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Saturday, March 17, 2007

False Advertising and the New TV War

AT&T is trying, though some deceptive advertising, to convince everyone that their new U-Verse service, which is TV over IP, should replace cable TV. The advertising comes from a group called TV4US, which, while it has an impressive list of backing organizations, is nearly 100% funded by AT&T.

AT&T does get one thing right, my cable bill has gone up over the last 8 years, but doing the math, my cost per channel has gone DOWN by about 20%.

My original cable service in Illinois (through, AT&T oddly enough) gave me about 75 channels total on the medium tier service I buy, for $39.99 Today, after Comcast took them over, I'm getting about 130 channels on that same tier of service, for $59.99. But I also get video on demand, and 100 more music channels than I did then. So I've actually dropped from AT&T's rate of about 54 cents a channel to around 43 depending on how you count music and VOD as channels.

One of the ways AT&T is keeping it's IPTV service cheap is by only rolling it out in cities that aren't requiring it to sign franchise agreements to provide TV service. Franchise agreements came out in the 70's, when cable first started being delivered. To keep city utility right of ways from being clogged with 10 cable companies wires, cities negotiated with one cable company, and charge a fee (generally 5%) for use of utility poles or underground access.

AT&T's logic is that they shouldn't have to pay the fees because their service is different from cable, due to the delivery method. However under the reasoning for the fees, there is no difference, fiber and cable both take up space on poles and in underground utility conduits.

The truth is, in many markets it's only the packet technology that is different between AT&T and say Comcast or Time Warner. My current Comcast service, like AT&T uses fiber optics to deliver the service to a node (actually to the pole in my alleyway) and a wire to my house. AT&T is using IP packets (internet) and Comcast uses their own system.

Now, does all this mean I'm against AT&T rolling out video service? No, actually I do like the idea of competition. However, I'd like it on a level playing field, with either AT&T signing franchise agreements on their video services, or cable companies having those fee eliminated.

AT&T's offer in most markets has been to pay the same fee as cable companies, but with no contract with the municipality. While it sounds good, without a contract that spells out the service, AT&T can change whatever they want, with no local oversight.

The last Congress tried to address this in legislation, but since it wasn't weighted to one side or the other, both the cable and phone companies lobbied against it. This congress probably won't do anything about it. Meaning we'll get 50 states and thousands of local levels of regulation making a bigger mess of the TV universe.

Verizon, in some areas is also starting to offer IPTV, but has agreed to pay the franchise fees to the cities it's operating in. They've also gone the fiber to the house route, giving much more bandwidth to each user (about 100mbs vs. 24 for AT&T) though it does cost more money.

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