U-verse blunders could impact cable.
Back in April 2004, I wrote a column on the policy implications of free video-on-demand. I came out in favor of moving PEG channels from dedicated 6 MHz analog channels to an on-demand or switched digital video mode. Research shows that few cable subscribers watch PEG channels, either because the programming is boring or no program guide is available, or because the PEG program schedule conflicts with programs on commercial channels. Dedicating 6 MHz analog channels to PEG services is a waste of spectrum. Making PEG programming available on-demand – instead of only at pre-scheduled, inconvenient times – is a better alternative.
So AT&T’s U-verse cable service, which is entirely switched digital video because its “last mile” uses copper telephone wires rather than coaxial cable or fiber, would seem to have an edge over traditional broadband cable service. Telephone wires don’t have the capacity of cables and fiber, so everything that AT&T delivers comes as switched video. Your home only gets the programs you are watching.
But stupid design blunders have resulted in tremendous user dissatisfaction in the way U-verse digital PEG services are being delivered. These blunders, coupled with another controversy involving digital PEG channels, could seriously impact the cable industry.
The U-verse program guide for PEG channels, which is based on Microsoft Windows Media Player, is a different software package than the commercial channel program guide. Called “Channel 99,” it takes anywhere from 8 seconds to more than a minute for the software to load after the subscriber selects it. Then the subscriber must select a community from a drop-down menu (because each of the 47 U-verse video hubs might serve hundreds of communities), then select the specific PEG channel, and then enlarge it from a window to full screen. And once a PEG channel is selected, channel surfing (channel up or channel down) is impossible; it’s back to the drop-down menu to change programs.
Why can’t AT&T just assign a channel number to each PEG channel in the same way it assigns a channel number to each broadcast channel? Because of memory limits in its set-top boxes. AT&T has not revealed the actual limit to the number of channel numbers its boxes can handle, but its comments to the FCC say “memory in our current set-top boxes limits the number of distinct linear channels the U-verse set-top box can accommodate.”
But channel navigation is the least of the problems. The picture quality sucks – or it did until recently. While AT&T delivers SDTV at an inferior 480 x 480 resolution, PEG channels were delivered at an even worse 320 x 240 resolution. AT&T claims they have now changed that and upped the data rate for PEG channels from 1 Mbps to 1.25 Mbps, and the resolution to 480 x 480. AT&T blames Microsoft for the original 1 Mbps setting: “Initially, AT&T encountered problems with the Microsoft software on the set-top boxes at bit rates greater than 1 Mbps.”
Closed captions, if present on PEG channels, are converted to open captions, sometimes partially obscuring the programming. Here again, AT&T blames Microsoft for the inability to pass closed captions but claims that software upgrades are coming “soon.”
AT&T’s set-top boxes with DVR capabilities cannot record PEG channels. AT&T has intentionally disabled the recording of all basic tier programming, including PEG channels.
So these problems led to two FCC complaints (actually “petitions for declaratory ruling”) from the city of Lansing, Mich., and from an alliance of community programming groups. But the FCC, rather than dealing separately with the limitations of AT&T U-verse technology, combined them into the same docket as another dispute, a lawsuit to stop a cable operator (Comcast, in this case) from digitally encoding PEG channels to free up 6 MHz analog channel spectrum. This is a very important issue for the cable industry.
It’s too bad the FCC combined the relatively straightforward Comcast controversy with the complete mess created by AT&T and Microsoft. But perhaps it is understandable, because both controversies deal with the scope of Section 623(b)(7) of the Communications Act, which says that PEG channels must be carried on the basic tier.
That federal law only applies to cable operators if they are rate-regulated and not yet subject to effective competition. But the complainants want that limitation to be swept away. They want an FCC rule saying how cable systems must carry PEG channels, even when subject to effective competition. And they want broad new non-discrimination rules, requiring analog delivery of PEG channels so long as any analog channels are carried, in spite of the efficiencies of digital technology. In summary, the goal of the complainants in both of these cases is to get the FCC to enact broad new federal requirements for PEG channels affecting all cable operators.
That won’t happen, but AT&T and Microsoft deserve at least a spanking and an admonition to get their house in order. Meanwhile, cable industry lawyers have to deal with more than 6,000 comments in the docket, most of them identical form letters, saying “AT&T and Comcast have been illegally discriminating against PEG channels.”
The community programming advocates sure know how to crank up a letter-writing campaign, but suing the cable company to stop the conversion of PEG channels to digital is as ridiculous as suing a dry cleaner for $50 million for losing a pair of pants.