“We have a government affairs department that’s interested in that conversation,” Netflix CFO David Wells told investors today at the Goldman Sachs Communacopia Conference. Easy to see why: Usage-based broadband pricing could hurt Netflix by leading subscribers to fear that they’ll run up their costs if they spend hours watching TV shows and movies. But cable execs and investors want companies to switch to usage-based billing from today’s popular all-you-can-eat plans. It’s “only logical and fair” Liberty Media’s Greg Maffei said today. Wells counters that “the consumer is better served if there is not tolling”, adding that Internet providers already collect “a healthy [profit] margin”. Netflix would prefer to work with distributors to “lower overall delivery costs”. For example, the company often caches its content at multiple servers to minimize the distance signals travel over Internet lines. Netflix believes that the “amount of bandwidth consumed by our product can be adjusted down to reasonable caps”.
It just might if it frightens them enough to accelerate their efforts to make people pay for broadband based on how much they use — the same way they pay for electricity or water. ”This isn’t just a side show,” independent analyst Craig Moffett says. “This is THE central issue defining the value of the cable industry going forward.” And the pricing model could rock streaming companies including Netflix or, perhaps, Sony. It would be “a material risk” to Netflix’s prospects if a Sony-Viacom agreement leads to usage-based pricing, Bernstein Research’s Carlos Kirjner says.
FCC Chairman Julius Genachowski said that he’ll raise at the commission next month a proposal to “free up a substantial amount of spectrum for wifi to relieve wifi congestion and (increase) speeds.” He made the announcement at a friendly venue: the International CES confab in Las Vegas, where tech manufacturers are hungry for additional wireless spectrum for smartphones, tablets and other mobile devices. “This is an exciting new initiative….This is really important,” Genachowski says. Although most details will be released later, the wireless bandwidth will come from unlicensed spectrum in the 5 Ghz band held by the Defense Department and other government agencies. “As in other areas, we’re convinced the spectrum can be shared,” he says. The wifi spectrum in that band will increase by 35%, he added. It’s the largest block of unlicensed spectrum opened for wifi since 2003.
It’s hard to figure out Verizon’s place in the infotainment world — and CEO Lowell McAdam kept things murky in his appearance today at the UBS Annual Global Media and Communications Conference. He wouldn’t address this week’s surprising report that the phone giant might launch its own national movie and TV streaming service, potentially pitting it against Netflix. But he’s clearly interested in the business: McAdam said that Verizon seriously considered bidding for Hulu. “The jury’s out, but I do believe there’s a place for over-the-top” — jargon for a digital alternative to traditional pay TV — he said. “That model has yet to be determined and I hope we’ll be a player in that.” Wouldn’t that hurt Verizon’s FiOS, which provides a cable-like TV service to 4M subscribers? “Over-the-top can be complementary,” McAdam says. ”I don’t think it’s one thing or the other.” He was equally certain that FiOS “will not be disadvantaged” by Verizon’s new agreement with Comcast and other cable operators: The phone company will pay them $3.6B for their wireless spectrum — but also give them opportunities to sell Verizon Wireless phone service, even in markets where they compete with FiOS. McAdam says that he expects FiOS to eventually capture as much as 50% of the video and broadband customers in the markets it serves.
It happened last night, and for about six hours prevented some customers — no word on how many — from being able to use the Web. Cablevision says that it was a Distributed Denial of Service attack, which means that someone flooded its network with communications, causing it to slow down or grind to a halt. But the company says it has fixed the problem and is trying to find out what caused it. Cablevision has nearly 3M broadband customers, most concentrated in New York City and its suburbs. Here’s its release:
BETHPAGE, NY, November 30, 2011 — Cablevision Systems Corporation (NYSE: CVC) is alerting customers that it experienced a Distributed Denial of Service (DDoS) attack on the Optimum Online network during the evening hours Tuesday night. The company announced that the attack has been remediated and resolved. It began at approximately 6 p.m. Tuesday and was resolved shortly after midnight, when all service returned to normal.
The attack Tuesday night caused a disruptive increase in automated requests on a portion of the network, which impacted the ability of some customers to access certain websites and other Internet services.
DDoS attacks have been directed at several leading technology companies in recent months. Cablevision is continuing to investigate the cause of the attack.
Most major cable companies have committed to supply broadband Internet access to low-income households for $9.99 a month, the Federal Communications System is expected to announce Wednesday. FCC chairman Julius Genachowski has made expanded broadband access a top priority, and he told the New York Times that with cooperation of the big cable companies “we can make a real dent in the broadband adoption gap.” No federal funds are being invested. The plan relies on the cooperation of private companies. Comcast, for example, began offering $9.99 monthly broadband to some low-income households this year after promising the F.C.C. that it would do so when it acquired control of NBCUniversal.
The low introductory price is meant to appeal to new customers who have never had broadband, either because it was not available or because of the cost or perceptions that it was not relevant to their lives. In addition to the low introductory price, a tech company will offer refurbished computers to low-income households for $150 and Microsoft will provide software. Morgan Stanley will help develop a microcredit program to make it easier for families to afford them. Job websites and education companies also will offer content that, in theory, will underscore the value of online access.
For eligible households — those with a child enrolled in school lunch programs who are not current or recent subscribers to broadband — the $9.99 monthly price will apply for a two-year …