If you wonder what the telcos will be like years from now, when they're raking in the cash from video services, get a load of the way they behaved last month. As soon as the Federal Communications Commission removed some regulatory charges from consumer DSL bills, BellSouth and Verizon quickly tried to add them back and pocket the cash. The deleted charges had gone into the Universal Service Fund, which was originally designed to subsidize phone service in rural areas, and later extended to nurture Internet access in schools. BellSouth DSL customers had paid $2.97 per month into the USF, while Verizon DSL customers had paid $1.25-2.83 (depending on speed of service), until the FCC reclassified DSL and eliminated the fees to give consumers a break. Thereupon BellSouth swiftly imposed a "regulatory cost recovery fee" of $2.97, while Verizon added a "supplier surcharge" of $1.20-2.70. This breathtakingly opportunistic pickpocketing of consumers, greasily interlarded with corporate doublespeak, so enraged FCC chair Kevin Martin that he instantly threatened to send official letters demanding an explanation. He didn't have to send them—BellSouth quickly backed off and Verizon followed a few days later. They've got a lot on their regulatory wish lists, with BellSouth awaiting approval for its absorption into AT&T, and all the telcos eagerly awaiting the replacement of municipal franchise agreements for video service with more relaxed federal and state regulation. If this is what they act like when they're on their best behavior, just imagine what they'll be like at their worst.
Some of my happiest childhood memories involve a supermarket shopping cart and my mother (who has just turned 80). When I was still small enough, she'd place me in the shopping cart, roll me around the aisles, and occasionally give in to my pleading for animal crackers, though her own cookies were the best. When I got too big to sit in the steel cart, I started pushing it for her. That early consumer experience is about to change with the advent of the TV Kart. It's a colorful object that resembles a car equipped with a color liquid crystal display showing Barney and the Wiggles. The TV Kart is already deployed in 17 supermarket chains in the manufacturer's native New Zealand as well as in Australia and the United States. Within the U.S. it's hit 175 Meijer stores in Ohio, Illinois, Indiana, Kentucky and Michigan. And it's about to roll into Wal-Marts in three states, according to National Public Radio. There is an upside here. If kids are distracted by TV, they might be less likely to beg for snacks loaded with sugar and toxic oils. The downside, as a disturbingly ecstatic mother told NPR: "Now Mom shops alone."
"I love the sound of breaking glass," Nick Lowe once sang, and the Avdeco HR420 is just the TV stand for him. A member of the AV Science Forum relates: "I happened to be sitting in the next room, when I heard a tremendous crash. I thought that a plane had hit my house, and I ran into my bedroom to see what happened. The top shelf of the Avdeco stand EXPLODED sending shards of glass to every corner of my bedroom. Fortunately for me, I wasn't sleeping at the time, or I would have been hit by flying glass." The Panasonic 50PX500U plasma that had been sitting on the stand weighs 114 pounds, less than half of the stand's rated weight limit of 250. Neither Avdeco or the dealer that sold the stand, Threshold Concepts have responded to the consumer's complaints. The model is still listed on the Avdeco website. It's not on the Threshold Concepts site, though other Avdeco glass-rack models are, with the comment: "The simplistic lines are subdued, yet make a strong statement." Indeed. Other AVS members weighed in with useful pointers: (1) Tempered glass is designed to fragment into pebbles when broken, which is actually less scary than the angular shards of broken non-tempered glass. (2) It's been known to shatter in response to changes in temperature even when nothing is resting on it. (3) Manufacturers who make a quality product may disagree, but maybe glass of any type isn't the ideal material for a TV stand.
The lack of community-buildout requirements in a pending federal law has raised concerns that new TV services from AT&T and Verizon won't reach low-income households. Verizon defends its record: "We are already deploying our fiber-to-the-premises network and FiOS TV in many communities such as Irving, Texas, that have a mix of demographics or are simply not affluent," says spokesperson Sharon Cohen-Hagar. Shifting focus from income to ethnicity, figures from a variety of sources helpfully supplied by Verizon suggest that minorities are already lucrative customers for cable providers and are therefore equally attractive to nascent telco TV providers. One study cited is FOCUS: African-America from Horowitz Associates. It says African-American urban households buy $58.17 worth of cable services vs. the urban average of $54. Figures for digital cable and satellite services tell the same story. So if providers go where the money is, you just might see FiOS TV in the 'hood.
If you live in Naperville, Illinois and want telco TV as an alternative to cable and satellite providers, you're out of luck. AT&T has dropped the Chicago suburb like a bag of dirt. Naperville was willing to sign a franchise agreement that would have brought AT&T's Project Lightspeed—a combination of television, broadband, and telephone service—as long as all residents were eligible to subscribe to the service. AT&T walked away, an executive pouting: "Nowhere in this country has AT&T agreed to a build-out requirement." Then again: "We have an economic incentive to make the service as widely available as possible." But: "What we're not willing to do is make a commitment in 'x' number of months." However, AT&T actually did sign an agreement with nearby North Chicago to provide video service within 18 months. Confused? Here's the catch: that agreement doesn't specify next-generation Internet-based video. The folks in Naperville charged AT&T with making a scene in an attempt to strong-arm Congress into passing pending legislation providing telcos with a national franchise agreement that would end-run municipal governments. A Naperville council member commented: "We have some intellectual dishonesty taking place." See coverage in ArsTechnica and the Chicago Tribune. More tomorrow.
To speed the entry of the telephone companies into the video-delivery business, Congress is in the midst of rewriting the franchising rules, substituting national for local authority. Conspicuously absent from the national franchise legislation soon to hit the Senate floor is any mention of "buildout"—that is, an explicit requirement that new video providers serve all homes in a locale. Instead the bill would require the FCC to gather information on patterns of deployment and make an annual report to Congress, flagging any patterns of discrimination. Would that relatively relaxed regulatory approach make it easy for telcos to ignore poor folk? Verizon CEO Ivan Seidenberg flatly denies it: "We have never engaged in redlining or cherry-picking, and we never will. It is a violation of federal law, and it runs counter to our 100-year legacy of great service to customers. Our deployment strategy speaks for itself. We are serving diverse communities in every state where we are building our FTTP network, and the cable industry's claim is yet another red herring aimed at stifling choice and competition." Media activists will be watching closely. To be continued tomorrow.
Steve Jobs has finally found a situation he can't bluff or bully his way out of. He has, however, bought his way out of a longstanding tiff with Creative Labs, which holds valuable patents on the workings of music players—including the iPod. A $100 million settlement will end court battles and heal all wounds. Jobs' comment on the outcome is wry and brilliantly understated: "Creative is very fortunate to have been granted this early patent." And in case you were wondering, he adds: "This settlement resolves all of our differences with Creative, including the five lawsuits currently pending between the companies, and removes the uncertainty and distraction of prolonged litigation." The settlement will leave him freer to contemplate finer things, like warm batteries and cool Scandinavians. Folks at Creative, meanwhile, are looking forward to a harmonious future with Apple. Says victorious CEO Sim Wong Hoo: "Apple has built a huge ecosystem for its iPod and with our upcoming participation in the Made for iPod program we are very excited about this new market opportunity for our speaker systems, our just-introduced line of earphones and headphones, and our future family of X-Fi audio enhancement products." Unmentioned: Creative's Zen player, pictured. He's also pleased about the 85 cents per share Creative stockholders will reap from the settlement. Who wouldn't be?
You think gas is expensive? Copper, which formerly sold for around 90 cents a pound, has shot up past $3 a pound. Janet Pinkerton sums up the situation succinctly in the August 2006 issue of Custom Retailer (story not on site): "The copper price spiral has been driven by...a 'perfect storm' of economic factors: ravenous demand for copper and other metals from China and secondarily India, a strong construction market in the U.S., an extremely tight copper inventory supply, labor unrest in key copper mines, and the yet-to-be-quantified impact of fund managers and others speculating on copper futures." The labor unrest seems to be centered in Chile but production is also down in China. Skyrocketing copper will affect not only cables but a/v components as well. They're stuffed with copper wire. Some, like Pioneer's Elite receiver line, even use a thick copper chassis. Higher prices will be the inevitable result. For example: The Outlaw Audio site still quotes the price of the RR2150 stereo receiver as $599, but when I was fact-checking an upcoming review, my source bumped it to $649. Place your order now!
Implementation of the CableCARD may have taken another babystep forward with a court ruling last week. The U.S. Court of Appeals for the DC Circuit upheld the FCC's long-delayed "integration ban." By prying encryption apart from the cable box, as required by a 1996 act of Congress, the FCC wants to speed adoption of CableCARD technology, which enables consumers to plug their cable feeds directly into sets with a card slot. However, although the major TV makers and the major cable operators put their John Hancocks on an FCC-brokered CableCARD adoption agreement as long ago as December 2002, the integration-ban deadline has slipped from January 2005 to July 2006 to July 2007. And the many consumers who have already bought CableCARD-compatible sets have been frustrated to find the standard not supported by their local cable ops. Enough already, said the appeals court. Gary Shapiro of the Consumer Electronics Association hailed the ruling: "Consumers are entitled to a broad array of products that can connect to cable systems featuring innovative new features for competitive prices. In the wake of the court's decision, we are hopeful that cable will stop its foot-dragging and comply with the law for the benefit of consumers." In their defense, cable operators say they've got their eye on a new technology that supplants the card with a chip, not to mention new multi-streaming and IP-based solutions. And they hate the existing CableCARD because it's unidirectional, meaning one-way, meaning no video-on-demand, meaning less lucre. But consumers might wait years for implementation of these new technologies, whereas the CableCARD is here now and waitin' at the church.
Here's to the mating of the ampersand and the asterisk. Mayor Michael Bloomberg is expected to attend tomorrow's grand opening of J&R Express at Macy*s in Manhattan. Founded in 1858, Macy*s has been the city's leading department store for generations. It's a major tourist attraction and its advertising props up the city's newspapers. But Federated Department Stores, owner of Macy*s, has never found a way to make electronics retailing work in NYC. J&R's story is totally different. It started as a great little record shop back in the pre-CD days, then successfully branched out into electronics, but until recently never aspired to move beyond its peculiar cluster of far-downtown spaces near City Hall. Locals love it, but most people reading this probably know the Internet operation better than the stores. So now Macy*s will have the ideal partner for selling electronics, and J&R will expand into midtown, with its flocks of tourists and shoppers, just down West 34th from the Empire State Building. BTW, the weeping statuary pictured is a memorial for Isidor and Ida Strauss in tiny Strauss Park at Broadway and West 107th Street. Isidor acquired Macy's (then with no asterisk) in 1896 and moved it to the current iconic location in Herald Square. In 1912, he and his wife Ida went down with the Titanic.
In the latest act of a long-running drama, Dish Network PVRs will not be judicially disabled—at least, not yet. A federal appeals court has blocked an injunction from a Texas district court that would have shut down Dish video recorders. Dish's adversary is TiVo and the issue is patent infringement. TiVo has successfully argued that Dish PVRs violate TiVo's patents, winning $74.9 million in penalties. That matter was decided months ago, but what to do about it has not, so millions of Dish PVRs have the sword of Damocles hanging over their heads. The Dish people say they expect to reverse the Texas district court decision and will "continue to work on modifications" to the allegedly infringing machines. Even if TiVo gets a short-term win in this situation, its real challenge is competition from not only satellite DVRs but those marketed by cable and emerging telco-video services. No judge or lawyer is going to make that problem go away.
Cynical Steve Jobs is marketing one of the worst-sounding audio products ever. As an audiophile, I can view this only with alarm and outrage. No, I'm not talking about the iPod, you foolish thing. I enjoy my nano as much as the next person. I'm talking about the earbuds that come with the iPod. They don't even come close to taking advantage of the sound quality that the deliriously popular music player is capable of delivering.
A Tokyo racetrack has become home to the world's largest large-screen video display. The screen is 218 feet wide (by 66 by 37). Judging from the picture, its ratio of width to height is way more than the standard 16:9 of DTV in general. Behind the display is Mitsubishi's Aurora Vision LED technology. Here LEDs are being used to produce the picture directly, though they're also creeping into consumer DLP displays as a substitute for the color wheel. The screen was installed in 35 pieces and cost $28 million. Apologies for the headline. Couldn't resist. A larger edit of the picture, and three others, are in the Galleries.
More information has emerged about Microsoft's forthcoming Zune music player, thanks to my colleagues at This Week In Consumer Electronics, who always have their ears to the ground on the retail scene. The company has been briefing retailers and TWICE have been prying out morsels of information about Redmond's supposed iPod-killer. Here are the details (I would rather slit my wrists than say deets):
We control the horizontal. We control the vertical. And we control the DVR, says Verizon. If you're a multi-zone kind of consumer, and interested in Verizon's FiOS TV service, check out the Verizon Home Media DVR. In a multi-zone DVR configuration, the Motorola QIP6416—shown here—acts as the media hub, recording and streaming video. It has a 160GB hard drive and dual QAM tuners. Operating as remote terminal is the Motorola QIP2500 set-top box. The remote terminal operates in standard-def only, though you can watch high-def on the hub DVR. Media Manager software pulls photos and music from a PC and routes them to connected TVs. The Home Media DVR costs $19.95 per month ($7 more than a regular Verizon DVR) plus $3.95 for each remote-terminal STB. The relatively new concept of place-shifting has not come without controversy among content producers. Cablevision's network DVR has become the first casualty and the Slingbox may follow.