Two months ago, when the Hulu Plus rumor came out in the industry, we did a comparison between between Netflix and Hulu Plus here. Now that Hulu Plus is officially introduced, let’s take a further look at the new service. According to Hulu, Hulu Plus is not a replacement for Hulu.com. Hulu Plus is a new, revolutionary ad-supported subscription product that is incremental and complementary to the existing Hulu service. For almost all of the current broadcast shows on our service, Hulu Plus offers the full season. Every single episode of the current season will be available, not just a handful of trailing episodes. Moreover, Hulu Plus subscribers can now watch their favorites through more than just the browser on their Mac or PC. Hulu Plus subscribers will be able to watch all the Hulu shows on Internet connected TVs, iPhones, iPads and game consoles. In short, Hulu Plus offers a deep catalogue of TV shows and a wide range of content distribution channels. It is the TV Everywhere by broadcasters. So will consumers be willing to pay for the service? Without statistical evidence yet, a qualitative comparison among online premium video offerings could shed some light on the future of Hulu Plus. Netflix is a similar service which we’ve already compared with Hulu Plus in the previous post. As Hulu Plus has made it universally accessible, Netflix on iPhone is also coming soon. Both services are going the video everywhere approach. From the content distribution portfolio perspective, Hulu Plus is on par with Netflix streaming service. With $1 price advantage, Netflix could gain a slight edge over Hulu Plus, although a minor one. The key difference between the two services come down to content selection. While Netflix is a back-catalogue movie service, Hulu Plus is a back-catalogue TV show service, as all consumers can watch recent TV shows on regular Hulu service. So the competition could be somewhat simplified to TV shows VS movies. Netflix again has an edge over Hulu, with some of the TV shows such as Lost, 24 and Prison Break, also being included in its catalogue. Going forward, Hulu Plus could grow its catalogue significantly, but Netflix’s big user base makes it hard for broadcasters to ignore and not to sign deals with. Cable companies’ TV Everywhere is definitely a competing service to Hulu Plus. With similar content distribution portfolio in which users can access content on TVs, PCs and mobile phones, TV Everywhere could have better content selection than Hulu Plus. And for current cable subscribers, there is no incremental expense to enjoy TV Everywhere programs. But the speed of rolling out TV Everywhere service is questionable so far. Hulu Plus is clearly an experiment by the broadcasters in the hope of generating revenues by distributing content on their own. If Hulu Plus could prove its viability on profitability, there will be more content providers joining the game. And cable companies would inevitably lose their leverage in the negotiation. It is foreseeable that Hulu Plus could potentially become a formidable over-the-top TV service provider that rivals Comcast and Time Warner Cable, once all the major content providers join Hulu Plus. This could lead to the failure of cable companies’ TV Everywhere and eventually the distinction of cable companies. But right now it is still too early to tell. -Jia Wu

As the US government is investigating Goldman Sachs' case in which the financial titan allegedly materially misstated and omitted facts in disclosure documents for a synthetic CDO product, many financial industry analysts claim that the financial service industry has not innovated anything for its customers in the past 40 years except the ATM machines. Unlike the financial service industry, the Telecommunications, Media and Technology (TMT) sectors have been at the forefront of all kinds of innovation for many years. And again at this year's NCTA The Cable Show 2010 in Los Angeles, a myriad of innovation demonstrated here has shown us that the media, cable and technology industry is still marching ahead with strong momentum. The big themes here this year, probably similar to many other media and technology trade shows, are home 3D and TV Everywhere technologies. 3D technology has been hyped for sometime, with the movie Avatar pushing it to a recent peak in real user consumption. Followed by Alice in Wonderland, How to Train Your Dragon and more new 3D movie releases, 3D's initial success in movie theaters is undeniable. But more problems emerge when it comes to the mainstream home adoption of 3D technology, such as the lack of content support, the hassle of wearing a glass and consumers' willingness to pay for 3D. Technology providers are fearless for these problems, with companies like Motorola, Ericsson, NDS, OpenTV and a lot more demonstrating their development and commitment in this realm. Meanwhile, the atmosphere under the theme is a little different from the hyped 3D world. When we talk to executives from various firms in cable and technology industry, most of them acknowledge that the mainstream home 3D adoption will take longer than we think, as the industry makes effort to address the problems pertaining to 3D in the home. Therefore, it is reasonable that 3D technology will continue its evolution as the next growth area for the industry while its entry to most of our homes might take over ten years to be realized. TV Everywhere is another major topic at The Cable Show 2010. TV Everywhere here not only refers to the initiative which the cable industry in working on, but also touches upon anythings that could enable users to watch videos on any device anytime anywhere. Major cable companies continues their progress on the project, which offers their existing cable subscribers to watch the programs they already subscribed to on any device they want. The Wimax-based 4G network provider Clearwire, Sprint, Time Warner Cable and Comcast's 4G service partner, is rolling out its service in increasing number of US cities. The 4G network with higher bandwidth comparing to current 3G network could help users consume more traffic intensive content, such as HD video and video games, on the go. Echostar's Slingbox forges ahead the place-shifting TV service. In addition to the consumer product line, the place-shifting technology is integrated to its set-top-boxes, allowing operators to deliver a seamless place-shifting experience across TV, computer, and mobile devices. Furthermore, the online video platform industry carries forward their services helping cable and media firms improve their online video delivery process. While it is exciting to see all these innovation going on at the show, it is believed that the mainstream adoption of consuming any media content anytime anywhere are still going to take years to consummate. Jia Wu

AT&T and Verizon both posted strong broadband numbers in Q4 on the back of their rollout of fiber-based broadband services, according to Strategy Analytics’ latest broadband benchmarking report. In terms of quarterly net new additions, Comcast and Time Warner Cable were pushed into 3rd and 4th place. AT&T took the number one spot with 242k additions, followed by Verizon with 212k. Behind the telcos’ numbers is the story that their next generation access platforms, U-Verse and Fios, are gaining ground at the expense of “legacy” ADSL services, for which subscriptions are in decline. Neither AT&T nor Verizon will confirm how many “fiber” customers previously were existing customers to their own basic ADSL services, but we can assume that they represent a fair proportion of the total. Of course, the term “fiber” is used fairly loosely in the case of both companies. Fios is a true fiber-to-the-home broadband service, although the Fios TV service is delivered over coax. And U-Verse actually uses VDSL technology. In spite of the telcos’ strong Q4 performance, our 2009 forecasts suggest that Comcast will again be the leading broadband provider this year, in terms of new additions, followed by AT&T and Verizon. But we again see a trend towards the fiber based services, and predict that AT&T’s U-Verse will be the fastest growing service in 2009 if seen in isolation from the overall AT&T broadband operation. Twitter: twitter.com/DavidMercer_SA Client Reading: Broadband Service Provider Performance Benchmarking: North America Q4 2008

We have always cited the cable industry as the archetypal vertical or closed content-to-device business model. Ever since the US cable network providers (MSOs) began to offer paid-for services and secure content using set-top boxes, they have steadily increased their hold on the television content and device market. Initially with analogue premium TV boxes, and more recently with digital cable boxes, a growing proportion of US TV viewers use a device provided by their cable operator as the gateway to all their television programming. And as the cable industry has added more advanced features to those boxes, such as DVRs and VOD, these have also been controlled by the set-top box, leaving the “TV set” as essentially a dumb terminal. The satellite TV industry followed a similar model in both the US and Europe. Cable in Europe, however, has a somewhat different history, since its early development was encouraged by government subsidy in several countries. But the US model has also found its way into several European countries, notably the UK, and as digitisation of cable has accelerated, European cable operators have also moved increasingly towards a set-top box approach. Manufacturers of TVs have been concerned at these trends for many years, realising that the “intelligence” of their devices was being bypassed and ignored as many viewers used set-top boxes. In spite of many attempts over the years to encourage the integration of various cable or satellite technologies into TVs, such as digital tuners or smart card slots, these have largely failed. The challenges for TV manufacturers have been numerous, not least the additional cost of these features and overcoming the obsolescence argument, that viewers may want to change cable or satellite providers or services without having to change their TV set. There has also been an argument that it has not been in the strategic interests of cable or satellite providers to allow integration of what are essentially their network technologies into devices that are available in an open, horizontal market. Having fought hard to win new customers, service providers should not be inclined to make it easy for those customers to move to a different supplier, and forcing them to use a proprietary device is one way of discouraging churn. Recent developments suggest that the cable industry at least is now ready to adopt a much more open stance towards the CE industry. In the US, Sony has signed an important agreement with the five largest cable operators (Comcast, Time Warner Cable, Cox Communications, Charter Communications, Cablevision and Bright House Networks) to use Tru2way technology in its TV sets and other CE devices. This will allow cable customers to use cable services, such as VOD and interactive guides, on these devices without the need for a set-top box. Given the support for Tru2way by other major CE companies, there seems a genuine possibility that it will become widely deployed over the coming years, although the cable operators still have to demonstrate that they are wholeheartedly behind the initiative by actively promoting the technology. In Europe, meanwhile, some of the cable industry’s largest operators are also moving towards endorsement of a more open system. CE companies Sony, Panasonic, Samsung and Philips have led the initiative to develop a platform known as CI+ (Common Interface Plus). German cable operators, including the largest, Kabel Deutschland, have given their support, and others are expected to follow suit. CI+ will allow users to access premium and advanced cable services without the need for a set-top box. CI+ devices will incorporate a smart card slot which will accept conditional access modules provided by cable operators. So is this a sign that cable operators are accepting that the world is moving on? Or will both Tru2way and CI+ be sucked into the black hole of promising but failed open cable technology initiatives? My bet is that this time round things may really be changing. And the difference now is that cable recognises that its long-term future lies more in broadband than in the traditional pay television market. The TV set-top box has been the gateway to content for many years, but as people consumer more content on the web some of that role is increasingly shifting towards other devices such as broadband gateways, home PCs and TV sets. For sure, the set-top box is not going to disappear overnight. It will be some years before both Tru2way and CI+ are widely enough deployed to have a significant impact. And cable companies and content providers may still decide to promote set-top boxes if the new technologies fail to support future services or fail due to content security issues. But one way or another, the cable industry is getting ready for a major transition that will have widespread implications for device manufacturers and content owners alike. Client Reading: Global Broadband Forecast 2008 - 2012

Or indeed, vice versa? Much of the discussion around Google's open letter to FCC Chairman Kevin J. Martin on 700MHz spectrum focuses on the impending battle between the former search engine and incumbent telcos. It can only be good news that an alternative competitor to dominant communications providers might emerge with the coming wave of spectrum sales. Whether Google will offer as "open" an alternative as any other potential bidder is debatable. "Open" is a word I normally treat with extreme caution, particularly when it comes to issues relating to network access and technology standards. What seems to be ignored is that Google has put some of its considerable weight behind the cable industry, by way of an investment in Spanish Wifi outfit FON. Time Warner Cable (with 8% of the broadband market) recently set itself apart from its telco rivals by encouraging its broadband customers to use FON's technology and shared broadband access model. Our report on the subject concludes: "Time Warner's acquiescence was a colossal win for FON, and an important milestone for shared broadband access". Google recognises that cable is the quiet foster child of the US telecoms industry. Still seen primarily as TV providers, cable companies in fact led the US industry into the broadband era, still have 54% of the market, and are stealing voice customers at a rapid clip. Also often forgotten is that cable is nearly as ubiquitous as fixed telco, and passes well over 90% of US homes. As the cable industry struggles to find a way into the mobile/wireless business to complete its quad-play offer, Google could prove to be a valuable partner in more ways than one.