The Industry

Is Telemedicine Here to Stay?

It’s going to be interesting to see if telemedicine stays after the end of the pandemic. In the past months, telemedicine visits have skyrocketed. During March and April, the billings for telemedicine were almost $4 billion, compared to only $60 million for the same months a year earlier.

As soon as Medicare and other insurance plans agreed to cover telemedicine, a lot of doctors insisted on remote visits during the first few months of the pandemic. In those early months, we didn’t know a lot about the virus and doctor offices were exercising extreme caution about seeing patients. But now, only four months later a lot of doctor’s offices are back to somewhat normal patient volumes, all done using screening patients at the door for temperature and symptoms.

I had two telemedicine visits during April and the experience felt familiar since I was was spending a lot of my day on Zoom meetings that month. These were zoom-like connections using specialized software to protect patient confidentiality, but with a clearly higher resolution camera (and more bandwidth used) at the doctor’s end. I was put on hold waiting for the doctor just as I would have been in the doctor’s office. One of my two sessions dropped in the middle when the doctor’s office experienced a ‘glitch’ in bandwidth. That particular doctor office buys broadband from the local cable incumbent, and I wasn’t surprised to hear that they were having trouble maintaining multiple simultaneous telemedicine connections. It’s the same problem lots of homes were having during the pandemic when multiple family members have been trying to connect to school and work servers at the same time.

One of my two telemedicine sessions was a little less than fully satisfactory. I got an infected finger from digging in the dirt, something many gardeners get occasionally. The visit would have been easier with a live doctor who could have physically looked at my finger. It was not easy trying to define the degree of the problem to the doctor over a computer connection. The second visit was to talk with a doctor about test results, and during the telemedicine visit I was wondering why all such doctor meetings aren’t done remotely. It seems unnecessary to march patients through waiting rooms with sick patents to just have a chat with a doctor.

There was a recent article about the topic in Forbes that postulates that the future of telemedicine will be determined by a combination of the acceptance by doctors and insurance companies. Many doctors have now had a taste of the technology. The doctors that saw me said that the technology was so new to them at the time that they hadn’t yet formed an opinion of the experience. It also seems likely that the telemedicine platforms in place now will get a lot of feedback from doctors and will improve in the next round of software upgrades.

The recent experience is also going to lead a lot of doctor’s offices to look harder at their broadband provider. Like most of us, a doctor’s office historically relied a lot more on download speed than upload speed. I think many doctor’s offices are going to find themselves unhappy with cable modem service or DSL broadband that has been satisfactory in the past. Doctor’s will join the chorus of those advocating for faster broadband speeds – particularly upload speeds.

Telemedicine also means a change for patients. In the two sessions, the doctor wanted to know my basic metrics – blood pressure, temperature, and oxygen levels. It so happens that we already had the devices t home needed to answer those questions, but I have to think that most households do not.

I don’t think anybody is in a position to predict how insurance companies will deal with telemedicine. Most of them now allow it and some have already expanded the use of telemedicine visits through the end of the year. The Forbes articles suggest that insurance companies might want to compensate doctors at a lower rate for telemedicine visits, and if so, that’s probably not a good sign for doctor’s continuing the practice.

My prediction is that telemedicine visits will not stay at the current high level, but that they will be here to stay. I think when somebody books a visit to a doctor that they’ll be given a telemedicine option when the reason for the visit doesn’t require an examination. The big issue that will continue to arise is the number of homes without adequate bandwidth to hold a telemedicine session. We know there are millions of people in rural America who can’t make and maintain a secure connection for this purpose. There are likely equal millions in cities that either don’t have a home computer or a home broadband connection. And there will be many homes with so-so broadband that will have trouble maintaining a telemedicine connection. Telemedicine is going to lay bare all of our broadband shortcomings.

The Industry

Video Trends During the Pandemic

TiVo recently published an infographic that discusses the drastic changes in video viewing habits as a result of the COVID-19 pandemic. TiVO looked at video viewing habits between March 27 and May 4 compared to the video viewing from the month before the pandemic. As might be expected, people forced to stay home are watching a lot more video content.

Homes are watching a lot more streaming services. In the period studied, TiVO reports that viewership hours watching Netflix were up 33%, Hulu was up 36%, Amazon Prime and HBO Go were up 80%.

One of the biggest jumps in content was kid’s programming that had grown by 27% by mid-April. That’s much larger than increases in other kinds of programming. As might be expected, sports viewership dropped 62%, It’s surprising the drop wasn’t more since live sports essentially disappeared by April, but the remaining sports viewers were watching reruns of classic sports events. It will be curious to see sports viewing for June.

TiVO offers its subscribers a big pile of free content they label as TiVO+. This content includes ads, and TiVo say viewing jump 41% after the pandemic. The company thinks this indicates that viewers are still willing to view ads to get content they haven’t seen before.

TiVO also recently published its 1Q 2020 Video Trends Report that looks deeper into a wide range of statistics concerning video. The end of the first quarter saw the start of the pandemic and TiVO reports a number of statistics that show big increases in video viewing.

The statistic that jumps out the most is that TiVO saw video viewership on the TiVO platform grow an amazing 58%, and that covered the wide range from live TV, streaming video services, and watching shows recorded to watch later. TiVO saw the average home increase viewing of news content by 2 hours per week.

One of the more interesting statistics is when people were watching video. Since the advent of streaming services, the heaviest viewing of content has been on weekends. During the pandemic, TiVO says that weekday viewing now mirrors historic weekend viewing, and weekend viewing has climbed to match historic levels of viewing only seen on holidays.

The TiVo quarterly report includes a result of a survey as well as covering how customers use the TiVO platform. The survey had some interesting results:

  • Over 82% of homes with a traditional cable TV service says that local content is important to them, compared to 62% of homes that only use streaming services. This shows that local content is likely to still be a big driver for homes keeping traditional TV.
  • The survey showed a climbing interest in free ad-supported streaming services such as Crackle, Tubi TV, and Pluto TV. 66% of survey respondents still pay for a traditional TV subscription, 36% watch the free ad-supported content, and 34% pay for a streaming service like Netflix.
  • Many survey respondents either like or aren’t bothered by advertising. 57% of traditional TV watchers don’t mind ads and 48% of homes with steaming services don’t mind ads,
  • Churn remains an issue for the industry. Over 21% of homes with traditional cable TV report dropping an online video service during the previous 6 months. 11% of homes that only watch streaming services dropped a service in the last 6 months.
  • The survey also asked about broadband use. 12% of survey respondents said they had cut or switched broadband service during the previous 6 months. 55% said broadband was becoming too expensive. 38% said their broadband provider didn’t provide a fast enough service they could afford. This is the first such report I’ve seen about broadband churn since it’s a topic that the big ISPs don’t talk about.
  • Survey respondents reported a lot of discontent about the ease of finding content to watch. 84% wished there was a way to browse content across all of the platforms they use. 77% expressed a willingness to buy all of their content from a single provider that could offer an integrated guide.

The bottom line is that video viewing has skyrocketed during the pandemic as people are stuck staying at home. It’s going to be really interesting to see what happens to video when the pandemic is over.

The Industry

Did Broadband Deregulation Save the Internet?

Something has been bothering me for several months, and that usually manifests in a blog at some point. During the COVID-19 crisis, the FCC and big ISPs have repeatedly said that the only reason our networks weathered the increased traffic during the pandemic was due to the FCC’s repeal of net neutrality and deregulation of the broadband industry. Nothing could be further from the truth.

The big increase in broadband traffic was largely a non-event for big ISPs. Networks only get under real stress during the busiest times of the day. It’s during these busy hours when network performance collapses due to networks being overloaded. There was a big increase in overall Internet traffic during the pandemic, but the busy hour was barely affected. The busy hour for the Internet as a whole is mid-evenings when the greatest number of homes are watching video at the same time. Every carrier that discussed the impact of COVID-19 said that the web traffic during the evening busy-hour didn’t change during the pandemic. What changed was a lot more usage during the daytime as students took school classes from home and employees worked from home. Daytime traffic increased, but it never grew to be greater than the evening traffic. As surprising as that might seem to the average person, ISP networks were never in any danger of crashing – they just got busier than normal during the middle of the day, but not so busy as to threaten any crashes of the Internet. The big ISPs are crowing about weathering the storm when their networks were not in any serious peril.

It’s ironic to see the big ISPs taking a victory lap about their performance during the pandemic because the pandemic shined a light on ISP failures.

  • First, the pandemic reminded America that there are tens of millions of rural homes that don’t have good broadband. For years the ISPs argued that they didn’t invest in rural America because they were unwilling to invest in an overregulated environment. The big ISPs all promised they would increase investment and hire more workers if they were deregulated. That was an obvious lie, since the big ISPs like Comcast and AT&T have cut investments since the net neutrality appeal, and collectively the big ISPs have laid off nearly 100,000 workers since then. The fact is that the big ISPs haven’t invested in rural broadband in decades and even 100% deregulation is not enough incentive for them to do so. The big ISPs wrote off rural America many years ago, so any statements they make to the contrary are purely rhetoric and lobbying.
  • The pandemic also highlighted the stingy and inadequate upload speeds that most big ISPs offer. This is the broadband crisis that arose during the pandemic that the big ISPs aren’t talking about. Many urban homes that thought they had good broadband were surprised when they had trouble moving the office and school to their homes. The problem was not with download speeds, but with the upload speeds needed to connect to school and work servers and to talk all day on video chat platforms – activities that rely on a solid and reliable upload speed. Homes have reacted by migrating to fiber when it is available. The number of households that subscribe to gigabit broadband doubled from December 2019 to the end of March 2020.

The big ISPs and the FCC have also made big political hay during the crisis about the Keep America Connected Pledge where ISPs promised to not disconnect homes for non-payment during the pandemic. I’m pretty sure the ISPs will soon go silent on that topic because soon the other shoe is going to drop as the ISPs expect homes to catch up on those ‘excused’ missed payments if they want to keep their home broadband. It’s likely that millions of homes that ran out of money due to losing their jobs will soon be labeled as deadbeats by the ISPs and will not be let back onto the broadband networks until they pay their outstanding balance, including late fees and other charges.

The shame of the Keep America Connected Pledge was that it had to be voluntary because the FCC destroyed its ability to regulate ISPs in any way. The FCC has no tools left in the regulatory quiver to deal with the pandemic after it killed Title II regulation of broadband.

I find it irksome to watch an industry that completely won the regulatory battle keep acting like it is under siege. The big ISP lobbyists won completely and got the FCC to neuter itself, and yet the big ISPs miss no opportunity to keep making the same false claims they used to win the regulation fight.

It’s fairly obvious that the big ISPs are already positioning themselves to fight off the time when the regulatory pendulum swings the other way. History has shown us that monopoly overreach always leads to a reaction from the public that demands stronger regulation. It’s in the nature of all monopolies to fight against regulation – but you’d think the ISP industry could come up with something new rather than to repeat the same lame arguments they’ve been making for the last decade about how overregulation is killing them.

Current News The Industry

Where’s My Refund?

Today’s blog is a little tongue-in-cheek, but not entirely so. The blog was prompted by seeing that auto insurance companies are sending refunds to customers since they are no longer driving their cars much during the COVID-19 pandemic. This is pretty obvious when the web is full of pictures of major urban highways with practically no traffic at rush hour.

My question is why my cable company doesn’t reimburse me for sports channels that no longer carry sports. On the flip side, why would the cable company pay the sports networks since they aren’t delivering what was promised? This is not an inconsequential amount of money. In 2018 Kagan, a media research group within S&P Global Markets Intelligence reported that the average cost of sports programming in the US was $18.55 per subscriber per month. Since then, that cost will have climbed and is likely at least $20 per cable subscriber per month – even higher in metropolitan markets with local sports networks that carry baseball or basketball.

That’s a substantial amount of customer billing that ought to be refunded. With over 83 million traditional cable customers at the end of 2019, that’s over $1.6 billion per month in subscriber fees. The customers of Sling TV, YouTube TV, and other online programmers pay similar monthly fees. There are additional customers subscribing to extra programming such as ESPN+ and BIG 10 TV. Altogether it’s likely that the public is paying at least $2 billion per month for sports content that currently isn’t being delivered.

Sports networks are currently sad for any sports fans. The NCAA basketball tournament would have just concluded. It’s almost time for the NBA and NHL playoffs. This would be the early weeks of a new professional baseball season. College baseball would be well underway marching towards the college world series. There would also be plenty of coverage for soccer and NASCAR. Sports networks would be covering other college sports like lacrosse, gymnastics, and track and field. There would be boxing, wrestling, and the UFC and MMA.

Instead, the sports networks sit empty of sports. These networks are filling the day by playing older sporting events or showing talking heads talking about sports – but there are no sports on the air. I watched a couple of old Maryland basketball games at the start of the COVID-19 shutdown as a substitute for the NCAA tournament, but I suspect most sports fans have stopped watching the sports networks.

The money streams for sports programming is complex. Consider ESPN, the flagship sports network as an example of how this industry segment operates. The monthly fee charged to cable operators to carry the ESPN channels is around $9 per customer. Disney doesn’t report ESPN numbers separately, but industry analysts estimated that those fees account for about 60% of ESPN’s revenues. Most of the rest of the revenue stream comes from the advertising shown on ESPN. The most expensive advertising rates are charged during sporting events.

ESPN’s biggest costs are fees paid to sports leagues for rights to carry the sporting events. The latest figures I could find for these fees was from a 2017 study done by the Sports Business Journal. The annual payments made by ESPN in that study included payments such as $608 million per year for the college playoffs, $700 million for major league baseball, $38 million for major league soccer, $1.4 billion per year for the NBA, $1.9 billion per year for the NFL, $75 million per year for US Open Tennis, $40 million per year for Wimbledon, $240 million per year to the Atlantic Coast Conference, $100 million for the Big 12, $100 million for the Big 10, $125 million for the Pac-12, $300 million for the Southeastern Conference, plus a number of smaller payments for other sports. These payments have likely climbed since 2017.

The dollar impact of sports advertising gets complicated during the COVID-19 crisis because of the contractual relationships among the parties. Many of the above payments to sports leagues are guaranteed even if there are no sports being played. However, these same contracts likely require the leagues to compensate networks like ESPN for lost advertising revenue. That makes it hard to estimate the net impact of sports coming to a grinding halt. Ultimately the advertising money should roughly be a wash. If there are no sports, there are no big advertising dollars and leagues and networks both suffer losses.

But the payments from customers continue. I’ve canceled my subscription to YouTube TV since I only purchased it to watch sports – and I suspect many other households are cutting the cord right now. But the $2 billion monthly payments to networks like ESPN continue. If my car insurance company is going to send me a check for not driving, then I don’t know why cable providers shouldn’t return my money for sports channels that carry no sports. This sounds to me like a ripe opportunity for a class action lawsuit.

Regulation - What is it Good For?

The Consequences of No Broadband Regulation

A few weeks ago when the COVID-19 pandemic became apparent we saw the ridiculous spectacle of an FCC chairman begging ISPs to not disconnect customers during a pandemic that would likely throw tens of millions of people out of work. Chairman Pai was reduced to begging because a few years earlier he had voted to strip the FCC if its power to regulate broadband. Before that decision, Chairman Pai could simply have ordered ISPs to be on their best behavior during the pandemic.

This is the most recent demonstrations of the negative impact of deregulating an industry that is controlled by a tiny handful of carriers. In most urban markets the big cable companies have become de facto monopolies – and even most markets that haven’t quite reached monopoly status are, at best, duopolies. There is little broadband competition in most major metropolitan areas, and even in many rural county seats.

It’s not hard to see that the ISP industry thinks it’s bullet-proof against regulation. Consider what’s happened with prices in just the past few years:

  • When comparing data prices around the world, the US has the highest data rates among industrialized countries. Our cellular data prices are nearly the highest anywhere in the world other than a few remote places like Antarctica and war zones.
  • All the major ISPs have raised broadband rates in the last year – when everybody in the industry knows that broadband is already a product with huge margins. These rate increases serve no other purpose other than padding the bottom line. What’s worse is that Wall Street analysts are pushing the ISPs to raise rates much higher.
    • ISP bills are now full of hidden fees. Consumer Reports said last year that the average monthly company-imposed fees for the bills they analyzed averaged to $22.96 for AT&T U-verse, $31.28 for Charter, $39.59 for Comcast, $40.16 for Cox, and $43.79 for Verizon FiOS. They estimate that these fees could total to at least $28 billion per year nationwide.
  • Some ISPs like AT&T, Comcast, Cox, and Mediacom are making big money on data caps. It’s clear that the argument of having data caps to protect networks against overuse has zero basis in fact. Data caps are just a quiet way to raise rates and billings. We now know that over 8% of homes now use over a terabyte of data per month – and that was before the COVID-19 pandemic.
  • ISPs feel brave to openly gouge customers, like Frontier that is billing a monthly fee for WiFi modems that the customers purchased. Even when challenged publicly, the company won’t remove the charges because they don’t fear regulatory retribution.

One of the worst things about the deregulation of broadband is that the average consumer has no idea this happened. The FCC was slick enough to bury the deregulation of broadband in the net neutrality topic. Most people don’t realize that when the FCC killed net neutrality that they also gave away their authority to regulate broadband. People still look to the FCC to correct broadband injustices, without realizing that when they file an FCC complaint against a broadband provider that the agency is powerless to intercede on their behalf.

The FCC will argue that they didn’t kill broadband regulation, but they instead handed the responsibility to the Federal Trade Commission. That claim falls apart quickly once you realize that the FTC has zero authority to regulate industries – they can’t write a rule that applies to all ISPs. The FTC’s power is limited to fining ISPs that have blatantly injured the public – and this must be done by an agency that is also overlooking all other US corporations.

Other than to dole out spectrum for 5G, it’s hard to even justify the FCC any longer. If the US isn’t going to regulate one of the most important industries in the country – many would say during the current pandemic the most important – then perhaps we ought to stop pretending to do so.

Only Congress can fix the problem and they’ve shown no inclination to do so. Congress hasn’t done anything meaningful concerning broadband since the 1996 Telecommunications Act that was signed just as people were subscribing to AOL and Compuserve.

The FCC should be taking drastic action during this pandemic. The agency could have been leading the charge looking for ways to get broadband to kids stuck at home. They could have been taking actions to make it easier for telemedicine in the last few months. They could have reacted to the pandemic with plans to finally solve the broadband gap. Instead, all we got was a powerless FCC Chairman politely asking ISPs to not harm people during a national emergency.

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