July 27, 2012
Google Inc. on Thursday officially thrust itself into competition with cable operators, saying its high-speed Internet and TV service in Kansas City, Mo., and Kansas City, Kan., will launch later this year. For the new service, which Google is looking to expand to other geographies, the Web-search giant said it would provide Internet speeds around 100 times faster than those found at most U.S. homes and a TV package that lets people record 500 hours of shows to watch when they want-all for prices equivalent to those of rivals such as Time Warner Cable Inc. Since 2000, "very little progress" has been made to increase Internet service in the U.S., said Google Chief Financial Officer Patrick Pichette on Tuesday. He said the average Internet speed in the U.S. is 5.8 megabits per second, or a fraction of the average speed in other developed countries, including in Europe. Rich Greenfield, a media analyst at BTIG Research, said Google's offering would be a viable threat to cable companies in the Kansas City area. "You're getting something way better for the same price or less," he said.
A Time Warner Cable spokesman said the company has "advanced products and services" and "experienced local employees" in Kansas City, adding that it takes all competitors "seriously" and is "confident in our ability to compete." With the new service, Google is taking its biggest step into supplying Web connections rather than the services that run on them. Google executives have said the move was designed to accelerate the deployment of faster networks and show off the sort of services that high-speed connections can enable, such as video downloads. Google also is looking to pressure the cable and phone providers, which have faced criticism for not upgrading their networks fast enough. Google's Web services, including its YouTube video site, would benefit from faster networks.
While the Google Fiber plan for now is restricted to the Kansas City area, Google has privately discussed expanding its offerings to other markets that Verizon Communications Inc. hasn't entered with its FiOS fiber-optic TV and Internet service, people familiar with the matter have said. Jenna Wandres, a Google spokeswoman, said the company will be "looking at ways to bring ultra high-speeds to other communities, but for now we're focused on Kansas City." There are some limitations to Google's offering. The company doesn't appear to have deals to carry Time Warner Inc.'s HBO and channels from Walt Disney Co. and News Corp, which operate ESPN and FX, among others. (News Corp. owns The Wall Street Journal.) Google won't offer telephone service like many cable operators do. The Google spokeswoman said "over time we will be expanding our TV package well beyond the channels it currently includes."
The Google Fiber initiative, announced in February 2010, has suffered from some delays as Google worked with contractors to lay fiber-optic cables and lined up deals with media companies to offer video service to residents. The company had said its service would be made available in the first half of 2012. For high-speed Internet and high-definition TV service, Google will charge $120 a month, which includes DVR storage so people can record 500 hours of shows-including eight shows simultaneously-and watch them on-demand. The company will give those customers a Nexus 7 computer tablet that they can use as a remote control. People who want only high-speed Internet service will pay $70 a month, a price that includes online file-storage space. Google will also offer free Internet service with speeds of five megabits per second to any resident located in a neighborhood that gets access to Google's fiber service. Users of the free service will have to pay a one-time $300 fee.
Some Internet industry veterans said Google's initiative makes a bold political statement but won't do much to help Americans get access to faster Internet service. Brough Turner, founder and chief technology officer of netBlazr Inc., a wireless Internet-service provider in Boston, said that "when all is said and done," Google Fiber "doesn't address the structural problems in the U.S." that restricts competition for cable and Internet service. "The only way to compete is to end up looking like a cable company, which is what Google is doing," he said. That means the company must physically install cables and connect individual homes rather than be able to lease already-existing cable infrastructure. "Whether you can find somebody to do in Boston and San Francisco what Google has done [in Kansas City]-that's a hard problem," Mr. Turner said.
Google declined to comment on the amount of capital investment it is making for the project, but a spokeswoman said it was a "significant" investment and "we expect to operate profitably." As part of the initiative, Google again showed its newfound consumer-electronics prowess by building three devices on its own: a TV set-top box, a box to store recorded shows and other files, and a wireless router that handles high-speed connections. Wall Street Journal; more in Kansas City Star
Comcast Corp. is launching a marketing campaign costing at least $170 million, to fix what Chief Executive Brian Roberts has acknowledged has been a less-than-successful two-old corporate rebranding effort. The campaign is aimed at improving consumer understanding of the Xfinity brand, introduced by Comcast in 2010 as the name for its overall umbrella of services that include TV, phone and Internet access. TV ads will air during the opening ceremonies of the summer Olympic Games on Friday, broadcast on Comcast's majority owned NBC network. Ads also will appear on radio, print media, billboards and the Web at least through the end of the year. The company has spent about $640 million advertising the Xfinity brand since 2010, according to Nielsen, excluding promotional time on Comcast's cable systems. Yet branding experts and industry executives say it still isn't clear what the name stands for, a point Mr. Roberts recently conceded. "How do we explain to consumers what is Xfinity?" he said at an investor conference last month. "That's the No. 1 question I get asked." Comcast has "got so many great products and we need to tell people. We are doing in some ways better on the delivery than we are on the telling," he added.
The new advertisements aim to show what an integrated Xfinity "experience" feels like to a customer. Ads will show how consumers can use any device-a tablet, phone, laptop or TV-to seamlessly maneuver between all of the services Comcast offers, including video, phone, voice and home security. In one ad, for example, a TV makes a phone call, an iPad streams the London Olympics live and a smartphone displays the option to unlock or lock the house. The ads end with the tagline, "this is easy, this is simple, this is awesome."
It is a departure from previous Xfinity marketing efforts, which were "organized around product silos," says Peter Intermaggio, senior vice president of marketing communications at Comcast. Ads about one feature or product, like Streampix, Comcast's online streaming service, didn't explicitly show its relationship to other Xfinity offerings. Branding experts say the new campaign is a step in the right direction but question whether Comcast can make as complex a term as Xfinity into something "simple." "It was hard to get one's arms around the product and explain it and have people actually understand that it comes from one place," said Jeff Goodby, co-chairman of Goodby, Silverstein & Partners, the Omnicom Group -owned ad agency that created the commercials. "I believe we've found a way to explain it going forward." According to people close to the situation there was initially internal debate about the name, including whether it could be confused with a pornographic website, many of which use names starting with the letter X. According to one of the people, Comcast bought the rights to "xxfinity.com" too, just in case a typo would lead a customer to an adult content website.
The cable industry generally is putting more emphasis on brand marketing. Subscriber growth is slowing, while online video portals pose a competitive threat. As a result, cable operators are focusing on retaining existing customers rather than just adding new ones. "The industry is very focused on satisfying the current customer first. You want your current customers to be happy and come back again," Comcast's Mr. Intermaggio said. Key to that is making customers actually like their cable company. According to a recent study by BAV Consulting, a New York-based firm owned by WPP PLC, cable operators' brands are relatively weaker in stature on a national scale than those of phone and satellite companies, online video portals, and TV networks like HBO and ESPN. Wall Street Journal
Dish subscribers who use its AutoHop commercial skipping feature may have noticed some recent tweaks to the device. The AutoHop, a controversial feature Dish has been offering since May, makes it easier for subscribers to skip commercials from shows recorded off of broadcast networks ABC, CBS, NBC and Fox. As of yet, the AutoHop is not available for use on cable channels or smaller broadcast networks such as the CW or ION. Three of the networks -- CBS, NBC and Fox -- have filed suit declaring the AutoHop violates their copyright. There are also charges that the AutoHop in essence creates an illegal video-on-demand service. Some of the changes Dish has made to its AutoHop, first reported by Variety, seem designed to potentially legally defuse some of these issues with the networks, at least in the eyes of the court. For example, previously when the AutoHop was activated it would automatically record broadcast networks ABC, CBS, NBC and Fox. Now, subscribers can choose which networks they want recorded. Also, now when Dish asks subscribers to enable AutoHop and allow it to skip commercials, the "no" box is checked by default instead of the "yes" box. That means a subscriber who wants an ad skipped now has to take an extra step for that to happen. Los Angeles Times
Quotable: "This is not your father's Republican Party. This is a different breed of cat." - Vice President Joe Biden, addressing the International Association of Fire Fighters at the Pennsylvania Convention Center on Wednesday. Philadelphia Daily News
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