide also contains cast, director, writer, cinematographer and composer indices with complete filmographies. PocketSensei takes the content of irreverent video guide and packages it into Palm-sized - and now iPod-sized - modules. The first MoviPod reviews Academy Award winners from 1927 through the present. In addition to witty reviews, it includes comprehensive film facts and entertaining trivia questions plus hyperlinks, one-click navigation and insider notes revealing behind-the-scenes facts. Future PocketSensei MoviPods based on VideoHound categories are likely to include such genres as "Alien Babes," "Bugs and Slugs" and "Killer Reptiles." MoviPod modules for the iPod
are $1.95 each. The Academy Award MoviPod is available at www.pocketsensei.com/movipod.htm.
Back
to Headlines Humax First to Make NDS DVRs for DirecTV South Korea's set-top box maker Humax is the first to announce that it's one of the companies making DVR-based set-top boxes for DirecTV that use the DVR software from NDS technology rather than TiVo. Called DirecTV DVR, the boxes are due out later this year. News Corp owns NDS and has a 34% controlling interest in DirecTV. Until now, DirecTV, the largest seller of DVRs, has only shipped TiVo-based boxes. The deal with Humax also includes some portion of DirecTV's basic non-DVR set-top boxes. The basic units will have interactive services. Due out later this year is an HDTV receiver capable of receiving MPEG-4 broadcasts. DirecTV executive VP and CTO Romulo Pontual said that the company is poised to introduce several "compelling" new products and services in 2005. He said that Humax has proven to be a cost-effective supplier of set-top boxes. The announcement that DirecTV
would buy DVRs with other than TiVo technology is considered
one of the main reasons for the drop in TiVo's share price.
Back
to Headlines TiVo Tops 3m, Foresees Long-Term Revenue Growth TiVo said that its number of subscribers grew by 698,000 in the fourth quarter ending January 31 to exceed three million. DirecTV, as it has in previous quarters, accounted for the majority of new subscribers. It added 447,000, while non-DirecTV TiVo subs grew by 251,000. Last fall, TiVo launched a pricey $50 million marketing scheme to increase the number of non-DirecTV users. The goal, it said at the time, was to have three million subscribers - a target it says would put it on the road to profitability by year-end 2005. TiVo Subscribers TiVo Standalone......................1.1 million Total.......................................3.0 million "Last year, we launched an aggressive growth plan that included increasing our subscription acquisition spending to grow our base, strengthen our market position, and fuel our recurring revenue model," said Mike Ramsay, who recently announced his resignation as TiVo chairman and CEO. "We accomplished our goal of doubling our sub base to over three million subscriptions." TiVo president Marty Yudkovitz resigned only weeks after Ramsay. TiVo critics, and there are many, complain the company is too dependent on DirecTV -at its mercy, so to speak. DirecTV has announced that it will soon start selling DVRs from TiVo competitor NDS. However, the TiVo-DirecTV deal has proven mutually beneficial. DirecTV carved out a large market share in competition with EchoStar and the cable TV services by offering TiVo DVRs at a substantial discount - as low as $99 installed. TiVo grew its installed base to three million and with that comes the certainty of a long-term monthly cash flow. TiVo users pay, directly or through DirecTV, a monthly fee in order to get the on-screen TV program guide that allows them to schedule the shows they want to record. DirecTV pays the TiVo monthly fee for its customers who have DirecTV's top-of-the-line package. TiVo customers pay $13 a month for the guide. It is not known what DirecTV pays for its TiVo customers. Sites such as slashdot.org say that a "TiVo death watch" has started - want to bet slashdot.org wishes it had three million subscribers forking over a monthly payment? Engadget.com is also reporting on the TiVo deathwatch "until further notice." Before the funeral services are scheduled, however, some thought needs to be given to the three-million-user base and its potential for generating revenue. First, DirecTV is not going to pull the plug on all those TiVo boxes it's sold and ship out NDS replacements. Second, preliminary reports on previews of the NDS DVR don't sound as if it's observably superior to TiVo, except perhaps for the speed of switching between channels. If, as reported, the NDS unit does not permit fast-forwarding through unwanted commercials, TiVo users will not accept it as a replacement. Additionally, TiVo has already announced three initiatives that could keep its revenue growing: -Opening the TiVo source code to outside developers would permit enhancements to be added at an accelerated rate. TiVo uses the Linux operating system, which developers are already familiar with. -TiVo announced an unspecified joint effort with Netflix that can only mean the two are attempting to get clearance from content providers to download movies, music and TV shows directly to TiVo. That would do away with the need for Netflix and its customers to mail DVDs back and forth, the need for warehouses spread across the US and computer systems and operators to keep up with where all the DVDs are. -Bringing in additional revenue from "long-form" commercials that are downloaded. They are short infomercials that offer more detail about a product, say a 10-15 minute video that provides more in-depth information about a car than a 30-second commercial can. Additionally TiVo is experimenting with being a content aggregator, perhaps in conjunction with Netflix. Aside from the obvious movies and TV shows, the aggregation could include what is expected to be a large quantity of films - both entertainment and educational - that independent producers are beginning to create for distribution over the Net. The biggest criticism of TiVo
deals with its management's failure to land any other cable or
satellite TV service. Reports filter out that TiVo is still
knocking on the doors at Comcast, the largest US cable TV
service. Also, any failure on the part of NDS to deliver a
TiVo superior DVR could re-energize the deal with DirecTV,
which knows that its main competitor isn't TiVo - it's the
other satellite and cable TV services. Back
to Headlines MP3tunes Unveils 'Personal Digital Music Recorder' MP3tunes, the new digital music venture from MP3.com and Linspire founder Michael Robertson, has come out with a new gadget that lets consumers collect and entire music collection in one central location and listen to it from just about anywhere on any device. Dubbed MP3beamer, the music player is available as either a software application or as a standalone hardware device about one-third the size of a typical PC. With either version, users can rip music from a CD by simply inserting the disc into the CD drive. The MP3beamer software automatically rips the full disc within three or four minutes, and pulls artist, album and track name as well. The ripped tracks are recorded in MP3 format. MP3 files stored on a PC as well as tracks purchased from a digital music store can be transferred to MP3beamer either over the Internet or via a USB device. Once stored to MP3beamer, the music can be streamed to PCs, home stereos, PDAs and portable devices. MP3beamer can play music in every room of the house over a Wi-Fi or wired network using a media receiver, such as those from Linksys and SMC. A number of devices can connect to MP3beamer simultaneously, with each playing different songs. "The MP3beamer is the jukebox in the sky, but it lives in your computer room," said CEO Robertson. "It acts like your own personal digital music recorder (DMR). Just as a digital video recorder stores video and allows you to play it back on TVs, a DMR lets you add a music track or album to MP3beamer and immediately have it available on your home stereo, iTunes, PDA or portable device - virtually any device with speakers or a headphone jack."
The MP3beamer Interface MP3beamer works with Windows, Mac and Linux computers. It uses the latest Linspire operating system and the Lsongs music manager program, which handles importing music files and auto-ripping of CDs. The hardware unit, which can
store some 1,400 CDs, is $399. The software version is $69.95.
Back
to Headlines ***************************** - Robert Evans, the movie mogul behind movies like "Chinatown" and "The Godfather" Every week in The Online Reporter, we try to bring you all sides of every issue. Call 225-769-7130 for your own
subscription. FCC: Cable Losing Ground to Satellite TV Services The US cable TV services are dominating the broadband market with a 60%-66% market share and are threatening the telcos in the residential phone market. Their vulnerability is their traditional stronghold of TV programming where the two US satellite TV outfits are taking market share. The FCC in its "11th Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming" report for the 12 months ending June 2004 compared cable and satellite growth: In commenting on the delivery
of video over the Net, the FCC said:
Satellite 20.18 23.0 14% Satellite TV services account
for 25.1% of all MVPD households "Streaming video is currently most viable when delivered over broadband networks. As of June 2004, an estimated 64 million Americans subscribed to an Internet access service, and 30.1 million of those subscribed to a high-speed Internet access service, or about 47% of all subscribers. "Most near-term uses of
video available over the Web will be downloadable video.
Traditionally, downloadable video has been stored and viewed
over the personal computer; however, video also is becoming
available for download directly to a set-top box to be viewed
over the television, similar to MVPD video-on-demand services.
Despite its relative low quality, streaming video remains
popular, and many firms continue to develop a great deal of
content." Back
to Headlines Intel Delivers Movie Via Wireless Internet Intel's latest trick for raising the profile of WiMAX was to present a film at the Sundance Film Festival, delivered over the wireless Internet. The film "Rize" was the first to be delivered in this way. Intel technicians in Hillsboro, Oregon, encrypted Rize, which was shot on high-definition digital video. The file was streamed to Salt Lake City, and then beamed via microwave links to Park City and through a WiMAX connection to the top of a 10,000-foot mountain where the showing was staged. A receiver at the ski lodge sent the file to an HP Media Center PC, where it was decoded and projected through a high-end digital projector. Intel's wireless chief Sean Maloney |
