Wednesday, April 15, 2009

Prime Time for Cable's IPTV v. Internet TV Battle Royale -- In This Corner, Time Warner Cable

As my readers know, I have blogged several times recently about the brewing battle royale between the closed and ISP-controlled world of IPTV v. the  open consumer-choice world (and growing reality of) Internet TV.  And, in particular, about the threat Internet TV -- and services like Hulu, Netflix and others -- pose to the cable companies and their existing business model.

And now, the battle really begins.  Time Warner Cable recently announced that it plans to roll out tiered pricing for its broadband services -- i.e., limiting (throttling down) broadband speeds unless consumers pay significantly more (up to $150!) -- based on usage.  While this may sound reasonable and benign ("hey, you should pay more if you use the Internet more!"), upon closer examination, this really is cable's first full frontal attack on the concept of "network neutrality" (i.e., equal access and pricing to all -- that is, the direct opposite of tiered pricing).

Why is Time Warner Cable doing this now?  Precisely because online video usage -- and Internet TV (i.e., consumers decide what they want to view, where they want to view it, and when they want to view it) -- is now sky-rocketing and by-passing the cable companies' "walled garden/channel" paradigm.  Hulu, Netflix and other legitimate online video services (delivering television programming over the top) now give consumers the real choice of cutting off their cable TV service and keeping only their cable broadband service.  And, the current economic melt-down -- and ever-tightening wallets -- is exacerbating the situation.

So, what's a cable company to do?  Directly attack open broadband access -- in other words, try to attack consumer choice and maintain the status quo of cable's "walled garden" conventional TV approach in peoples' lives.  (Similar sentiments are expressed in an article from the LA Times today, although the author and I disagree on some fundamental points.) 

But, that time has come and is going.  And, Time Warner's new approach -- which already is being attacked around the country (including in the halls of Congress) -- ultimately will fail.  Time Warner simply will accelerate the demise of its existing business model by scaring off its customers -- many of whom simply will not be able to pay more -- and sending them running to another broadband provider.

The era of cable regional monopolies is ending ...

Skype Hype -- Announces Plans for IPO (But Is This Really Just Another eBay Auction?)

No sooner had I blogged about Skype and its founders looking to buy back their company from eBay (on Monday), then ... drum roll please ... eBay announces plans for Skype to go public (IPO) in 2010!

My opinion?  eBay smartly wishes to capitalize on the recent hype surrounding Skype rumors and shop the company in a non-obvious way (but, perhaps, transparently obvious?).  Skype, purchased in 2005 ultimately for $3.1 billion, ended 2008 with over 400 million registered users and with over $500 million in revenues.  Recent reports indicated that Skype's founders looked to buy back the company for $2 billion or less.