Google Fiber Roll-Out Zips Along in Kansas City

by Peak Positions

Story first reported from USA Today

KANSAS CITY, Mo. – It doesn't take long to figure out Google's pitch for Fiber. The potentially disruptive broadband service that Google is making available to residents in certain Kansas City neighborhoods is all about speed —Usain Bolt fast.

The search giant recently opened the Google Fiber Space store that I visited here to explain the promise of Fiber to the public and show it in action. The main virtue is speeds of up to 1 "gigabit per second" (1,000 megabits per second, or Mbps), a whopping 100 times zippier than the typical Internet. The results of a speed test during my visit: download speeds of 800.54 Mbps and upload speeds of 945.29 Mbps.

It's one thing to look at a number. It's another to put it in perspective. Where it might take you more than 2 minutes to download a high-definition movie on what is considered a fast connection today, and a lot longer on a poky connection, Google Fiber promises to do so in seven seconds. Fetching 100 photos might take three seconds on Fiber vs. close to a minute on a setup today. The blurring and buffering delays you might experience before a Street View on a Google Map materializes or a painting in the Google Art Project comes into focus all but disappear. At the Fiber store, there was no visible lag as Google streamed games off the OnLive streaming platform. And Google says Fiber will be ready to handle televisions based on so-called 4K (4,000-plus pixels) supersharp video tech.

While residents of Kansas City, Kan., have first shot at Fiber — ahead of their Missouri neighbors — there are restrictions that could prevent some people who want it from getting it. Either way, it'll be a slow roll-out for the rest of the country. Google isn't specifying when Fiber comes to a town and city near you. But it's a long-term effort.

Those eligible for Fiber can preregister in person at the Fiber store in Kansas City or at fiber.google.com and must do so by Sept. 9. The $10 to preregister is applied to your service. But to actually get Fiber, you may have to rally your neighbors. Google will start building out the network in a given community only if enough people in that neighborhood sign up. Google established thresholds based on size and density as well as speed and ease of Fiber construction. As the company explains it, houses that are spread out in the suburbs require more time, fiber and labor, and therefore are more difficult to connect than homes in a dense urban environment. There are 204 Fiberhoods (as Google calls them) so far; 64 have qualified. Fiberhoods with the most preregistrations get first dibs on Google starting construction.

Those who get the green light from Google have three plan options. The first provides free monthly Internet for a period of at least seven years, provided you pay a one-time $300 fee (or $25 a month for 12 months) covering the cost of construction. Under that plan, Google promises speeds only on par with today's Internet — up to 5 Mbps download and 1 Mbps upload. There are no data caps, and you can upgrade to superfast Fiber at any time. Google will supply a network box (with up to 4 gigabit ethernet ports, plus Wi-Fi).

If you want to cruise the Internet fast lane, you have to sign up for either a Gigabit Internet plan or Gigabit + TV plan. Under both plans the $300 construction fee is waived. The Gigabit Internet plan costs $70 a month and comes with a network box as well. Plus you get 1 terabyte of cloud storage backup on Google Drive. Optional add-on: a Google Chromebook for $299.

The Gigabit + TV plan delivers 18 local channels, plus more than 100 cable channels, with additional premium channels available for a fee. For now, some key channels are missing, including ESPN, Disney and HBO. You also get a 2 TB box to store up to 500 hours of high-definition television and record up to eight shows at the same time. Google is also throwing in its Nexus 7 tablet, which can double as a remote control and search vehicle for the TV.

At the very least, what Google is promising with Fiber should force broadband rivals to step up their game. Time Warner Cable is confident, says spokesman Justin Venech. "Kansas City has been a highly competitive market for some time now, and we take all competitors seriously."

The bottom line:

fiber.google.com

$300 construction fee for free plan (for at least seven years). Construction fee is waived for Gigabit Internet and Gigabit TV plans that are $70 and $120 month, respectively.

•Pro. Gigabit service is blazing fast and affordable. Option for free Internet (at slower speed) for seven years.

•Con. Only available in Kansas City for foreseeable future. Even there, folks who want it may not be able to get it. "Free" plan requires one-time $300 construction fee. Google TV lacks certain popular channels for now.


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Cable Subscribers flee, but is Internet to Blame?

Associated Press

 

TV subscribers are ditching their cable companies at an ever faster rate in the past few months, and many of them aren't signing up with a satellite or phone competitor instead.

Their willingness to simply go without pay television could be a sign that Internet TV services such as Netflix and Hulu are finally starting to entice people to cancel cable, though company executives say the weak economy and housing market are to blame.

Third-quarter results reported this week by major cable and satellite TV companies show major losses, but don't settle the question of what's causing them.

If "cord-cutting" in favor of Internet video is finally taking hold, that has wide-ranging implications. Consumers who use the Internet to get their movies and TV shows bypass not just the cable companies, but the cable networks that produce the content. The move could have the same disruptive effect on the TV and movie industries as digital downloads have already had on music.

A few weeks ago, the CEO of phone company Verizon Communications Inc. likened cord-cutting to what started happening to the local-phone companies five or six years ago, when people started giving up their landlines in favor of relying solely on their cell phones.

"The first thing when that happens is you deny it," Ivan Seidenberg said. "I know the drill. I have been there."

On Thursday, Time Warner Cable Inc.'s chief operating officer, Landel Hobbs, said the company doesn't see evidence of people dropping cable in favor of the Internet. He said the biggest subscriber losses have been among people who don't have cable broadband services; high-speed Internet - from cable or a competitor - is key to watching video online. These people seem to be going to satellite or giving up on pay TV entirely.

On the theory that college students might be among the first to drop cable TV, the company looked at changes in subscriber figures in college towns such as Austin, Texas, and Columbus, Ohio. They weren't out of line with previous years, and they corresponded to the level of student enrollment, he said.

"We'll continue to monitor cord-cutting, but haven't found evidence where you might expect to see it," Hobbs told analysts on a conference call.

Time Warner Cable lost 155,000 video subscribers in the July-September quarter, compared with 64,000 a year ago.

The only larger cable company, Comcast Corp., reported last week that its subscriber loss more than doubled in the third quarter, to 275,000. Comcast said many of those leaving had taken advantage of low introductory rates that the company offered last year when the analog TV broadcast network was shut down.

Of the satellite companies, DirecTV gained subscribers and Dish Network Corp. lost them. On a conference call Friday, Dish CEO Charlie Ergen said the Internet was making itself noticed as a competitor.

"You know, my kids think I'm crazy for being in the pay-TV business because they don't pay for TV. They don't pay for movies," Ergen told analysts.

The country's eight largest publicly traded pay-TV companies, representing about 85 percent of the subscriber total, had reported their results for the third quarter by Friday. These cable, phone and satellite companies showed a combined gain of 66,700 video subscribers, or a 0.3 percent increase at an annualized rate, about a third the growth of the population.

The figure was a slight recovery from the seasonally weak second quarter, when they gained just 12,400 subscribers. But it's far short of the 401,300 subscribers gained a year ago.

Missing from the tally is the third-largest cable company, Cox Communications, which is privately held and doesn't report subscriber counts publicly. If it lost cable subscribers at the same rate as Comcast and Time Warner Cable, the nine largest pay-TV companies had zero net gain for the latest quarter and lost subscribers in the second.

Cable companies have been losing video subscribers for some time, but they have been compensating by upgrading basic subscribers to more expensive digital tiers, as well as adding broadband and phone subscribers.

However, both Time Warner Cable and Cablevision Systems Corp. lost digital video subscribers in the third quarter. Both added record-low number of phone subscribers, as years of growth are coming to an end.

Meanwhile, Netflix Inc.'s streaming service has become so popular that it is now the largest source of U.S. Internet traffic during peak evening hours, according to Sandvine Inc., a Canadian company that supplies traffic-management equipment to Internet service providers.

A variety of gadgets can send Netflix's streams to the living room TV, including game consoles and the $99 Apple TV box. Many high-end TVs now come with the built-in ability to play Internet content.

Thomas Clancy Jr., 35, in Long Beach, N.Y., canceled the family's Cablevision subscription this spring. He said he has been happy with Netflix and other Internet video services since then, even though there isn't a lot of live sports to be had online.

"The amount of sports that I watched certainly didn't justify a hundred-dollar-a-month expense for all this stuff. I mean, that's twelve hundred dollars a year," Clancy said. "Twelve hundred dollars is ... near a vacation."

But Clancy - who has no relation to the thriller writer - is also an example of the hurdles cord cutters face. He uses an Internet-connected Blu-ray player to get Netflix movies to the TV. And he pulls a cable from his computer to the TV for Internet content Netflix doesn't have. Clancy owns a computer consulting firm and is tech-savvy enough to do all that. Most people wouldn't know how.

Cablevision wanted to raise Clancy's Internet bill when he canceled TV service. That would have made cord-cutting less attractive, but he happens to live in an area where Verizon provides Internet service at speeds that are comparable with the best cable has to offer. He got a better deal from Verizon and switched to that provider.

Most people who have the technological skills to take advantage of Internet video find that the selection of movies and shows isn't broad enough to make the jump worth it, Sanford Bernstein analyst Craig Moffett said.

On the other hand, poor people have an excellent motive to cut cable and simply replace it with an antenna or nothing at all, he said.

"The price of cable TV has risen to the point where it's simply not affordable to lots of lower-income homes. And right now there are an awful lot of lower-income homes," Moffett said. "The evidence suggests that what we're seeing is a poverty problem rather than a technology phenomenon."

In addition, high unemployment means fewer new households, as kids are probably delaying moving out of their parents' houses, or people move in with roommates. That can reduce the number of households that pay for TV.

Cable companies would like to get low-income customers back with cheaper cable packages, but their hands are tied. Content providers such as The Walt Disney Co. and News Corp. won't license their channels one by one, so subscribers have to take big, expensive channel packages, or very basic ones, which offer little beyond what's available with an antenna.

Content providers now get billions of dollars in fees from cable service providers, and they want to make sure that whatever new industry model comes along, they'll get paid. It's not obvious yet that Internet video will let them sustain their profit levels.

Six companies create the content that consumes 85 percent of U.S. viewing hours, Moffett said. "Until they get on board, the train's not leaving the station."

Cable Clicks on Interactive Ads Again
Story from the Wall Street Journal

The traditional TV ad is losing luster as viewers get savvier about skipping commercials and some advertisers shift to the Internet to save money and target specific audiences.

Cable providers have helped undermine the 30-second spot by supplying digital video recorders to their subscribers and offering ad-free video-on-demand services.

Now they are promising to help marketers reach TV watchers with new interactive advertising that seeks to engage viewers and borrows techniques from the Internet.

"It's about making the TV a more lean-forward medium than a strictly lean-back medium," said Bob Ivins, vice president of research and data products with Comcast Corp.

It's a goal that has long eluded the industry. While the Internet has blossomed as a medium that can deliver targeted audiences and accountable results, the cable industry has promised interactive advertising for years only to leave advertisers and investors disappointed with the progress.

Cablevision Systems Inc. plans to roll out an interactive service next month that will allow viewers to respond to a banner or pop-up on their screen during a commercial, and automatically order a coupon or product sample by pressing a button on their remote control.

"It allows us to combine the power of the Internet -- with its engagement, targeting and accountability -- with the power of the big screen," said David Kline, Cablevision's president of ad sales.

Cablevision said it expects to have several major brands involved this fall including Benjamin Moore, which will send coupons for free paint samples to viewers that respond to its ads with their remote.

Cablevision said it would charge advertisers a premium to participate, but it declined to provide pricing details.

Other major cable operators, like Comcast and Time Warner Cable Inc., have also added interactive advertising to their systems. And while the traditional TV ad is typically sold based on estimated audience size, many of these new ads are sold on a pay-for-performance basis more similar to Internet advertising.

Time Warner in January rolled out a "promotions on-demand" offering in its Los Angeles market. The ads direct viewers to interactive channels fully dedicated to marketing materials from an advertiser.

By July, there were 22 advertisers participating, including CKE Restaurants Inc.'s Carl's Jr. and Big O Tires LLC. On top of regular ad spots and a set-up fee, Time Warner Cable collects a fee each time a consumer clicks to the on-demand channel.

"Interactivity through the remote control seems to drive a higher response rate than driving audiences to get on the Internet or make a phone call," said Joan Gillman, president of media sales for Time Warner Cable.

Cablevision also provides interactive channels to advertisers, like Walt Disney Co., Mattel Inc. and the U.S. Navy. Once viewers are directed to the channels through an ad, they can use their remote to choose from a variety of marketing videos and they can opt to receive coupons in the mail or request a call from a salesperson.

"Using interactive techniques, we can get a targeted consumer to engage with a brand on TV for a much longer period of time than just a 30-second commercial," said Jacqueline Corbelli, chief executive of media agency BrightLine iTV.

The New York-based agency recently worked for Axe, a brand owned by Unilever PLC, on a campaign reaching 70 million homes on cable, satellite and other pay-TV systems for its Axe Dark Temptations, a chocolate-themed deodorant and body wash.

The ads appeared on RipeTV, an on-demand network targeting males 18-24 with extreme sports and other programming. Using pre-roll spots and pop-up banners, the ads prompted viewers to press a button on their remote to do things like enter a sweepstakes or play a game.

Kevin George, an ad executive at Unilever who oversaw the campaign, said "the response was great" because it reached its targeted audience "without interrupting them," in part because Unilever reached its targeted audience "in a place where they're comfortable, giving them the option to participate without interrupting them."