From the Washington Post article:

“What Aereo is doing to bring broadcast signals to its customers is interesting,” Time Warner Cable chief executive Glenn Britt said in an interview with The Washington Post. “If it is found legal, we could conceivably use similar technology.”

That’s a big admission from Britt, and illustrates both how rapidly the internet is changing the television industry. But what would be an even bigger admission would be if Britt would consider delivering that public broadcast package beyond its existing subscriber base.

A modest proposal

In short, would Britt be willing to break the unspoken agreement that has kept the telcos and cable providers from infringing on each other’s turfs even as IP technology has made it possible for them to deliver their TV packages over the top?

If Time Warner Cable were to implement an Aereo-like business model and offer it to anyone, it might hurt Aereo but it would set off a war between the telcos and cable companies to deliver their services over the top. In many cases, the technology isn’t stopping this revolution, but the business implications would give them pause.

If Comcast’s Xfinity service were available everywhere and so were Verizon’s FiOS packages, then pay TV will have been decoupled from the entwork. All you would be left with are dumb pipes and whole lot of companies offering to provide the same channels of television. Would we need 20 “premium cable offerings?”

My hunch is no, which would have trickle down effects on the money the networks make as well as hasten the rise of a la carte pay TV packages, or even simply paying for a show. However, all of this speculation is premature as Britt cushioned his statements by telling the Washington Post that his company is only watching Aereo’s legal battle and that it doesn’t have concrete plans.

Taking action on this sort of talk would hugely piss off the broadcasters that own some of the channels that Time Warner Cable depends on to keep its subscribers happy, and may just be a feint in the ongoing fight between cable providers and content companies about retransmission fees.

Back in the real world

But Britt is clearly a fan of shaking things up. Unlike many ISPs that view Netflix as a threat to their triple play bundle, Time Warner Cable sends out advertisements touting Netflix as a reason to upgrade broadband speeds. He’s also letting consumers stream live TV to their Roku boxes with a Time Warner Subscription (that might come in handy should it elect to make an Aereo-style over the top offering). And he’s also been more vocal about the need for more flexible packages of channels for consumers.

He reiterated that to the Washington Post:

“The structure needs more flexibility,” Britt said. A customer shouldn’t have to pay for less popular channels like VH1 Honors in order to get Nick Jr. and MTV. “There are fellow citizens who are struggling financially and can’t afford large programming packages. We want the ability to offer those customers smaller, more affordable packages.”

It’s better to keep a customer paying you something, rather than decamping because they don’t want to pay for a $150 cable bill. Britt seems to get that, and wants to find a middle ground before the internet and over the top TV offerings take that ground out from under his feet. I wonder if he’s willing to take it even further.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

It’s also AT&T’s first foray into an over the top service. The company will offer the service in all areas where it provides wireless service, which may not seem like a big deal, except that the system will connect to both the AT&T wireless network as well as the wireline broadband inside a home. Looks like Ma Bell is ready to make some money on other people’s pipes.

What’s inside Digital Life

As for the service, it’s pretty compelling for the average person who’s evaluating a home automation or security system, especially if AT&t does open up the platform later as it promises it will. There are two basic packages. The cheaper entry-level package costs $29.99 a month plus $149.99 for equipment and installation. It includes 24/7 home monitoring, a wireless keypad, a remote, some sensors and an indoor siren. The more expensive package includes all of that plus three more sensors of the owner’s choice for $39.99 a month and $249.99 for the gear and installation.

AT&T also has a slew of add-on devices including water leakage sensors, wireless cameras and thermostats that a consumer can buy and add to the plan for a monthly fee. AT&T has staffed two call centers around the clock in the U.S. and has provided a battery with the system to ensure that the product is reliable and online all the time. The wireline broadband and AT&T wireless provide redundancy for the connectivity.

Glen Lurie, the president of emerging enterprises and partnerships at AT&T, explained that the whole plan behind the system is for it to be secure and easy for customers to use. That’s why for example, you can’t just bring any old connected device onto the Digital Life network. Much like AT&T’s wireless network, the AT&T wants to test the devices before it will allow them on your home network. Lurie declined to tell me when AT&T would bring on additional partners. He also declined to tell me what companies AT&T is partnering with at launch.

And yet …

However, AT&T’s plan is pretty darn basic at the entry-level and adding standard components for really useful automation and security can bring the total installation and gear cost to about $600 and the monthly service fees to about $55 a month if you add the security camera ($200 installed) and energy management ($150 installed) packages. Remote door locks, water shut-off valves and other tweaks are extra.

That’s not crazy considering you get an integrated app that’s actually quite nice to use for controlling everything, but it’s still a significant investment: especially given the closed nature of the ecosystem.

I’m currently contemplating a $210 set of connected door locks (the non-connected locks are about $85) and so I know that adding connected gadgets to your home isn’t cheap. Because for some of these devices, like thermostats or door locks are also installed into the home, you had better hope you like the overall service. Of course, that’s great for AT&T, because it presumably reduces churn. My colleague Kevin Tofel and I had a good discussion of how to choose a home automation system this week on the internet of things podcast.

And once I have those locks I’ll have to wait for a system such as MobiPlug or SmartThings to support those locks if I want to integrate them into my existing home network. Or maybe I’d have to hope my locks are supported by a software vendor such as Zonoff. Plus, I’d have to do the equivalent of programming scenes that AT&T already has its app. The Leave Home scene will turn down your air, turn off the lights and lock your doors, for example.

Lurie claimed that AT&T is ahead of its competitors by about two to three years, noting that many of the home security products from companies such as Comcast or Time Warner Cable are provided by outside vendors and don’t have an integrated ecosystem like what AT&T is offering.

I think the integration is wonderful, but I do think it will be more powerful when I can bring in some of my existing connected devices onto the AT&T Digital Life network. While the hub that comes with the service supports Wi-Fi, 915 Mhz and other radios, the devices connect in a proprietary mesh that AT&T uses because it ensures security. It also ensures I can’t bring my own devices into the Digital Life family just yet.

But for those without my own particular hangups, the product is certainly worth a look. It launches in 15 markets on Friday including Atlanta, Austin, Texas; Boulder, Colo.; Chicago, Dallas, Denver, Houston, Los Angeles, Miami, Philadelphia, Riverside, Calif.; San Francisco, Seattle, St. Louis and select areas of the New York and New Jersey areas.It will be in 50 markets by the end of 2013, available for purchase online and for testing at AT&T wireless stores.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A look back at mobile in Q1
• Report: The Ongoing Battle for the Digital Home
• Connected consumer first-quarter 2013: Analysis and outlook

In a blog post Wednesday evening, Time Warner said that existing customers with its standard cable package or above can log onto a city-wide Wi-Fi network the cable company is building out. Why now? Time Warner cites Google Fiber’s plans as a reason to kick its free Wi-Fi project into gear.

We’ve been rolling out our free WiFi network across our footprint for some time now, as part of our larger strategy to offer significantly more value to our Internet subscribers. Austin was in the game plan for 2013. But Google’s recent announcement encouraged us to deploy our network more aggressively now. As I mentioned a few weeks ago, we’re ready to compete.

While paying $70 for 30 Mbps internet service from Time Warner Cable and now getting free Wi-Fi around town is nice, if Google offers me a deal where I get a gigabit connection for anywhere near the Kansas City price tag of $70, free Wi-Fi isn’t going to stop me. It won’t even make me pause.

Still while, I wait to hear where Google will deploy fiber and how much it will cost, I’ll gladly check out the TWC Wi-Fi network. So far it’s only in a few locations, but the company plans to expand it around town. Customers can sign into the network, called TWC WiFi and use same username/password combo they use sign log into their account. Non subscribers can also pay $2.95 per hour for access. Subscribers also get access to other Wi-Fi networks in cities including New York City; Los Angeles; Chicago; Philadelphia; Atlanta; Baltimore; Boston; Washington, D.C.; San Francisco; Orlando; Kansas City; and Charlotte.

As far as responses to the threat of Google Fiber go, Time Warner’s is immediate and measured, especially when compared to AT&T’s. AT&T — with its fiber-to-the-node connections that currently top out at 24 Mbps — has a lot less than TWC has to offer when it comes to fending Google’s gigabit speeds. And after the 2009 experiment in broadband caps that Time Warner Cable attempted in Austin, it’s nice to have the city singled out for a benefit instead of a punitive pricing plan.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Even if my earlier arguments about innovation don’t convince you that Google Fiber could help change the broadband landscape, then here’s a chart that could help. For the practical people out there, just check out the pricing of Google Fiber today versus the pricing of the incumbent ISPs in Austin.

How much broadband costs in Austin.

Comparing pricing across telecommunications services is tough, so I assembled the highest speed internet package, the TV package that offered digital cable but none of the extra premium channels and a DVR package that provided whole home DVR as Google TV does. Time Warner Cable has a box and modem fee associated with its service. Google TV doesn’t have an equipment fee but it does have a different channel line up than the incumbents.

Looking at this, Google Fiber would be more expensive than AT&T’s services until people started using more devices and requiring more capacity. However, AT&T has a cap of 250 GB per month, and despite what the salesman told me over the phone, I’m pretty sure that I do need a 24 Mbps connection today to satisfy my family members. Still, on the eve of the Google Fiber announcement I’m tempted to switch over to AT&T while I wait for the build out.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Report: The Ongoing Battle for the Digital Home
• Connected consumer first-quarter 2013: Analysis and outlook
• OTT technologies and strategies for broadcasters

Peter Sevcik, president of NetForecast, told GigaOM that seven clients have hired his firm to audit their broadband meters over the last few years, but of those seven only one — Comcast — has published a report on the NetForecast certification. Sevcik is only willing to certify one other client in a public report.

Meters are a black box

The other five clients — which Sevcik would not name — have meters that Sevcik views as inaccurate, although not all of them have publicly rolled out their meters. And not all of those clients impose a broadband cap. Sevcik usually expects accuracy on the meters of between plus or minus one percent, but so far these don’t measure up.

“They are wrong by missing numbers by one way or another — sometimes it’s over reporting, but more frequently the error is under reporting,” he said. Under reporting should be a relief to those facing overage charges or service termination for going over their meters, but if the meters aren’t counting the data properly, it is still a problem.

Also disturbing is the attitude that Sevcik has encountered at some clients with malfunctioning meters. “There’s a general sense by some people, ‘Eh, we under report so we give them a free pass, so why worry about that?’” Sevcik says. “I think one does need to worry because it ruins the overall veracity of the meter. It derails trust in the meter.”

Broadband caps have grown to cover more Americans. They often come with meters.

Sevcik wouldn’t name those clients, but his website lists Time Warner Cable, Cox, Comcast, AT&T, Bell Canada, Verizon and France Telecom as customers. Time Warner Cable and Cox have both confirmed to me that they have used NetForecast to certify their meters. While Verizon doesn’t have a broadband cap or a meter, Verizon emailed to confirm that it is not using NetForcesat on the wireline side. AT&T’s spokesman says it has a team of engineers that certifies the accuracy of its meters but that it hasn’t worked with NetForecast to certify its wireline meters. Sevcik clarified that the seven clients he’s speaking of are all U.S.-based and all are testing wireline meters.

Last November, AT&T customer Ken Stox drew attention to AT&T’s meters when he couldn’t replicate the ISP’s byte count with his own home testing. For Stox, who is technically astute, the questions he had about the meter were less about fairness and more about understanding what, when and how AT&T was counting.

Building a broadband meter is tough

Those same questions are ones that Sevcik hopes ISPs will answer as part of an overall effort to improve their meters. He notes that whatever you think about the fairness of data caps, if meters are to serve some kind of public purpose, the public has to understand what the ISPs are counting and how they are counting it.

As for problems that lead to inaccurate meters, there are several. The first is that many of these meters are bolt-on afterthoughts. A telco or a cable company often uses measurement gear that sits on the subscriber side of the network. The ISPs has to allocate enough resources at that point to track the bits properly, but networks become congested. Then the ISP faces a choice. Does it count all the bits and risk slowing down the network, or does it let the bit count slide and let the rush of packets through?

Most ISPs err on the side of letting them rush through and a better user experience. But to solve the problem they could dedicate more resources to the counters so they can keep up with peak traffic. More resources would also solve the next problem ISPs face — once they have the bit counts, they need to add them up. As Sevcik describes it, many of these counters drop the bits into an Internet Protocol Detail Report format. Those reports are generated every 15 minutes.

Spread that across 10 million subscribers with a goal of doing hourly updates, and suddenly you have 40 million records to process in that hour. That takes servers — in some cases more than the ISP anticipated.

And while Sevcik said that while some ISPs had used decimal counting as opposed to binary counting of bytes in the past, most used binary counting today. That’s good because a binary count adds about 7 percent to the total number of bytes. But as Sevcik points out, if a consumer streams 3 HD movies on Saturday night and expects to see that jump in data consumed on his usage meter, then it needs to be there, or the consumer needs to know why.

Are meters worth it?

It’s clear that building a meter takes work. A Time Warner Cable spokesman notes that development of its meter took several years — other ISPs said it took at least a year of effort from multiple engineering teams.

My broadband consumption courtesy of Time Warner Cable.

If building a meter is so much work and consumes so many resources, why have them? For example, Comcast, which delayed the rollout of its meters while it struggled to get it right (and still runs monthly accuracy checks) has defended its meter as a customer education tool and as a means to manage network consumption. Critics point out that at 300 GB, Comcast’s cap is suspiciously close to the 288 GB figure that Comcast has said would be the amount of data consumed by someone using their broadband to replace cable. Those critics generally call caps a way for ISPs to protect their pay TV businesses.

What we do know is that Comcast has spent a lot of money and effort making sure its meter is accurate, because as Charlie Douglas, a Comcast spokesman notes, “We knew it would be in the spotlight.” I imagine also because it knew a meter would be the first step in how it could change the pricing dynamic from all-you-can-eat to something that’s a little bit more metered. And as I have pointed out in previous articles, if meters become the basis for charging subscribers overage fees or even terminating their service, then someone needs to monitor those meters to ensure that they are accurate.

I’ve called on the FCC to wake up and start gathering more data on how meters affect consumers and whether or not they are accurate, but the agency has so far been content to let this experiment in caps pay out without much oversight. With these accusations maybe the FCC will finally step up. Clearly, as a country we’re moving toward capped and metered broadband.

Sevcik, whose experience goes back to the days of the ARPANET and the first routing systems, believes if that’s the case, then those meters should be accurate.

“I’ve been in the internet business for quite some time … and in that time I’ve had my hand in the design of more than 100 networks and seen a lot in network technology. And what I’ve realized is, as the industry has matured there is an awful lot of talk and decisions made by people — consumers, policy advocates in DC and big companies — that is often based on hype,” he said. “my goal in a small way in this world of hype is to shed a light of real data and make a little piece of it really right.”

In short; If we’re going to accept meters on our broadband, then let’s make sure they are accurate.

This story was updated at 11:49 a.m. PT with comment from Verizon.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• What the shift to the cloud means for the future EPG
• Who and what to watch in the new era of the living room
• A look back at mobile in Q1

And in the long term, analysts think it will pay off for the cable giant, which reported financial results Thursday. Especially as consumers find themselves stuck between Time Warner Cable’s modem fee and slower DSL-based service offering. From an analyst note issued today by Stifel Nicolas:

Residential PSUs declined by 20,000 versus our estimate of +48,802, primarily due to weaker-than-expected HSD [high speed data] adds. We believe that the company’s residential HSD net adds (+75,000 vs. estimate 129,000) were negatively affected by higher-than-expected churn as a result of the company’s recent introduction of a modem fee (~$4). While the “fallout” from the modem fee could spill over into 1Q13 results, we don’t expect this to be a long-term issue for the company’s residential HSD product. In fact, the modem fee contributed ~3/4 (~$1.83) to the 6.3% increase in HSD ARPU during Q4.

So there you have it. Customers clearly are put off by the modem fee, but it won’t last. Likely because they don’t really have another option for broadband in many areas. Yet, plenty of people are still unconvinced that ISPs engage in anti-competitive behavior in the broadband market.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• What’s so bad about being a dumb pipe?
• Connected consumer first-quarter 2013: Analysis and outlook
• Who and what to watch in the new era of the living room

The point of contention is Netflix’s recent launch of 3D and Super HD video formats. Netflix launched a limited number of 3D titles during CES last week, and also added the ability to stream many of its titles in Super HD — a better-looking 1080p HD format that features less compression, and thus higher bandwidth requirements, that Netflix’s regular 1080p streams.

Both 3D and Super HD are exclusively available to subscribers whose ISPs take part in Neftlix’s Open Connect CDN network, and the company is actively encouraging its subscribers to contact their ISPs and get them to adopt Open Connect.

This kind of customer-driven campaign apparently didn’t go over so well with Time Warner Cable. The company told Multichannel News that it is wrong for Netflix to “withhold any content formats” from Time Warner Cable Customers, adding: “Time Warner Cable’s network is more than capable of delivering this content to Netflix subscribers today.”

Of course, Netflix doesn’t exactly agree with this point of view. Netflix Chief Communications Officer Jonathan Friedland sent me the following statement via email:

“OpenConnect provides Netflix data at no cost to the location the ISP desires and doesn’t seek preferential treatment. We hope TimeWarner will join the many major ISPs around the world who are participating in Open Connect to reduce costs, minimize congestion and improve data delivery to enhance the consumer experience.”

As we wrote before, this conflict between Netflix and ISPs has been going on for some time, and it essentially comes down to peering arrangements. ISPs want big content providers like Netflix and Google with its YouTube service to pay for traffic, but Netflix and Co. point out that consumers are already paying for their traffic.

These disputes have largely remained under the radar, but Netflix elevated the issue by tying it to its new video formats, and enlisting consumers in the process. It now looks like Time Warner Cable is responding with the same vigor it displays during cable TV carriage disputes.

The question is whether consumers will side with Netflix, or with their cable company.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• OTT technologies and strategies for broadcasters
• What the shift to the cloud means for the future EPG
• Who and what to watch in the new era of the living room

I called Amazon(samzn), which said it was having server issues that was causing problems for those streaming through a Roku box (I was), and got a refund for the movie. But the customer service rep said that based on my stream the Roku server issues weren’t the likely problem; my internet connection was. He said my internet service kept dropping the connection. I asked for a copy of the stream results he was looking at so I could call my ISP and find out what was going on, but that wasn’t possible. The customer service rep ended up offering to be on the phone with me while I called my ISP, something I haven’t done yet because he didn’t offer me a way to contact him other than email.

As I was on the phone with Amazon, I knew this might make a good story, so I took notes. But honestly, I didn’t want to spend Friday night troubleshooting my 30 Mbps cable broadband connection, my Roku box, my home Wi-Fi network or my inability to stream a rental via Amazon. I wanted to watch a $4 movie and relax. The trouble is that technology has enabled us to break up the process of getting a movie or TV show into many different pieces controlled by different service providers. But as we do this, we’ve have also taken out any accountability, which puts the consumer in the middle of any disputes over service quality.

Stuck in the middle with you

My experience on Friday is just one example — other content companies are eliciting help from consumers in the quest for better quality video streams. This week Netflix said it will offer 3D movies and a higher quality stream to customers whose ISPs put a Netflix Open Connect box on their network. The Open Connect program is Netflix’s homegrown content delviery network that many ISPs in Europe are using as well as a few in the U.S. But Comcast, Time Warner Cable (stwc), Verizon, AT&T and CenturyLink — which together comprise about 61.3 million broadband customers — aren’t using the service.

Netflix has offered up a handy web site so customers can see if they can get the higher quality streams, and suggests that if they can’t, those consumers should call their ISP. So now, I’m supposed to call Time Warner Cable and ask it to make the business decision to add Netflix Connect as well as try to get tech help on my Amazon issue; possibly by asking the technician to hold and wait for me to dial back in to Amazon’s help line to find the guy who helped me on Friday. I am not excited.

So many points of failure

This box is yet another possible point of failure.

It’s a well-known secret in the peering world that ISPs sometimes choke the traffic coming in from large content companies as a reason to charge them more money for the privilege of interconnecting to them. That’s suspected of happening with Free in France, and has triggered an investigation by the French telecoms authority. It’s also happened in the U.S., although most of the arguments on the issue are solved by negotiation rather than a government probe.

Should my Pitch Perfect packets hit the last mile network, they still have to run the gauntlet of all of my neighbors’ traffic (cable networks are shared, and Friday night is a great time for others to stream their own movies). Once inside my home it has to traverse my Wi-Fi network and travel through my Roku box to the TV. A congested Wi-Fi network or even glitches on my Roku may also affect the quality of my service.

Pay TV might be the option, if…

Comcast’s Xfinity app

But right now, they don’t provide enough value in terms of quality of service for me to spend $100 a month. As someone who rents maybe two or three movies a month and watches one or two shows on TV, it’s not worth it. It’s like buying a Maserati when a minivan or maybe even a moped would do.

Right now the cable companies and some telcos are pushing on-demand content to more devices (YAY!) through services like Comcast’s Xfinity, which is a concession to how customers want to watch more content on their time at on the device of their choosing. However, for the most part, they are ignoring that some people don’t want everything.

The pay TV industry has fought a la carte programming for years, and may not give in now. Without a lot of competition it’s tough to see that dynamic changing — and in some cases it would upend the pay TV business model. Pay TV companies generally sign long-term contracts to channels paying them a set fee for each subscriber. Even as subscribers fall, cable companies are still paying those fees. As television makes the transition to broadband, consumers, pay TV companies and the content companies are all making sacrifices, but asking customers to mediate disputes between Amazon and an ISP shouldn’t be one of them.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Who and what to watch in the new era of the living room
• OTT technologies and strategies for broadcasters
• What the shift to the cloud means for the future EPG

Time Warner Cable will stream up to 300 channels to subscribers through the service. The actual channel line-up depends on where customers live, as well as their subscription package, but I’ve been told by Roku that this isn’t one of those “get all the major broadcasters, minus the two you actually watch” kind of deals: “All channels will be included,” a Roku spokesperson told me.

This is a significant win for Roku, and it foreshadows where the company is going: In the past, Roku has often advertised itself as a cord cutting solution, with Roku CEO Anthony Wood telling us back in 2010 that 12 percent of his customers had already given up on their pay TV subscription. But since then, Roku has put a bigger emphasis on authenticated offerings like HBO Go. The Time Warner Cable deal now marks the first time a pay TV operator is streaming live TV straight to Roku devices.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.