Whether or not that’s true is certainly arguable. What is not arguable is that usage-based pricing is better for cable operators and for wireless carriers. Comcast Corp. (NASDAQ: CMCSA) last week said that it planned to drop its 250-gigabyte data plan and introduce a new pricing scheme that would allow its customers to consume 300 gigabytes of data at a base rate and pay $10 for each 50 gigabytes customers use above that limit. The usage-based plan could squeeze streaming video providers like Netflix Inc. (NASDAQ: NFLX) that have built their entire business models on essentially unlimited bandwidth. Streaming a 2-hour movie in HD consumes about 4 gigabytes.

It’s probably only a matter of time before other cable providers like Time Warner Cable Inc. (NYSE: TWC) and Cablevision Corp. (NYSE: CVC) adopt similar plans. Wireless carriers AT&T Inc. (NYSE: T) and Verizon Wireless, the joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), appear set to announce shared data plans that will allow more than one device to share usage on a single data plan. The carriers already charge more for usage above the plan limit.

Genachowski appears to believe that usage-based plans will level the playing field between the cable operators and the wireless carriers. Time Warner Cable experimented with a usage-based plan in 2009, but decided not to adopt the plan because customers hated it. Customers will still hate the plans, but without FCC backing customers no longer have any heavyweight help.

Comcast and the other cable companies will argue that the 300-gigabyte limit affects a small number of very high usage customers. They will also argue that by adopting a usage-based plan the vast majority of customers will pay less. But the data plan will also include internet access from computers, smartphones, and tablets, as well as Wi-Fi access from the local coffee shop.

Comcast has not yet announced pricing for its usage-based plan, but the odds of prices actually dropping don’t seem particularly good. Especially because the company is throwing in another 50-gigabytes of usage.

Cable companies need to prevent customers from “cutting the cord” and choosing to use their wireless data plans to drive home entertainment. An Internet TV box that really works is their biggest nightmare.

But if the cable guys and the wireless carriers can grab enough wireless spectrum and do enough cross-licensing deals and keep the content creators happy, the cost to consumers will not fall. The cable and wireless industries will appear to be competitive, but they’ll really operate an oligopoly and some small carriers and cable companies will be allowed to stick around to make things look good by providing service to low density markets. If the FCC really wants competition in the wireless business, then the agency better stick up for consumers, not cable or wireless providers.

Paul Ausick

Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), wanted the additional spectrum to accommodate future growth. That was no particular show-stopper as other wireless companies have been allowed to accumulate spectrum against prospective future needs. SpectrumCo, jointly owned by Comcast Corp. (NASDAQ: CMCSA) and Time Warner Inc. (NYSE: TWX) among others, and Verizon Wireless had also agreed to a cross-licensing deal where the two cable providers would be able to bundle Verizon Wireless’ service and the wireless carrier would be able to sell the cable companies’ content in a bundle.

Smaller rival wireless providers like MetroPCS Communications Inc. (NYSE: PCS), Sprint Nextel Corp. (NYSE: S), Deutsche Telekom AG’s (OTC: DTEGY.PK) T-Mobile USA division, and Leap Wireless International Inc. (NASDAQ: LEAP) complained about the hoarding of spectrum. As a result, the Federal Communications Commission (FCC) is considering requiring Verizon Wireless to divest some of its current spectrum before the deal is approved. A report at Bloomberg News cites “people familiar with the matter” for the information.

The FCC and the US Department of Justice, which must also approve the deal, want to maintain competition in the wireless and cable markets to protect consumer choice and prevent monopolistic pricing. But depending on how much spectrum Verizon Wireless must shed, there may be only one potential buyer — big rival AT&T Inc. (NYSE: T), which has stayed out of the fray so far, probably because it has equally big plans now that its $39 billion deal for T-Mobile has been killed.

The cross-licensing deals are also being investigated by the DoJ to determine if they threaten competition. The threat to competition and monopolistic pricing for consumers may be greater here than in the actual spectrum purchase. The nationwide reach of wireless networks and consumer demand for mobile resources opens up a whole new profit potential for Comcast and Time Warner. At the same time Verizon gets to offer programming that makes the company’s network a more attractive option, particularly if it can undercut competitive pricing.

The nuts and bolts of this acquisition and its fallout are nearly impossibly arcane. But the government’s decision will touch nearly everyone in the US. And that’s why the deal is so important.

Paul Ausick

We get more evidence of the switchover today from Charter Communications Inc. (NASDAQ: CHTR), which reported results this morning including miss on an already awful estimated EPS loss of -$0.57. Charter’s EPS loss came in at -$0.95. The company added a scant 20,000 customers for video in the first quarter compared with 141,000 new customers for Internet service.

As we noted last week in our look at earnings from Comcast Corp. (NASDAQ: CMCSA), bundling of services and content is becoming the new way of doing business in the space once dominated by cable providers. For example, Time Warner Cable Inc. (NYSE: TWC) and Comcast both have long-term deals with Walt Disney Co. (NYSE: DIS) to offer WatchESPN, the online and mobile version of Disney’s ESPN network. The cable providers are hoping that the offer of free mobile content will stem the flow of unsubscribers.

Verizon Communications Inc. (NYSE: V) and AT&T Inc. (NYSE: T) also offer high-speed digital content and are working on deals to offer new bundles to customers. Verizon’s attempt to acquire more wireless spectrum in its $3.6 billion deal for SpectrumCo gives the company’s wireless carrier, Verizon Wireless, the opportunity to bundle programming from Comcast and Time Warner Cable along with access to mobile broadband.

The cable providers, in turn, are able to offer a bundle to their customers that now includes Verizon’s high-speed mobile broadband. It should be no surprise that smaller carriers like MetroPCS Communications Inc. (NYSE: PCS), Leap Wireless International Inc. (NASDAQ: LEAP), and Frontier Communications Corp. (NASDAQ: FTR) are struggling.

Research firm Convergence Consulting recently released studies on broadcast and cable TV and bundling. Between 2000 and 2009, cable TV subscriber additions averaged 2 million a year. In 2010 additions totaled 272,000 and in 2011 additions totaled just 112,000. The firm estimates that 2.65 million cable subscribers “cut the cord” between 2008 and 2011, choosing instead to rely on “over-the-top” services from Netflix Inc. (NASDAQ: NFLX) and others. By the end of this year, the firm estimates there will be 3.58 million cord cutters.

Convergence Consulting estimates that the audience for free online/mobile viewing has plateaued at 19% of all TV viewing. But that seems low, especially in light of the cross-licensing deals between the wireless carriers and the content providers like Disney and the cable networks.

The other thing that could raise that plateau is another technological wonder from Cupertino. Rumors of an “insanely great” Internet TV box from Apple Inc. (NASDAQ: AAPL) have been rampant for months, if not years. There are already several options available for these ‘over-the-top’ boxes, but if Apple were to come up with a killer piece of hardware, the ground could shift in a hurry.

Of course the TV and movie industries have learned from the music industry that Apple drives a hard bargain, and they can’t let themselves give up currently large broadcast revenues in exchange for much smaller online sales. What Apple should hope for is that a game-changing device with one or two significant content partners will convince consumers to force the rest of the media moguls to toe the line.

The transition from wired high-speed broadband connections to wireless connections is just starting. There are lots of different companies involved and the one or two with the deepest pockets or that are able to discern what the future holds will prosper. As for the rest, who knows?

Paul Ausick

Dish agreed to broadcast the channels for 15 years, but stopped after just 3 years charging Cablevision with failing to support the new channels. Cablevision sued Dish for $2.5 billion.

The Wall Street Journal reports that in a pre-trial ruling, the court found that Dish had “in bad faith” destroyed e-mail evidence. Dish appealed the ruling twice and lost twice, most recently last week. The ‘VOOM’ channels were canceled in 2009.

Normally the threat to withdraw programming is a negotiating ploy when the content provider, in this case AMC, wants more money than the cable or satellite system wants to pay. This case is slightly different, though, given the rulings against Dish. This time Dish is no doubt hoping that AMC will drop the suit in exchange for Dish’s agreement to continue carrying the AMC channels, which include AMC, Sundance, IFC, and We TV. Problem is, Dish has a lot more to lose than AMC does.

Shares of Dish are down about -3% at $31.64 in a 52-week range of $20.89-$35.64. Shares of AMC are down -2.4% at $43.48 in a 52-week range of $29.66-$46.69.

Paul Ausick

MarketWatch reports that some observers are concerned that Netflix might be weakened if the Viacom channel becomes available through Hulu or the streaming service from Amazon.com Inc. (NASDAQ: AMZN). Netflix would not lose the right to stream Epix content, but would lose its exclusive right to do so.

Netflix has been trying to bolster its offerings of new or exclusive content to combat dwindling subscriber numbers.

Shares in Netflix fell -7.6% today to close at $75.95 in a 52-week range of $62.37-$304.79.

But both Amazon and Netflix face pretty tough competition from the likes of Walt Disney Co. (NYSE: DIS), Time Warner Inc. (NYSE: TWX) and its HBO network, CBS Corp. (NYSE: CBS) and its Showtime channel, and Viacom Inc. (NASDAQ: VIAB) and its Nickelodeon network, among others.

In its announcement today, Amazon said it will option one new project a month to add to its development list and to test with an audience. If the company picks up the option, the creator will receive a payment of $55,000 plus a share of merchandise licensing, royalties, and bonuses.

Like Netflix, Amazon’s streaming video offering needs a constant stream of good quality content. Licensing that content from the existing studios is getting more expensive as the studios get the idea that they can do it just as well or better, and keep more of the money.

Back in the early days of the World Wide Web, the mantra was, “Content is king.” But that content was generally static. Today’s streaming video and live Internet programming were a distant dream. But content is still king. The issue is whether that content can be licensed or created at a reasonable cost.

Amazon and Netflix are fighting an uphill battle here, and, as in all uphill battles, the odds favor the folks on the high ground.

Paul Ausick

Comcast posted EPS of $0.45 versus an estimate of $0.42. Revenue grew nearly 23% year-over-year to $14.89 billion, again higher than the consensus estimate of $14.43 billion.

The cable companies are losing subscribers to Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone plc (NASDAQ: VOD) and AT&T Inc. (NYSE: T) both of which offer high speed wireline broadband service in addition to voice and mobile services. And the competition is about to get even keener.

Verizon Wireless’ $3.6 billion bid for additional wireless spectrum from SpectrumCo LLC, a joint venture of Comcast, Time Warner Cable, and privately-held Bright House Networks and Cox Communications Inc., is about to change the landscape. The additional spectrum is what the other wireless carriers and the Federal Communications Commission are examining with a fine-toothed comb, but the cross-licensing agreements that give Verizon and Comcast and Time Warner Cable the ability to sell each other’s products are, perhaps, the bigger deal.

Although the FCC has not yet ruled on Verizon’s acquisition, the companies are acting like the deal is done. A Verizon-Comcast cross-licensing deal in San Francisco adds digital TV to its standard triple-play offer. AT&T, which offers its wireline U-verse high-speed service in San Francisco, has no comparable offer.

Similar deals between Comcast and Verizon are already in place in Portland, Oregon, and Seattle and Spokane, Washington. Verizon and Time Warner have launched a similar bundle in Raleigh, North Caroline, Kansas City, and Columbus and Cincinnati, Ohio. Subscribers can bundle cable services with Verizon Wireless mobile phone service and get the same deal from either the cable company or Verizon.

Cable-like companies such as Netflix Inc. (NASDAQ: NFLX), Dish Network Corp. (NASDAQ: DISH), and DirecTV (NASDAQ: DTV) will also find the going getting tougher. Netflix is at the mercy of content providers like Comcast and Time Warner, which are likely to drive Netflix’s costs higher while lowering their own. Verizon could throttle network speeds for Netflix streaming videos, and although the carrier would eventually be stopped, it might be too late for Netflix. The satellite companies, likewise, could find themselves paying more for content.

As for AT&T’s U-verse and Verizon’s FiOS, neither is as valuable nor has as well-defined a growth path as wireless services. Comcast’s Xfinity broadband service will disappear eventually and be subsumed by the Verizon wireless network.

People want mobility and that means wireless services. At first, the deals between Comcast and Verizon and Time Warner and Verizon will be appealing because the companies will be offering free or low-priced smartphones as well as the convenience of a single provider for all of a customer’s communications needs. But as smaller competitors like MetroPCS Communications Inc. (NYSE: PCS), Leap Wireless International Inc. (NASDAQ: LEAP), and even T-Mobile USA, the US arm of Deutsche Telekom AG (OTC: DTEGY) fall by the wayside, large markets will have at most two choices, Verizon or AT&T, and small markets will not get even that.

The new cross-licensing services launched too late to have any impact on first quarter results, but the deals should make some kind of showing on second quarter results. The smart money says that the deals will be winners.

Comcast’s shares are down -2.7% this morning at $29.76 in a 52-week range of $19.19-$30.88.

For those interested in the Verizon-SpectrumCo deal, the FCC web site has all the relevant documents under Docket Number WT 12-4. To date 539 comments have been filed and thousands of pages of documents.

Paul Ausick

TV advertising totaled nearly $61 billion in 2011, while online video advertising totaled $2 billion, double 2010 ad revenues.

Paul Ausick

YouTube and Google ware charged specifically with showing 79,000 videos without permission from the copyright holders and with doing nothing to stop the infringing behavior. The appeals court also said the lower court should also decide whether or not YouTube/Google developed a “willful blindness” by not removing the videos.

Under the plan, a pay-TV subscriber could stream purchased programming directly to a mobile device. Verizon’s CEO, Lowell McAdam, even used the frightening phrase (to cable operators at least), “a la carte” programming. Cable networks have long insisted that they cannot allow subscribers to choose only those networks they wish to view, but must choose from packages offered by the operators. The Wall Street Journal cites McAdam as saying that a number of content providers “have come to us and have said, ‘We are willing to do an à la carte approach here.’”

It’s important to note here that content providers are not cable service operators. The content providers — TV and movie studios — would be delighted to have another revenue stream. Cable operators believe a la carte programming would cannibalize their business and lead to their demise.

For mobile carriers like Verizon Wireless, the more data streamed to mobile devices, the larger their revenue streams. Just a couple of hours of video streamed to a high-definition mobile device like the new iPad from Apple Inc. (NASDAQ: AAPL) can eat up an entire $30/month 2-Gbyte data plan.

McAdam also said that mobile carriers are looking at making content providers pay for the streamed data, although that’s probably a non-starter. He thinks it is more likely that data plans will become cheaper and mobile users will be willing to pay the price.

Paul Ausick