Now we’re starting to hear some ad sellers and buyers tell us that things are indeed slowing down this fall. But the stories aren’t consistent, so it’s hard to figure out what to make of them quite yet.

Yesterday, for instance, Time Warner Cable said that its ad sales had been soft last quarter, and that would continue through Q4. But Time Warner Cable’s main business is selling subscriptions to consumers, not eyeballs to marketers. So, hard to tell if that’s a harbinger.

This morning, though, ad giant WPP cut its full-year growth forecasts because of slowdowns in the U.S. and Europe and an “increasingly challenging economic environment.”

But the ad guys aren’t consistent about this stuff. A few hours later, ad holding company Interpublic said that it was hanging on to its 2011 forecast, even though “macro uncertainty remains.”

This is normally the point where digital optimists tell us that even if traditional ad markets get hit, digital will do fine, because marketing dollars are still transitioning from offline to online, and online buys are much more efficient, etc.

And all of that may be true. But I took a quick survey of some digital ad sellers in the past couple days, and heard uneasiness from them, too. The mild version: “Companies are pulling back and being more selective with spend versus spreading it across the board.” The more alarming one: “If you ask around, all you’re getting from anybody is ‘brutal.’ Dollars have dried up.”

Again, this is profoundly anecdotal, so I’m happy to hear from folks with different experiences — my hunch is that Facebook is still moving very quickly, by taking share from a variety of competitors.

More important, no one is yet suggesting that we’re entering the dark days of 2008-2009, when ad spending went negative — so far, people are just talking about not hitting sales goals they made earlier in the year. Hopefully that’s as bad as it gets.

Here’s the company’s story in an almost-easy-to-understand chart. Pay attention to the parenthetical numbers, which denote subscriber losses. The two to focus on are the video subscribers — down 128,000 for the quarter — and the total subscribers — down 16,000.

And, as usual, there are plausible explanations for the loss which don’t have to include people ditching their TV subscriptions for some kind of Apple TV/Hulu/Netflix combo. The most obvious one is that Time Warner Cable is dealing with competition from telcos like Verizon and satellite guys like DirecTV.

One counter-argument for the cord-cutting crowd: Time Warner Cable’s broadband data subscribers numbers increased — by 89,000 — even as video subs declined. Again, that doesn’t have to be a cord-cutting signal — it’s possible, for instance, to use DirecTV for video and Time Warner for data. But if you’re inclined to think otherwise, that’s what you’re going to do.

Meanwhile, a warning for the advertising business: The company said that “soft advertising” trends it saw last quarter were continuing this quarter.

Cable providers like Time Warner don’t typically have a robust ad sales operation, because it’s a minor point of the business, so you don’t want to make too much of this. But that heads up does sync up with other murmurs about Q4 ads I’ve been hearing from other companies, in other industries, so worth keeping an eye on.

That’s the real story behind the Netflix/Starz breakup, says the Los Angeles Times. The paper says that Netflix was willing to pay some $300 million a year to renew the deal — more than 10 times what it’s paying now — but that Starz insisted that the video service change its pricing, too:

“Representatives for the cable network owned by John Malone’s Liberty Media were insistent that Netflix create a new “tier” for subscribers who wanted its movies at a higher price than the $7.99 it currently charges for online video. That would have put Netflix more in line with the pricing of cable and satellite companies, a step the video company apparently wasn’t willing to take.”

That is: Starz was willing to sell access to its stuff (and stuff it controls from Disney and Sony), but only if Netflix was willing to make its service less compelling to consumers, via a price hike.

Does this sound familiar? It should. It’s the same reason, more or less, that Hulu introduced a pay service last year.

And it’s why Fox (and soon, ABC and others) has started pulling back some of the free TV it puts on the Web: The people who make money from the traditional TV/video business don’t want that business to change. Or at least they want to slow change down as much as they can.

So they’re willing to make real sacrifices to make that happen. The TV networks, for instance, are willing to give up Web advertising dollars by walling off their stuff online. And Starz, theoretically, is willing to give up $300 million a year in order to placate its cable distributors like Time Warner Cable and Comcast.

If that’s really the case, I’m hedging because it’s possible there’s a different backstory at play here (but note the LAT has excellent entertainment-biz reporters, and the spin syncs up with the official commentary from both sides).

A more practical reason to hedge is that even though both sides have pushed back from the bargaining table, there’s still quite a bit of time left before the deal expires in February.

And both sides have very good reasons to come back: That $300 million could have been about a fifth of Starz’s 2012 revenue, says Citigroup analyst Mark Mahaney.

And while Netflix says it doesn’t really need Starz’ stuff, because it’s now so diversified, that’s a little hard to stomach — after all, it was willing to pay $300 million a year for it.

The two parties were negotiating the final agreement Sunday and a deal could be announced as early as Monday, the people said.

The deal would join two of the 10 largest U.S. cable operators by subscribers, continuing consolidation in a business facing competition for TV subscribers from satellite operators and telecommunications companies, as well as Internet-based upstarts.

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Moffett expects to see the cable guys like Comcast and Time Warner Cable lose a total of more than 300,000 subscribers, while the satellite TV companies may eke out about 70,000 new customers.

Those results could be balanced out by growth from the TV services offered by AT&T and Verizon, who have added 412,000 new subscribers. And overall pay TV numbers could end up positive for the quarter, but Moffett says that’s no sure bet at all: “Our conviction in a positive aggregate number is all but zero.”

Moffett is quite skeptical that pay-TV customers are actually cutting the cord and satisfying their TV needs with Netflix, Hulu, etc. For quite some time he’s been arguing that pay TV growth is a function of new household formations — and since there’s none of the latter, there can’t be any of the former.

Again, note that Reed Hastings and the rest of the Netflixers have been diligently announcing that they don’t believe there’s cord-cutting either — and if there is, they’re certainly not contributing it. But there are a lot of people who will see the next few weeks’ numbers as evidence that cord-cutting is, indeed, for real.

Unless they’re Time Warner Cable subscribers.

That company’s 14 million customers don’t get access to the digitized CNN feed, even though just about every other big pay TV provider –  AT&T, Comcast, Cox, DISH Network, Verizon — has signed on.

This isn’t the first time that Time Warner Cable subscribers have been shut out of a Time Warner TV Everywhere service. Earlier this year, Time Warner’s HBO released HBO Go, a very good iPad app, for customers of just about every big cable provider — except Time Warner Cable.

What gives? The short answer is that Time Warner and Time Warner Cable are two entirely separate companies that share a name but nothing else. The two formally split up in 2009, part of a decade-long corporate slim down on the part of Time Warner (also jettisoned: Warner Music Group, AOL, and not nearly as much of Time Inc. as many had predicted).

OK. But what really gives? Here I don’t have a good answer.

Some wags suggest that Time Warner Cable has some sort of theological/business strategy problem with TV Everywhere products that allow people to stream video outside of the home, because Time Warner Cable only sells broadband access to the living room. That is, if you’re streaming HBO Go on your iPad in an airport, using AT&T’s bandwidth, then Time Warner Cable doesn’t really get a chance to participate: It wants you to consume most of your broadband through its pipes, so it can charge you for it.

But that seems a bit of a stretch, particularly since Time Warner Cable subscribers can use some TV Everywhere products — just not the ones from Time Warner. Time Warner Cable customers can use ESPN’s excellent ESPN Watch app, for instance, and stream live sports anywhere they can tote an iPhone, no matter whose bandwidth they’re consuming.

Another theory: Time Warner and Time Warner Cable’s executives simply don’t like each other, a residue of the divorce proceedings. That also seems a bit of a stretch — in the cable business, nobody really likes each other. They just tolerate each other because they spend all their time negotiating incredibly complicated, expensive carriage deals, that ultimately let both sides make a bunch of money.

Still, if anyone can shed any light, I’m all ears: Neither Time Warner Cable nor Time Warner wanted to comment for this one.

The new so-called Copyright Alert System was created by a coalition of major film studios, record labels and Internet-service providers, who agreed to guidelines for identifying and notifying Web users who violate copyrights.

Among the ISPs that have pledged to implement the new policy are Comcast Corp., AT&T Inc., Time Warner Cable Inc., Cablevision Systems Corp. and Verizon Communications Inc.

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Here’s a full-page ad Mirman took out this month in the New York Press and the Greenpoint Gazette, two free New York City papers.

(Sorta-meta side note: This is a prank that only works because he actually bought a print ad–anyone can write anything on the Web, so if he just did that, it wouldn’t have the same impact. But if Mirman hadn’t posted this to his Web site, who would have seen it? Also, have you ever really looked at your hands? I mean, really looked at them?)

Oh, also: This contains jokes about Stalin and Jeffrey Dahmer. Now you’ve been warned!

May 19, 2011

Eugene Mirman
Brooklyn, NY 10217

Time Warner Inc.
One Time Warner Center
New York, NY 10019

Dear Time Warner Cable,

On April 23rd I moved and had an appointment with Time Warner Cable to come and install cable, Internet and phone service and no one showed up. When I called, I was told my appointment was entered wrong and moved to May 4th, without anyone calling me. No big deal, why would a company check with someone to see if they are home on a Wednesday afternoon? Of course they are. Everyone is. Name one person who isn’t home on a Wednesday afternoon? You can’t. It’s impossible, because everyone is home. It would be a waste of resources to call and talk to him. Did Stalin ever call people before he arrested them and sent them to die in Siberian work camps? No! Why should Time Warner Cable have a policy that is any different from Stalin’s?

Did you know that on Yelp, Time Warner Cable has one and a half stars? That’s less stars than Jeffrey Dahmer — who killed and ate people, maybe even had sex with their skulls (I don’t really know). Obviously what I’m saying is untrue, because Yelp does not review serial killers, but if they did, his babaganoush would be better than yours, if you both made babaganoush, even if his drugged and murdered people. Sorry that got weird. F**k you. I just made you read that confusing thing.

To give you an idea of how much I dislike your company, I have come up with plagues I hope God smites your board of directors with. I know He’ll only do this if you enslave the Jews, but considering you might have a monopoly in NYC, you sort of already have:

1. Awkward. Every board member’s cell phone ring loudly announces their weight and also the day they’ll die.

2. Bathroom. The constant feeling that you have to go number two, but completely forgetting how.

3. Improv. Your first-born will want to be a short form improviser.

4. Popcorn. Your second born will smell like hot buttered popcorn. It’s not that bad at first, but eventually I bet it will be maddening.

Sincerely,

Eugene Mirman and probably everyone of your customers

P.S. On May 4th I called you and got an automated message saying my appointment was moved to May 10th, but spoke to two representatives who assured me it was still on May 4th. Twenty minutes later, I got a call saying the technician called and couldn’t reach me and my new appointment would be on May 12th. An hour later I got a call apologizing and saying my appointment was moved to May 6th. Why does your company act like a controlling, abusive husband on an episode of Law and Order?

P.P.S. On May 6th a very nice, professional man came, rang my doorbell and installed everything. I would feel remiss to not mention that a handful of other employees were also very helpful. However, overall your company is run like an ill managed Soviet factory. I bet if Ayn Rand was still alive, she’d write a fun to read, but poorly argued book about how appalling and inefficient your company is. Please cut it out. Thank you.

This is a paid advertisement

As advertised, the free app is a mirror of HBO’s existing broadband service: It lets the channel’s subscribers stream a very deep catalog of HBO’s shows and movies, on demand, via both Wi-Fi and wireless networks.

It will also work on Apple’s iPhone and iPod Touch, as well as 20 phones running Google’s Android; it won’t work on tablets running Google’s newest Honeycomb OS, though. (Demo video from BTIG’s Rich Greenfield at the bottom of this post)

The two catches:

• The service is available to most cable customers, with the exception of Time Warner Cable and Cablevision subscribers. Time Warner Cable says it’s working on a deal; Cablevision won’t comment.
• It’s a very deep catalog–1,400 titles, including the complete run of great series like “The Sopranos” and “The Wire”–but it will still have gaps that could frustrate HBO’s most avid users. I’d like to try David Simon’s “Treme” again, for instance, but I can’t get last season’s episodes; just the new ones that started airing last week.

Some of you will bemoan the fact that you have to be a cable subscriber to get this–there’s no broadband-only option, a la Netflix and Hulu Plus. But that’s the point: Parent company Time Warner is completely wedded to the cable industry and wants to build as many incentives as it can to keep you there, too.

Still, this stuff is lightyears ahead of where the cable business was just a couple years ago, where paying subscribers had no way to get these shows except on their TVs, or by buying it again on DVD or iTunes.

And if you really are a dedicated cord-cutter, and a patient one, you may eventually get your way: I can imagine a scenario where HBO does offer this stuff directly to consumers, and if it happens within a few years, I won’t be completely shocked.

Could be!

But right now the industry is steaming merrily along. Today’s snapshot, via three earnings reports:

• Discovery Communications: Revenue up 9 percent, profits up 20 percent.
• Viacom: Revenue up 20 percent, profits up 47 percent.
• Time Warner Cable: Revenue up 5 percent, profits up 50 percent.

And those cheery results hold up when you dig into the reports, too: Discovery’s numbers are up because it’s getting more for both the ads and the subscriptions it sells–in the U.S., those numbers are up 6 percent and 9 percent, respectively. Viacom has the same story, plus “The Jersey Shore,” which remains astonishingly and distressingly popular.

(But don’t get me wrong: The boob tube has always been the boob tube. And, really, much boobier, in the old days of three (three!) networks. Here, via Bill Simmons, is a clip of Heather Locklear and Heather Thomas in a “Battle of the Network Stars” dunk tank. And at the bottom of this post, Telly Savalas and Gabe Kaplan and Farrah Fawcett. So great/bad.)

Okay, but those are programmers. What about Time Warner Cable, which merely owns pipe? Doing fine, too. The company did lose 66,000 video subscribers–about a half-percent of its 12.2 million base, so if you’re looking for evidence of cord-cutting, you can point to that.

But the cable industry’s consistent refrain is that any customers that are cutting the cord aren’t doing it to watch Web video on iTunes or Netflix or Hulu; they’re doing it because they don’t have any money for anything, period.

Here the numbers seem to bear out the argument: Time Warner’s video losses were outweighed by customers who added broadband and/or phone service to their packages, and the company ended up adding a total of 208,000 new subscription services for the quarter.

Next week we can check in with Comcast, which now has its hands in both the programming and pipe business. Those numbers should be instructive.

And now, because I can:

The idea was that whatever/whenever access would be enough to keep cable TV subscribers paying their monthly bill instead of cutting the cord for Hulu, Netflix, Apple TV, etc. And while it sounded pretty good on paper, it’s been very slow going since.

But here’s what it’s supposed to look like: ESPN’s new “WatchESPN” app, which does just what you think it does. It lets you watch the sports network live, for free, on your iPad, iPhone or iPod touch, no matter where you are.

It seems to work pretty well, too. Here’s a screenshot of live TV I took from my iPad. Note that the app is technically an iPhone app (an iPad-optimized one is coming), but the image looks pretty nice even blown up at 2x:

Catches? Of course.

• The biggest one is that Disney’s network has carriage deals so far only with Time Warner Cable, Brighthouse TV and Verizon FiOS. That covers 18 million homes, but that won’t make you any happier if you don’t live in one of them. It’s worth noting that Comcast, the country’s biggest cable provider, isn’t included here, even though it has previously set up broadband programming deals with ESPN.
• There’s no app for Google’s Android platform, though ESPN says that’s coming.
• ESPN says there are a “few circumstances” where it still doesn’t have the rights to transmit its on-air programming online. The biggest one you’ll care about is “Monday Night Football,” which the network can’t transmit to mobile phones because Verizon has paid big money for those rights. But ESPN says it can send the game to your iPad, regardless of where it is or what connection you’re using.

But given the nature of this stuff, that’s still a pretty short list.

And unlike the iPhone and iPad apps we’ve seen recently from Time Warner Cable, Comcast and Cablevision, which either don’t work outside your house or do with limitations, this is one where you don’t have to scratch your head for a reason to use it. This is stuff you’ll want to use if you like sports but aren’t able to watch from your couch. Simple, useful.

Note for ad folks: The apps don’t carry any ads right now at all–when a commercial break comes on, viewers just get a temporary graphic. But ESPN ad boss Sean Bratches says by August, his company will have technology that will allow it to serve up different ads to different users at the same time. And when that’s available, he’ll start selling access to tablet and phone eyeballs in conjunction with TV ad buys.

First of all, Boyden said, Conduit is not in talks to be acquired. The common scenario echoed in many media reports, most of them coming out of Israel (where Conduit runs much of its operations), was that Conduit was entertaining interest from suitors–including Microsoft and Google–and could be bought for more than $1 billion.

“The company is courted by all sorts of people all the time but we are certainly not in active discussions with anyone,” Boyden said. Pressed to clarify, he added, “There are absolutely no discussions that are going on. It’s completely not true. And we haven’t had discussions that were put on hold.”

However, Conduit is indeed buying Wibiya for $45 million, Boyden said, as had been reported by TechCrunch, citing anonymous sources who said a deal could be reached soon. Update: Boyden wanted to clarify that the Wibiya acquisition agreement has not yet been signed, as of Wednesday.

Wibiya also offers toolbars for publishers to make their sites and blogs more social and interactive. It, too, is based in Israel, and has raised about $2.5 million from backers including Primera Capital.

Boyden said Conduit deserves credit for Bing’s recent growth, which follows Conduit making Bing its default search engine at the beginning of this year. Microsoft had 13.6 percent search share in February, up from 12.0 percent in December. “We were much behind that,” Boyden said.

Conduit, which is backed by Benchmark Capital, counts 260,000 app publishers–including Major League Baseball, Time Warner Cable, Univision, Coke Zero and Groupon–and 260 million users. It is expected to bring in hundreds of millions of dollars in revenue in 2011.

Multiple outlets have reported on the supposed sales talks, and while the company hasn’t confirmed them it has gone on the record saying it won’t sell for less than $1 billion. (The comment came from Shaul Olmert, Conduit’s chief marketing officer who is incidentally the son of former Israeli Prime Minister Ehud Olmert.)

Conduit makes significant money from revenue share of search ads delivered from its toolbars, which it switched to Bing from Google in January.

Sources said the San Mateo, Calif.-based company, which runs much of its operations in Israel, expects revenue of close to $300 million in 2011, so a billion-dollar sale price would not be insane.

Whether or not the talks are actually happening, and with whom, we have not yet confirmed.

Companies and brands that have built apps for the Conduit toolbars include Major League Baseball, Time Warner Cable, Univision, Coke Zero and Groupon. (Zynga used to have one as well so that FarmVille players could be alerted when they needed to return to the game to water their crops, though I could no longer find it in the directory.)

The latest numbers from various reports peg Conduit at 260,000 app publishers, 260 million users and 240 employees. Conduit has raised $9.5 million, mostly from Benchmark Capital. The company recently expanded into mobile app distribution across various devices and platforms.

The consumer tracking outfit says Reed Hastings’ company owns 61 percent of the market for digital movies, with Comcast running a distant second at eight percent. There’s a three-way tie for third between DirectTV, Time Warner Cable and Apple.

None of which should be terribly surprising: Netflix is in the midst of a go-go growth boom, and while not all of its 20 million subscribers are using the company’s Web video service, many of them are. And a third of its new customers are signing up for its Web-only option.

Meanwhile, Apple’s iTunes movie store, which sells and rents films on an a la carte basis, has yet to catch on as well as Steve Jobs would like. And if you’re going to rent a movie from the cable guys, it seems much more likely that you’ll rent a movie via cable, directly to your TV.

More surprising is NPD’s assertion that digital video “now makes up one quarter of all home video volume.” I’ve got some questions about that statistic: For instance does it include all video, or just movies? And all video, or just legally purchased stuff? Etc. I’ll report back if I can get more detail from the company.

Release:

Six Out Of 10 Digital Movies Are Streamed via Netflix

NPD’s VideoWatch Digital tracking service reveals that subscription streaming, digital movies purchased online, and Internet and cable video-on-demand (VOD) services are becoming a part of many Americans’ entertainment diets.

PORT WASHINGTON, NEW YORK, March 15, 2011 – According to a recent review of the home video market in the U.S. by The NPD Group, a leading market research company, Netflix’s share of digital movie units, downloaded or streamed, reached 61 percent between January 2011 and February 2011, followed by Comcast at 8 percent, and a three-way tie for third at 4 percent among DirecTV, Time Warner Cable, and Apple. Based on information from NPD’s new VideoWatch Digital tracking service, digital video now makes up one quarter of all home video volume.

“Sales of DVDs and Blu-ray Discs still drive most home-video revenue, but VOD and other digital options are now beginning to make inroads with consumers,” said Russ Crupnick, entertainment industry analyst for NPD. “Overwhelmingly digital movie buyers do not believe physical discs are out of fashion, but their digital transactions were motivated by the immediate access and ease of acquisition provided by streaming and downloading digital video files.”

NPD also compared consumer-reported satisfaction with four modes of digital-video acquisition: electronic sell-through (EST), Internet VOD (iVOD), cable VOD, and subscription streaming. Consumers clearly recognize that EST services like iTunes have the most “current releases available,” while Netflix streaming gets credit from customers for providing the best “overall shopping experience” and “value for price paid.”

Data note: The information in this press release is from VideoWatch Digital, which is based on online surveys of U.S. consumers age 13 and older conducted between January and the third week of February 2011. The final reporting is based on 10,618 completed surveys.

Lastest installment: A report from Disney’s ESPN, which says that just a tiny fraction–0.18 percent–of cable subscribers cut the cord in the last three months, and that that number shrank from 0.28 percent last fall.

Just as important, says ESPN: It found an equal number of “un-cutters”–broadcast TV owners who added cable and broadband access during the same period. Which means whatever loss the cable business just recorded was netted out by its new gains.

ESPN’s analysis, which it put together using Nielsen numbers, basically mirrors what it reported late last fall. Except it’s even more positive for cable guys like Comcast and Time Warner Cable–and, of course, ESPN itself.

If you’re a cynic, you might wonder what the cable network would do if the numbers didn’t support its relatively rosy outlook. Then again, if you really were a cynic, you might argue that a lot of the cable-cutting rhetoric you hear comes from cord-cutting start-ups and their backers, who have their own expensive axes to grind.

Anso Labs is helmed by Jesse Andrews, the former lead architect at Flock, the Web-browser company that was recently acquired by Zynga, and Soo Choi, a former exec at Booz Allen Hamilton. Anso Labs is best known for its work on the cloud computing front with NASA, the U.S. space agency.

The move takes place against the backdrop of a surge in consolidation in the cloud computing and data center business. Last week, Time Warner Cable dropped $230 million for NaviSite. And on Jan. 28, Verizon acquired Terremark for $1.4 billion. That one-two punch in data center deal-making has led to persistent speculation that other data center companies, Rackspace among them, will be rolled up by larger companies–like Hewlett-Packard, Dell or Cisco Systems–that are eager to add cloud services to their portfolio.

Ask Rackspace executives about this–and I have–and they’ll tell you they’re not thinking about that. Rather than being rolled up by someone else, they’re focused on rolling up the assets they want to grow, and to remain independent. Late last year Rackspace acquired Cloudkick, a start-up focused on building cloud monitoring tools.

Rackspace did $629 million in revenue in 2009, and is expected to show annual sales of about $775 million when it reports fourth-quarter earnings tomorrow. It has 100,000 customers, and while many of them are small- and medium-size businesses, larger enterprise customers like Coca-Cola, Target and Vodaphone are tapping Rackspace for Web hosting and to run their cloud applications.

Rackspace wants Anso Labs for its expertise and devotion to OpenStack, an open-source cloud computing software project backed by Rackspace, Dell, Citrix, Cisco and Canonical, the company behind the Ubuntu flavor of Linux.

Rackspace wants to create a bunch of inter-operable cloud services so that customers can move workload from one cloud service provider to another at will, giving them increased flexibility. It’s comparable in some ways to vCloud from VMware and Eucalyptus.

But then again, it’s not the most aggressive move Reed Hastings could make. Note that the chart Netflix provides makes it quite difficult to really evaluate broadband provider against broadband provider, without doing a whole lot of squinting.

And even then, I can’t tell which light-blue line represents CableOne and which one represents CenturyTel.

We do know, because Netflix already told us, that Charter gets the best marks. And it appears that Clearwire, the wireless service co-owned by Sprint and some of the big cable companies, ranks dead last.

The news that most of you care about: Time Warner Cable and Comcast, the nation’s two biggest cable companies, appear to be in the top part of Netflix’s rankings. I’m asking the company for clarification for those of us with decaying vision.

And here it is, via CNET–a top-to-bottom ranking:

1. Charter
2. Comcast
3. Time Warner
4. Cox
5. Suddenlink
6. Cablevision
7. Cable One
8. Verizon
9. AT&T
10. BellSouth
11. Embarq
12. Windstream
13. Qwest
14. Century Tel
15. Frontier
16. Clearwire

You can click on the chart below to see a larger version, and you can read a technical explanation of what it measures over at the official Netflix tech blog.

Interesting PR campaign from Netflix, which is fighting with the cable guys and telcos over the cost of delivering all that streaming video to your living room: The company is going to publish a list of broadband Internet providers, ranked by performance.

Netflix CEO Reed Hastings’s letter to shareholders goes on about his company’s position vs. the ISPs at great length, and I’ll reproduce it at the bottom of the post.

But you can summarize it in a sentence: If the broadband guys insist on gouging us to get video to our customers, we’re going to make a very public stink.

So tomorrow’s list is a warning shot, meant to give the ISPs a sense of where Netflix is willing to go on this one.

Hastings says the list will detail “which ISPs provide the best, most consistent high-speed Internet for streaming Netflix,” and offers a preview: Charter is tops, right now.

But if you invert Hastings’s description, you get what he really means: We’re going to tell some broadband customers that they’re getting screwed and should switch to a new provider. Heads up, Time Warner Cable, Comcast, etc.

In other news, Netflix casually tossed off another very good quarter: The company added three million subscribers in the last three months of 2010, and says that a third of its new customers are choosing its new streaming-only plan. International expansion is still on the table for 2011 and is a major focus for Netflix going forward, Hastings said.

Here’s his warning/threat to the broadband business:

Recently the FCC adopted a version of net neutrality for wired networks in the U.S., and it’s a step in the right direction. The focus is on fair-play within an ISP’s network, but does not explicitly address entry into the ISP’s network.

Delivering Internet video in scale creates costs for both Netflix and for ISPs. We think the cost sharing between Internet video suppliers and ISPs should be that we have to haul the bits to the various regional front-doors that the ISPs operate, and that they then carry the bits the last mile to the consumer who has requested them, with each side paying its own costs. This open, regional, nocharges, interchange model is something for which we are advocating. Today, some ISPs charge us, or our CDN partners, to let in the bits their customers have requested from us, and we think this is inappropriate. As long as we pay for getting the bits to the regional interchanges of the ISP’s choosing, we don’t think they should be able to use their exclusive control of their residential customers to force us to pay them to let in the data their customers’ desire. Their customers already pay them to deliver the bits on their network, and requiring us to pay even though we deliver the bits to their network is an inappropriate reflection of their last mile exclusive control of their residential customers.

Conversely, this open, regional, no-charges model should disallow content providers like Netflix and ESPN3 from shutting off certain ISPs unless those ISPs pay the content provider. Hopefully, we can get broad voluntary agreement on this open, regional, no-charges, interchange model. Some ISPs already operate by this open, regional, no-charges, interchange model, but without any commitment to maintain it going forward.

Tomorrow, we’ll publish on our blog ongoing performance statistics about ISPs collected from our 20 million subscribers detailing which ISPs provide the best, most-consistent high speed internet for streaming Netflix. We can tell you now, though, that for our subscribers streaming Netflix, Charter is the highest-performance ISP in the United States.

Recently, there was a report that at peak times Netflix subscribers in the U.S. were driving about 20% of peak downstream last-mile Internet traffic. This may or may not be accurate, but it should be noted that because we pay for the data to be delivered to regional ISP front doors, little of this traffic goes over the Internet or ISP backbone networks, thereby minimizing ISP costs, avoiding congestion, and improving performance for end-using consumers.

An independent negative issue for Netflix and other Internet video providers would be a move by wired ISPs to shift consumers to pay-per-gigabyte models instead of the current unlimited-up-to-a-large-cap approach. We hope this doesn’t happen, and will do what we can to promote the unlimited-up-to-alarge-cap model. Wired ISPs have large fixed costs of building and maintaining their last mile network of residential cable and fiber.

The ISPs’ costs, however, to deliver a marginal gigabyte, which is about an hour of viewing, from one of our regional interchange points over their last mile wired network to the consumer is less than a penny, and falling, so there is no reason that pay-per-gigabyte is economically necessary. Moreover, at $1 per gigabyte over wired networks, it would be grossly overpriced.