When new subscribers to the Excite@Home cable modem service sign their contract, no one tells them where the land mines are buried.
Those land mines come in the form of a mandated ban on providing access to any streaming video longer than 10 minutes in length and the right of any cable operator to independently ban any kind of content from being accessed by their particular cable modem subscribers.
Each cable operator that offers cable modem services delivered by Excite@Home must sign a contract that specifically outlines the 10 minute streaming video restriction. Further, the contract says that @Home "shall require it to use its reasonable best efforts to block or otherwise impair a user's ability to connect" to any streaming video content longer than 10 minutes in length.
The limit on video content has drawn the concern of William Kennard, chairman of the Federal Communication Commission and members of Congress. The restriction was put in place to protect the programming offering on cable TV, analysts said.
"Part of the genesis of the 10 minute restriction was from the concern that folks would start watching streaming media on the computer instead of going to the core cable business and watching TV shows," said Gary Arlen, a Maryland-based consultant, adding that the cable companies were concerned "that video on the Net would take away from the core business and maybe make customers not watch what the advertising supported cable programming side was offering."
David Card, senior analyst for Jupiter Communications, puts a fine edge on the reason for the restriction: "They don't want the cable modem business to cannibalise their basic core business, which is delivering filmed entertainment, news and sports."
By comparison, the cable modem service of Roadrunner, which is a joint venture owned by Time Warner, MediaOne, Microsoft, Compaq and Advance/Newhouse, has no such restriction with individual cable operations offering its service. They do, however, have a 10 minute limitation for video content that is produced specifically for the "Roadrunner environment," said spokeswoman Sandy Colony. (Microsoft is a partner in MSNBC.)
Roadrunner's video collar is "a matter of policy," Colony said. "We want to keep things as fast as possible." However, Roadrunner subscriber's aren't limited in any way from viewing any length of video they might find outside of specific offerings from Roadrunner, she said.
As more and more Web-based services ramp up streaming video "on-demand" programming, broadband services, such as cable modems and DSL, the high speed services being offered by the rival telephone companies, are becoming more popular. Some new companies, such as METV.COM, are already promising pay per view sessions, like those offered by cable TV.
The Excite@Home 10 minute restriction has drawn unwarranted concerns, said Matt Wolfrom, a company spokesman. "Let me be blunt with you," Wolfrom said. "We never limit streaming video or audio on our service."
Wolfrom didn't deny that Excite@Home's contract with cable partners does, indeed, contain the 10 minute restriction and the blocking content "right" for individual cable operators. However, Wolfrom says that the contracts were written in the mid-'90s "before anyone really knew what broadband was going to be," so they were covering all the bases.
In addition, those contracts contain a "convoluted, very dense language about streaming video that was put in there because no one really understood what broadband was going to do, because no one really had deployed it," Wolfrom said.
The streaming video restriction, Wolfrom said, only relates to streaming video offerings of broadcast quality, or 30 frames per second, a rate that no Internet content provider is currently offering, he said.
The "right" of cable operators to block any video content they deem necessary also owes itself to the uncertain future of what broadband content would be, said Wolfrom. "I've been here since we launched the service and I have no recollection of any cable partner blocking content; it's a consumer service, why would you want to do that?" he said. But that begs the question, why is the content blocking right still in the contract?
"Listen, I think you're looking at a contract that was drafted before anything was rolling out," Wolfrom said, "and I'm not going to fault anybody for putting it in the contract, but you have to look at the reality: is it implemented? No."
Such assurances don't sit well with everyone. "What we've heard, after we raised this issue publicly, is that they are now saying, 'Oh it's in the agreement, but we are not enforcing that provision at this time,'" said John Raposa, associate general counsel for GTE, a statement "which we view as very cold comfort for consumers."
GTE, along with other telephone companies and America Online, has been battling in the courts and lobbying the FCC to force cable modem companies like Excite@Home to open their networks to other Internet Service providers. Currently, Excite@Home subscribers are forced to use only that ISP; GTE and others claim the company should open its network to competitors. In addition, GTE has taken the additional step of filing an antitrust case against Excite@Home and AT&T, which owns 26 percent of the service, on the same grounds.
"I think what [the restriction] tells us about them simply confirms what we've been saying all along," Raposa said, "is that they intend to use access to control content." Arlen agrees with Raposa: "If we're going to have really full motion, rich media content you can't have that kind of [10 minute restriction] hurdle." Although the cannibalisation factor seems the primary reason for the limitation, there's a very real technological angle, too.
Cable modem service is really a huge digital "party line." That means the more people on your block that subscribe to your cable modem service, the less bandwidth there is, because everyone is dipping into the same "pipe." The more people logged on at one time, the slower the service responds.
By contrast, DSL service, is an "always on" pipe that a customer doesn't share with anyone else; however, the service is proving slow in its rollout because customer's homes have to be within certain distances from the main "switch."
However, content limitations, whether currently being enforced or not, don't bode well for the future of cable modems, unless the restrictions are lifted, said consultant Arlen: "Customers will have to go elsewhere if they want to get full streaming programming."
In July, AT&T Chairman C. Michael Armstrong told a Senate hearing called to examine the ramifications of the company's planned acquisition of MediaOne Group, on top of its ownership of Excite@Home, that the current 10 minute video "limitation needs to change."
However, Armstrong also noted that "we need to find a commercial equation to pay for the change," hinting that cable modem subscribers would have be willing to pay more for a system capable of providing high quality, unlimited streaming video.
Cable modem companies don't have to worry about a mass exodus by their customers, said Jupiter analyst Card. For starters, it's "way too expensive for anyone to do video on demand over the Internet in the near future," at the broadcast quality frame rate, so no one is going to be blocked.
Besides, Card said, the streaming video offerings today are being pumped into a PC, not a TV, "and no one wants to watch movies on a PC, so I don't think it's that big a deal." In addition, Card said that if cable companies figure out how to deliver entertainment quality video over a cable modem in a cost effective manner "that's what they'll try to deliver."