Net plans split siblings at TW

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HBO will begin offering an all-you-can-eat buffet of its programming online to subscribers.

But in an ironic twist, an HBO corporate sibling is ready to exercise portion control.

Last week, Time Warner Cable disclosed its intent to experiment with a billing plan for high-speed data that charges customers based on how much bandwidth they consume. If such a model catches on in the U.S., it could have big implications for content companies trying to find traction online -- like HBO.

There is no conflict in the short term; only HBO subscribers in Green Bay and Milwaukee, Wis., will be able to access HBO on Broadband when it is deployed there Tuesday on TWC systems. Meanwhile, the cable operator has selected Beaumont, Texas, as the test market for metered billing.

But in success, the dueling Internet initiatives could conceivably cross paths -- and purposes -- in other markets. Time Warner would find its cable-operator arm discouraging the very behavior HBO is allowing.

Chalk it up to the perils of navigating the ever-fluid digital era, where sprawling conglomerates often find conflicting agendas at far-flung ends of the boardroom.

A TWC spokesman dismissed the prospect of complications arising.

"Time Warner Cable is confident our subscribers will enjoy content like HBO on Broadband no matter what the pricing is," he said.



While HBO on Broadband is dipping a toe in with just two markets, the long-term plan is to expand its footprint much the way the premium programmer has transformed its business in recent years with multiplex channels and VOD.

"It's not about creating a product that is going to have tremendous impact on the business tomorrow," HBO co-president Eric Kessler said. "It's about setting the table for the future."

HBO on Broadband allows its subscribers at no extra cost to watch as much of its programming as they can fill on their hard drives; subscriptions actually can cover five computers, the limit per household. As many as 375 titles ranging from theatricals to current episodes of original series like "The Wire" are available for download at any given time -- more than twice the volume of HBO on Demand. A linear feed of the HBO East channel also is available on the service.

HBO on Broadband won't transmit high-definition content; video is encoded at 1.3 megabits per second, still a relatively high-quality picture. The most recent hourlong episode of "Wire" amounts to 556 megabytes of data; a movie like "The Devil Wears Prada," which clocks in at nearly two hours, is a little more than a gigabyte.

Meanwhile, TWC confirmed a leaked internal memo Thursday indicating a trial run in Beaumont for metered pricing, which would deviate from the traditional fixed-price standard imposed by most Internet service providers in the U.S.

Details of the new pricing structure have not been finalized, but TWC is expected to unveil four options that cap gigabyte allotment at levels between 5 gigabytes and 40 gigabytes; exceeding the maximum would incur financial penalties.

The move is intended to discourage the minority of subscribers who take advantage of the one-price-fits-all model and gorge on the copyright-infringing material that chokes available bandwidth. Piracy hogs are a significant problem that many of TWC's competitors have recently signaled will take extraordinary measures to rectify.

AT&T indicated earlier this month that it is considering filtering for piracy at the network level. Comcast already is being investigated by the FCC for compromising the traffic flow on peer-to-peer networks.



The prospect of TWC's metering plan incited much discussion on the blogosphere, particularly the notion that TWC's piracy crackdown will have a chilling effect on Internet video consumption. Making consumers mindful of how much content they take in could make it harder for ventures like HBO on Broadband to get sampled.

"I think the trouble with metered approaches in the Time Warner environment is that it evokes a dangerous variable that a consumer might find tricky," said Andy Nobbs, president of Teletrax, a firm that helps media companies track their content online.

Reps for HBO and TWC say any kind of collision course between their respective strategies is a long way off, and technological workarounds that would give HBO content an open backdoor is possible.

Ironically, HBO on Broadband is intended to upsell broadband to TWC video subs: Only viewers who subscribe to linear HBO, HBO on Demand as well as Time Warner's high-speed data product, Road Runner, can receive it. No other multichannel provider has secured HBO on Broadband yet.

While having a presence in both the content and distribution side of the business can put Time Warner in the occasional awkward position, it might not be for much longer. Time Warner is expected to spin off TWC under the oversight of new CEO Jeff Bewkes in an effort to rejuvenate its stock price.

Digital media has a way of sending mixed messages within a conglom. Last year, marketing mavens at NBC Universal reportedly were feeding copyrighted content to YouTube while inhouse legal eagles were cracking down on the Internet upstart.

HBO on Broadband is available via an application downloaded to the desktop in just a few minutes. It can be accessed via login and password.

A viewer who orders a program can begin viewing the program immediately. A technology known as progressive streaming enables the PC to exhibit the program even before it resides completely on a hard drive.



Available programming is not made available on a download-to-own basis. A program expires from a subscriber's hard drive on average four weeks after it's made available on HBO on Broadband. However, for example, if a subscriber downloads the latest episode of "Wire" three weeks after it is placed on HBO on Broadband, that would leave only one week of viewing time.

The latest installment of a series currently in original episodes will be available one hour after airing on linear channels, which is actually faster than HBO on Demand (except in cases where HOD gets an episode prior to its linear premiere, like "Wire"). HBO will occasionally make the entire backlog of a show available on the site if it's not currently in original episodes.

HBO plans to refresh roughly one quarter of the titles available on HBO on Broadband every week.

While a subscriber of HBO on Broadband is limited to five desktop or laptops, it will eventually work with Windows portable devices as well. No Mac version is yet available, and burning to DVD is not an option.

HBO on Broadband also supplements the viewing experience with a "series pass" that automatically downloads all new episodes of favored shows, content "extras" like factoids about downloaded programs, a recommendation engine that makes viewing suggestions, parental controls that limit viewing options for younger viewers, and a meter that allows you to see how much hard-drive space is being occupied by HBO programming.

HBO on Broadband will likely disappoint some TV fans who were hoping to access current HBO programming without subscribing to the linear service. But the company is very protective of its primary revenue stream, limiting the exposure of programming in digital windows until after they have been exploited in other secondary markets such as syndication and DVD.
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