New Comcast Traffic Shaping Plan

Comcast has a new plan to deal with bandwidth hogs: slowing down their broadband access connections for periods of 10 minutes to 20 minutes, at peak congestion periods. Comcast hasn't yet offered a definition of what a "heavy user" is or how much bandwidth consumption qualifies one as a "heavy user."

At some level this is a marketing opportunity for fiber-to-home networks that should be able to operate without such restrictions. At another level, "heavy users" probably are not profitable customers at this point. Not only do their subscription fees not cover their consumption of network resources, but they also create problems for other users.

Still, the longer-term issue is that the usage profile of a "heavy" user today becomes more like the "normal" usage profile at some point in the future, when most people use the Internet to watch video.

Long term, there is but one reasonable alternative: much more bandwidth for every user. In the near term, there are some serioius marketing issues to grapple with. Though the overwhelming percentage of users will never encounter the traffic shaping, the existence of such shaping then becomes a potential marketing drag for some, an opportunity for others.

But it is a complicated matter. In truth, competitors probably are happy "heavy" users are Comcast's problem, as such customers are not profitable, and in fact create externalities. It isn't just the stress on the access networks. Comcast pays transit fees for all those video bits. So higher usage really does impose usage-based costs.

This will be an interesting marketing challenge for Comcast and its competitors. Longer term, it also is a packaging and pricing challenge, since most users ultimately will wind up consuming lots more bandwidth as video becomes a staple of Internet activity.

AT&T Offers 2-Year Guaranteed Access Rate

AT&T has announced a guaranteed broadband access monthly rate for two years without the hassle of a term commitment. The plan freezes rates for two years and does not have any termination fee.

New residential AT&T high speed Internet orders placed before Nov. 15 will include the price guarantee.

Given the shockingly low net high-speed access additions AT&T, Verizon and Qwest experienced in the second quarter, it is a smart move.

Another Shift in How Things Get Counted

There are times when the way things get counted tells you something about where products are growing, how companies want their growth measured and how revenue growth metrics are changing.

That seems to be the growing case for video entertainment. Until recently, "basic subscribers" have been a fairly reasonable way to evaluate how well a video provider is doing. Two decades ago, that might have been a reasonable way to evaluate how well a telco was doing. But markets are changing, and so are the "counting" mechanisms.

This data from the Cable and Telecommunications Association for Marketing track "digital video" in addition to basic subscribers. At some point, we might well find that digital video subscriptions are a better indicator of performance than "basic" subscriber units, where in the past the delivery protocols haven't mattered as much (satellite subscribers are, by definition, digital customers).

These days, "revenue generating units" make more sense as a way of describing either cable or telco growth. About a decade ago, "voice grade equivalents" began making more sense than "access lines" as a way of describing and measuring performance.

It looks like we are just on the cusp of a time when digital video units are a better growth metric than "basic" and "enhanced" or "digital cable" subscriptions.

1/3 of Vista PCs Downgraded to XP, Survey Suggests

In a survey of more than 3,000 computers, performance testing software developer Devil Mountain Software estimated that more than one in three new machines had either been downgraded by vendors such as Dell, or by customers once they bought the PC.

For whatever reason, large numbers of users still seem to be expressing a preference for XP.

Phweet Escalates Twitter to Voice

Phweet, a new application that allows Twitter exchanges to escalated to voice, now is in public alpha. One of the more unusual features is the ability to create on-the-fly, unscheduled conference calls. Basically the app works using shortURLs. A signed-in Twitter user can ping other Twitter user and request escalation to voice. The other user receives a shortURL. When clicked, a voice session is created using a simple click-to-talk operation.

Twitter addicts may like this.

Falling off a Cliff

For all the other good things executives at AT&T, Verizon or Qwest might talk about, these figures are the one thing you find not being talked about.

Analyst Sees Trouble for Emerging Telecom Cos.

Oppenheimer analyst Timothy Horan this morning turned cautious on the “emerging telecom sector," cutting his ratings on both Level 3 and Cogent Communications to "underperform" from "perform," while chopping TW Telecom to "perform" from "outperform," according to Barron's writer Eric Savitz.

Horan says slowing demand and decreases in pricing power at Cogent and Paetec Holding are evident. Horan says that while the sector has already been under pressure, the companies are heading for a “difficult six to nine month period.” Slowing or sluggish economic growth tends to lead to slackened demand for communication services, an increase in churn, pricing pressure, slower volume growth and limited access to capital as well.

Horan adds that he thinks estimates are too high for all three companies he downgraded today. “These business models have high operating leverage and a slight slowdown in revenues will have a very negative impact on EBITDA,” he writes. “We expect some of the smaller, private CLECs to go bankrupt, which could pressure valuations in the sector.”

Of course, some of us would say we can't recall a year in the past eight when the "emerging" telecom sector was not "under pressure." Pressure is just a way of life in the competitive segment of the business. Indeed, in every segment of the business.