Catalyst Radio News Analysis

News Analysis for May 30th, 2008

Tom - The Organization for Economic Cooperation and Development (OECD) has released updated broadband data that finds the US still in 15th place worldwide in terms of broadband internet access. The US, which was fourth on the list in 2001 has been losing ground for several years and has yet to show any real signs of improvement. But broadband in general is booming, growing 187 percent since 2004 in OECD countries. Denmark takes first place with 35.1 broadband subscribers per 100 inhabitants, followed by Iceland, Norway, Switzerland, and Finland. Korea, Sweden, Luxembourg and Canada round out the top ten. The total number of broadband subscriptions is up 18% compared to the year prior, which increased per-capita broadband penetration to 20% overall in December 2007, compared to 16.9% in December 2006. The report also profiled the type of connections, showing that fiber-to-the-home is playing an increasingly important role. Fiber-to-the-home (FTTH) and fiber-to-the-building (FTTB) subscriptions comprised 8% of all broadband connections in the OECD in December 2007.

Linda - Said OECD economist Taylor Reynolds: "In terms of fibre the two most interesting markets are Japan and Korea. They are the only two countries where DSL is starting to fall as people switch from low-speed DSL to high-speed fiber." The numbers for Japan and Korea are particularly impressive, with fiber connections accounting for 40% of all Japanese broadband subscriptions and 34% in Korea. From there it's a large jump to third place Sweden, which has 18% of broadband subscribers using fiber. The US comes in 11th in FTTH with only one or two percent. A common complaint made by those who defend US broadband progress is that the decline in OECD rankings can largely be explained by geography, as countries with high population densities build out infrastructure cheaply and quickly. Two of the countries, Norway and Sweden, have substantially higher fiber rollout levels than the US despite lower population densities. When it comes to overall broadband connections, the link between density and high-speed Internet lines breaks down even further; five of the 14 countries ahead of the US on the overall broadband chart actually have lower population densities.

Tom - On Tuesday May 20 the Grand Rapids Press ran an editorial praising the introduction of AT&T's U-verse cable service citing the importance of competition in the cable television business. The editorial sites Comcast and Charter Communications "continually rising cable bills and less than stellar customer service" and makes the claim that introducing a competing cable service will result in lower prices for consumers. The editorial backs up this claim by noting that "national studies show prices are about 25 percent lower in markets where there are cable service competitors." The editorial does not offer a description of the U-verse service or explain how it differs from cable TV. The cable service provided by Comcast or Charter is delivered into people's homes by way of coaxial cable specifically installed for that purpose. U-verse does not use the traditional cable TV infrastructure, instead sending out its signal over phone lines. This distinction is important for it means U-verse is subject to different regulations than traditional cable.

Linda - What this means to consumers is that U-verse, unlike traditional cable, is not required to carry local PEG channels (public access, educational and government.) Therefore cable customers in Grand Rapids that opt to switch to U-verse service will at present lose the ability to see local cable access channels GRTV and LiveWire. This could change in the future, but at present, there is no regulatory mandate that U-verse carry PEG channels. One other important point omitted by the GR Press concerns the analog to digital TV conversion happening on Feb. 17 2009. The press states that on that date people with older analog TV sets will have to either get cable or satellite service to recieve broadcast channels or get an analog to digital converter box. The editorial does not mention that the Federal Government has set up a program whereby every U.S. household is eligible to receive up to two coupons, worth $40 each, toward the purchase of eligible digital-to-analog converter boxes.

Tom - The magazine Wired is reporting that Internet service providers that monitor their networks for copyright infringement or bandwidth hogs may be committing felonies by breaking federal wiretapping laws. University of Colorado law professor Paul Ohm, a former federal computer crimes prosecutor, argues that ISPs such as Comcast, AT&T and Charter Communications that are or are contemplating ways to throttle bandwidth, police for copyright violations and serve targeted ads by examining their customers' internet packets are putting themselves in criminal and civil jeopardy. Charter's proposed test of a system that eavesdrops on the URLs its customers visit, in order to serve them targeted ads, has already spurred a powerful Congressman to question whether the scheme would violate the Cable Act. For its part, Comcast's heavy-handed throttling of peer-to-peer sharing by sending fake stop messages to its customers has the Federal Communications Commission holding public hearings over whether it should ban the practice as being inconsistent with its open network principles.

Linda - Ohm thinks these practices may also run afoul of other laws as well, in particular the Wiretap Act, a federal statute banning eavesdropping that comes with criminal and civil penalties. That law has some exceptions for service providers to monitor content, but only when necessary to deliver service, or to protect the company's "rights and property." In fact, Ohm thinks network system administrators could themselves be in legal trouble, just for following orders from their bosses to install monitoring devices. Said Ohm, "Not only is this a five-year felony, it also has individual accountability." "The sys admin could be sued individually and prosecuted individually If you are asked by your manager to go and do this kind of monitoring, you yourself may be legally exposed." Fellow panelist Michael McKeehan, a director of Internet and Technology Policy for Verizon, said his company shares the same legal concerns, which is why it has explicitly said it has no plans to build filters to look for copyright infringers, as AT&T has it is interested in doing. Not surprisingly, the panel did not include anyone from an ISP that is filtering or talking about filtering packets. Those ISPs skipped even an FCC hearing in Stanford last month.

Tom - C/Net is reporting that users of Windows Vista Media Center were blocked from recording two NBC shows last week. Microsoft is soon expected to explain why it inserted technology into its Vista operating system that blocked digital-TV viewers from recording their favorite shows. The controversy began last week, when some Vista Media Center users trying to record from over-the-air digital or basic cable television discovered that they were barred from recording NBC TV shows American Gladiators and Medium. The software maker said Windows Media Center honors the “broadcast flags used by broadcasters to limit recording. The term "broadcast flag" has taken on several meanings, but it is best known for describing a set of proposals made by the FCC. The commission wanted those that made television software and hardware equipment to honor the flag, a code that broadcasters can insert into the data stream of digital-TV shows that typically place restrictions on the copying of shows. The courts ruled against the FCC's plan in 2005, saying the regulator couldn't force electronics makers to interpret TV signals a certain way. Since then, those software and hardware companies have had the option of deciding whether to design their systems to obey the broadcasters' flags.

Linda - The article notes that the flag rules were never meant to ban the recording of over-the-air digital broadcasts. They were designed to wall off content, and prevent mass reproduction and piracy. But Vista's remote copy control apparently goes much further and may forbid the recording of broadcast TV shows. About 30 million U.S. households are equipped with a DVR, according to research firm Leichtman Research Group. Forrester Research says about a third of the country's households own DVRs and predicts that the percentage will climb to 50 percent by 2010. That number is likely to rise rapidly after February 17, 2009, when all full-power U.S. broadcast television stations will switch from analog to digital broadcasts. As for Window users, more than 140 million copies of the Vista operating system have been sold, Microsoft said last month. Both Vista Home Premium and Vista Ultimate contain Media Center, though a tuner is needed to record from TV.

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