Reading patent applications provides happy bloggers with ample fodder for blue-sky speculation. I rarely report these what-ifs for the same reason that I avoid Japanese new-product introductions: it may not happen, or it may not happen here. But the San Jose Mercury News uncovered an especially interesting what-if in an Apple patent application several months back, one that may affect the user interface of the iPod—revered by many as the Michelangelo's David of industrial design. Reporter Troy Wolverton explains: "The company had previously explored replacing the click wheel with a virtual one as part of a touch-sensitive display." As it has with the iPhone, touching off speculation. "But now," Wolverton continues, "Apple appears to be looking at a third option: a touch-sensitive frame surrounding the display. Rather than click a physical button or press a virtual one on the screen, users would touch an area on the frame to operate their iPod." Needless to say, Apple didn't return the reporter's calls, and this cataclysmic ergonomic shift may never happen.
Netflix is eyeing the movie-download market, according to Variety. Eric Besner, VP for original programming, told a movie- and TV-production conference in LA that a new service would download movies overnight into a proprietary set-top box. Pricing may be the same as existing subscription fees for hard copies by post. Though scrapping with Blockbuster to shore up its existing business, Netflix sees the writing on the wall (and the profits in the rack). Various services are already bidding to replace videodisc rental. One of them, Movielink, is reportedly up for sale. The 800-pound gorillas are Verizon and AT&T, whose set-top boxes may ultimately become ubiquitous for movie downloads and dozens of other uses—but only if they cut the right deals with Hollywood. If Netflix wants a piece of the movie-download pie, it'll have to move fast. Besner said the service may begin before year-end.
AT&T is considering a cutback in its rollout of next-generation U-Verse TV, internet, and phone service to homes in its service area. The Wall Street Journal reports that AT&T is blaming the specter of increased regulation from the Federal Communications Commission, which recently voted 3-2 to pursue net neutrality rules.
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.
Soon after announcing their hoped-for merger, Sirius and XM told an investor conference call they planned to raise rates. They're beaming a different tune now. If the merger goes through, they promise to allow subscribers to block adult channels, pay a la carte, and save an unspecified amount off the current minimum of $12.95/month. The climate surrounding the merger has been chillier than expected. FCC chair Kevin Martin has expressed the opinion that the satellite services' federal operational licenses prevent them from being combined into a single company. And Sen. Herb Kohl (D-WI), chair of the Senate Antitrust Committee, has referred to the proposed merger as "a real bad deal for consumers."
YouTube is talking to Sony Pictures about the possibility of licensing full-length movies for viewing through the popular website. While this would not be the first time YouTube has licensed content, it would be the first time major motion pictures have been approved for free YouTubing.
Netflix, Blockbuster, and other online program providers are cutting deals left and right to get their services into various devices. But many of these scenarios hinge on an important assumption--that consumers have fixed-price internet service to bring all those audiovisual bits into the home. This assumption may not be viable indefinitely, as internet service providers are now threatening to shift from all-you-can-eat plans to metered, usage-based pricing.
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.
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.