Time Warner Cable will officially begin their previously announced broadband bandwidth cap trial in Beaumont, TX this week. Time Warner tells the Associated Press that on average, 5% of their subscribers account for 50% of the bandwidth consumption. Depending on the tier selected, customers will have a cap on the total amount of bandwidth they can use each month, measured by both download and upload traffic. If they exceed their designated bandwidth cap, they will be charged at the rate of $1/Gigabyte per month. Kevin Leddy, Time Warner Cable's executive vice president of advanced technology tells the Associated Press, "We think it's the fairest way to finance the needed investment in the infrastructure."

Of course, there are different viewpoints about Time Warner's real motivation. Could it be an attempt to discourage customers from using competing services for video content? Video is the most intensive broadband bandwidth hog today. A full length high definition movie downloaded over the Internet can equate to 6 gigabytes of data. Considering alternative sources for video consumption are flourishing on the Internet, a conspiracy minded theorist could easily draw the conclusion that Time Warner wants to make it a little more expensive for customers to enjoy these competitive offerings. Netflix, Amazon, and others are pursuing direct to consumer movie download services. Other services including Hulu and Joost aim to offer a compelling mix of video content for Internet download. Quite candidly, the day when consumers can choose to forgo a traditional subscription video model in favor of an Internet only video content delivery option is quickly approaching (if it's not already here). The video below reveals Time Warner Cable's CEO Glenn Britt's view of the spin off of Time Warner Cable from their parent company Time Warner, as well as his take on the impact of Internet video on the cable business.

Is Time Warner trying to slow the trend of Internet video from taking hold by making it more costly for their broadband subscribers? Perhaps. But issues like this are rarely that simple. The reality is probably a little more complex, involving network efficiency and optimization strategies, as well as implementing an element of fairness to broadband availability. After all, it's not an unlimited resource. Why shouldn't the bandwidth hogs pay more? Making customers pay for the bandwidth they actually use isn't exactly anarchy. It's a model that consumers are used to in other areas including, electricity, water, and transportation. Should bandwidth be different?

Update - May 7, 2008: It's official. Sprint and Clearwire announced the formation of the "new" Clearwire, as discussed below in the original May 6th post.

A mega deal which involves Sprint, Clearwire, Intel, Google, Comcast, Time Warner Cable, and Brighthouse Networks is on the verge of being announced according to the Wall Street Journal (subs. req.). The deal will merge Sprint and Clearwire's WiMAX assets into a company valued at $12 billion. The company will retain the Clearwire brand and will be led by Clearwire's CEO Ben Wolff. The cable company investments totaled over $1.5 billion, led by Comcast who ponied up over $1 billion. The deal has been rumored for months. It is expected to be announced as early as Wednesday.

It appears as if WiMAX will now have the foothold it needs to become a 4G wireless force in the North American market. Cable companies including Comcast, Time Warner Cable, and Brighthouse will now have access to a legitimate broadband wireless network and begin the long process of integrating wireless opportunities into their core business. The deal will allow cable companies to sell broadband wireless under their own brand. It's somewhat surprising that cable companies and Sprint are partnering for another wireless venture, given the failure of their previous joint effort, Pivot Wireless. Perhaps Pivot's demise was intentional to make way for Clearwire. It's not clear what this development means for cable's AWS spectrum holdings. Regardless, this new WiMAX momentum will provide interesting competitive observations. Sprint will conceivably gain a considerable 4G lead over their main competitors, AT&T, T-Mobile, and Verizon, who have all tagged LTE as their 4G technology of choice. It will be at least a couple years before we see them bring something to market though. It's some welcomed news for Sprint, which has seen nothing but rumors focused on their troubles swirling for the past few weeks.

Time Warner announced they will structurally separate Time Warner Cable (TWC) from the parent company. Investors have been pressuring Time Warner execs to do just that, thinking that a separate TWC will add more value to Time Warner shares. From an investor point of view, the cable business can be a real drag. It’s CAPEX intensive, especially in these competitive times, and some investors think TWC drags down Time Warner’s content assets.

Being separated from Time Warner may allow TWC to become more aggressive with competitors and do things that the current parent company does not have the stomach for. Cox took things a step further over a year ago, by going totally private. The whims of Wall Street and the quarterly earnings grind don’t mesh well with a company that needs to spend significant amounts of CAPEX and sales and marketing budgets to meet their competitors head on. TWC hasn’t gone that far yet, but by separating from their parent company, they may raise their competitive visibility in the marketplace. Their most recent results weren’t bad by any stretch. They grew in just about every category, including reaching triple play penetration of 18%, or 2.6 million households. Look for them to get even more aggressive when they are a stand alone cable MSO.

It’s official. Pivot Wireless, the wireless joint venture between Sprint and the cable industry is dead. The three major cable partners, who included Comcast, Time Warner Cable, and Cox, have decided to move on. Sprint announced back in October that it would stop marketing Pivot. All existing Pivot wireless subscribers will migrate over to Sprint. There are no firm numbers on exactly how many subscribers the venture had obtained. All joint venture participants had previously complained about Pivot’s provisioning and integration complexities. It almost seems that it was doomed from the start.

The real question is what’s next for the cable industry in regards to wireless? They are sitting on a “boatload” of spectrum obtained from recent AWS and 700 MHz (Cox is the lone national cable provider with 700 MHz) auctions. In some regards, Pivot was almost a distraction. With it removed from the equation, the cable industry may start moving more aggressively on a true facilities based wireless platform. Gigaom.com is reporting that Comcast has hired a seasoned wireless executive to start building the framework for their own wireless launch. There has also been speculation that the cable industry was interested in investing in Sprint’s WiMAX play, Xohm. That seems highly unlikely now, given the Pivot blow up. Whatever the case, the cable industry needs to move fast on their wireless strategy. If they don’t, they may arrive to the wireless party too late (which may already be the case), and spend billions on building a nationwide wireless network, only to find out that subscribers are quite content with their current wireless provider.

Verizon filed a false advertising suit against Time Warner Cable in the southern district of New York. Verizon said Time Warner Cable's TV ads wrongly portray Verizon's FiOS video service as a satellite delivered video service that does not offer the triple play. As a result, Verizon says Time Warner Cable is improperly positioning Time Warner Cable as a better technology for triple play services. This current lawsuit joins many others, some of which have been settled, that pit telecom and video service providers against each other in the high stakes game of wooing potential triple play and video customers. DirecTV has seen its fair share of lawsuits. So too have other cable companies.

Verizon claims these ads are causing "immediate and irreparable harm,” and is seeking an injunction barring Time Warner Cable from running the ads, as well as issuing a retractment of the ads claims. Verizon is also seeking damages, including lost profits and attorney's fees. Time Warner Cable spokesman Alex Dudley tells Reuters, "We feel the lawsuit is without merit and we look forward to defending against it in the appropriate venue."

Several cable companies, including Comcast, Brighthouse, and Time Warner Cable have filed a complaint with the FCC about Verizon’s “retention marketing” practices. First reported in Multichannel News, the cable operators claim that Verizon is using their knowledge of number porting requests to target customers who have already committed to switch phone service to cable competitors. Such a practice is against FCC rules. Carriers are only permitted to try to win customers back after they have switched, not try to convince them not to go once they have begun the process. FCC rules state that a carrier can’t use a porting request to try to influence a customer’s decision to switch carriers. Maybe this is a little payback to Verizon for their current and future patent lawsuits against cable companies over VoIP technology. The battle over VoIP is sure to get more complicated as competitors use a variety of regulatory and legal tactics to try to slow each other’s progress down.

Yet another dust up between DirecTV and a cable MSO, Cox in this case, over who delivers the better HD signal. Multichannel News is reporting that DirecTV filed a misleading advertising suit against Cox over certain Cox Internet ads. In the ads, Cox cites a survey that concluded that cable HD was preferred over satellite HD. That same survey is at the center of a lawsuit between DirecTV and Comcast. DirecTV says the survey was flawed, and thus the data should not be used to assert and support HD viewing preferences among subscribers. Time Warner Cable turned the tables on DirecTV earlier this year, suing them for false advertising over HD as well. DirecTV recently settled that lawsuit.

These lawsuits reflect the growing role HD plays as a competitive differentiator. Service providers take their HD reputation seriously, and don’t take lightly to inferiority claims. All multichannel video service providers are actively executing a HD strategy. DirecTV appears to have much of the HD momentum, claiming around 70 HD feeds today, with 100 promised by year end. These multiple advertising campaigns may be one strategy to slow their momentum. Expect the lawsuits to continue.

IPTV and cable providers have long known that local content can be an effective differentiation strategy. That view is now extending to mobile wireless service, with Pivot Wireless experimenting with local video content for mobile phones. Not to be confused with the original production of local content, Pivot’s local content strategy simply repurposes existing local news, weather, and sports broadcasts for the mobile phone. TelecomWeb reports that Comcast, Time Warner, and Cox have all successfully launched local content for their Pivot Wireless ventures, and are looking to expand the practice. "Video content can be truly customized and localized for each MSO and market," says Kevin Packingham, Sprint's vice president for marketing and product development on the joint Pivot venture.

Pivot is positioning video, using both local and national content, as a differentiator for their wireless service. It makes sense for them to try to leverage their cable heritage of robust video service. Unfortunately for Pivot, their wireless competitors have already seen the mobileTV light and are aggressively pursuing wireless video strategies of their own. Verizon Wireless is very active with their V-Cast mobileTV service, and AT&T and T-Mobile are pursuing options as well (although less aggressively). Sprint is also very active with mobileTV, but you wonder how Pivot and Sprint view themselves in the market. They are business partners on the one hand, but clearly competitors as well. Should make for some interesting board meetings.

Cable MSOs addressed their Pivot wireless plans at the SCTE Cable-Tec Expo 2007, saying caution was a common approach. Multichannel News reports that executives from Comcast, Cox Communications and Time Warner Cable all say they are taking their time with Pivot roll outs. All of the MSOs report ‘several thousand’ Pivot wireless subs in their limited market launches. They all shared similar challenges of integrating Pivot wireless customer support functions into their cable CRM functions. Advance/Newhouse has yet to deploy, but says it plans to soon. Smaller cable MSO’s, including Suddenlink, expressed interest in joining the Pivot wireless joint venture, which is partnered with Sprint.

You don’t have to look far to see evidence of this cautious approach. Cursory glances at all the MSO website homepages, reveals no reference to wireless service. You have to go to specific geographic targeted sites to find anything about wireless. Contrast that with Verizon and AT&T, who not only make wireless very prevalent on their homepage, but also make video a strong focus. Without question, wireless will be a determining factor among potential quad play bundle subscribers. Cable MSOs appear to be executing well on the triple play, but it remains to be seen if they will be able to translate that success to the potentially lucrative quad play. Telecom providers have a lead in wireless, but can they leverage it to take the quad play lead? Interesting debate, with huge implications for both telecom and cable.

Time Warner Cable went on record today, announcing their intention to aggressively pursue the lucrative business telephony market. “This year will be what I call the launch year," for business class service said Time Warner Cable Chief Operating Officer Landel Hobbs said at a Deutsche Bank investor conference. Cable MSOs may be feeling quite confident about there chances. They have demonstrated that they can take residential telephony market share from telcos, and they see no reason why they can’t carry that success forward into the more appealing business sector. Truth be told, their march to the business sector will be much more challenging. Telcos have significant advantages, including far more infrastructure reach and long established relationships (with contractual agreements to match). That being said, no one should underestimate the cable industry’ resolve. There’s simply too much money at stake - $100 billion by some estimates.

Check out this Reuter’s post for more insight.