One of the more interesting spectacles in telecommunications involves what I'll call the "collisionary nature" of the industry, with Darwinian justice for all. At one time, radio ruled the roost, only to be rudely shoved aside by broadcast TV, first in black and white, then color, which in turn was eclipsed by cable, with both challenged by satellite TV -- and now radio -- and so forth.
At one time, the FCC gave away AM and FM station authorizations in pairs to promote FM radio, when AM radio ruled supreme. My father had a story of a client who insisted that he give back the FM license back to the FCC because he didn't think FM would ever amount to anything. Well, things have changed since then, and changed some more.
A current interest for many involves the concept of "net neutrality" which (predictably) means different things to different industry segments, all seemingly bound by a sense of honor akin to the definitive statement that "the check is in the mail."
So let's say, for example, that you have this nutty idea to build out your entire telephone network to provide a suite of services to consumers drawn to service offerings of your competitors, which at one time were not really your competitors, just another company doing something with communications two pastures over. All the same, these companies certainly were competitive with someone, such as cable competing with broadcast TV, which market then was joined by satellite offerings.
This last point is key, because the cable rules primarily face the broadcasters. One of the rules governing this messy front is known as "must carry," which, in simple intent, is where cable companies are required to carry programming of broadcast stations. So far so good, but alas, even this simple point of coexistence has sparked years of bitter fighting between the industries.
Let's say that in building out your out your telephone network you want to provide, in addition to the wireline voice services that unfortunately defines your network, broadband Internet access (now more or less governed by another set of rules, and mostly federalized), as well as video (governed by those cable rules that address broadcasters, and highly, I mean really highly, localized).
Whether your motivation is fear or greed is irrelevant, you commit to the buildout, but the fact here your competitor -- the one from two pastures away, never before a direct competitor -- is also building out their network to go after the same market you intend to pursue.
Here's another headache: your network connection to the customer has some value to other would-be competitors who want to provide voice, data and video, separately or in some combination, over the network you have signed up to build, at considerable risk and astonishing cost. They've never been competitors of yours since they didn't exist -- they are software plays, and may not even be located in the US.
In addition to building a network to handle streaming video, you have also lined up valuable content for consumers to view over this network, in order to make your combined voice data and video offering more valuable. This content is owned by people who paid lots and lots of money to create it, and they get very very nervous when others give it away for free, particularly if it is in easily and infinitely reproducible digital format.
So not only do you have to buy this content from the content owners, you have to promise to protect it. The aforementioned digital reproduction and transmission capabilities make this somewhat problematic to achieve, and the copyright rules are a completely new and interesting can of worms for you, and also are in transition in the face of technology.
In telecom industry parlance, this is called a "train wreck."
After all, the problem with your network building goals lies in the widely disparate governing regulations pertaining to not only the types of services you want to offer (voice, data, and video), but also over what runs over your network (content you have purchased from others and have promised to protect), and you also get to play rear guard action against content and service providers with whom you have no connection but which are utilizing the web as their platform launching pad.
So imagine, you go head to head with facilities-based competitors that most likely will be subject to a different set of ground rules than those that apply to your company. Meanwhile, another set of competitors might claim that their applications or content is better and that you have engineered your network and/or service offerings to impede them.
Think of a VoIP operator who would compete with your voice offering, using the same technology, over the network you built. Or think of a indie film site, it could be one of many, that either chose not to sign up with your company, or just tossed their content out on the Internet with some notion in mind of making money, or maybe not.
Does this mean that network providers must carry all legal content on the web in the same manner? With the same guarantees of quality of service that would apply to their own (purchased and protected) content? These are rhetorical questions, but one quality the Internet has conditioned people to expect is "always cheaper if not free" -- how do these notions apply to a closed network?
There have been widespread reports that network outages and communications interoperability issues hampered recovery and relief efforts following the hurricane, which devastated
According to FCC Chairman Kevin Martin, "[m]ore than 3 million people lost their phone service, over a thousand cell phone towers were knocked down, and over 100 broadcast stations were knocked off the air," disruptions which prevented many citizens from receiving information about the emergency, communicating with their families about their safety and whereabouts, and preventing first responders and emergency personnel from coordinating with one another on relief efforts.
For more information about the FCC's response to Hurricane Katrina, go to the FCC's Homepage. At the time of this writing, virtually every single headline, from top to bottom of the homepage, concerns announcements of actions, efforts and waivers by the agency in response to Katrina. In addition, there are multiple statements by Chairman Martin and Commissioners Kathleen Abernathy, Jonathan Adelstein, and Michael Copps.
House Energy and Commerce Committee Chairman Joe Barton (R-TX) released a bi-partisan draft bill yesterday to address “Broadband Internet Transmission Services” or “BITS.”
Among those working on the bill with the Committee Chairman were ranking member John Dingell (D-MI), Telecom Subcommittee Chairman Fred Upton (R-MI), ranking Subcommittee member Ed Markey (D-MA), and Chip Pickering (R-MS).
Proposed changes to the Telecom Act to account for IP technologies has been a contentious issue of late. Think of trying to fit a oversized square peg in an undersized round hole, and you have some idea of the challenges facing policymakers -- irrespective of their philosophical views -- as they grapple with how to apply legacy rules to emerging technologies.
The draft language in BITS proposes creating a federal franchise requirement for broadband video, eliminating the requirement for video competitors to cable to obtain franchise approval from local authorities before entering the market. BITS preserves the assessment of franchise fees, however, allowing local authorities to assess a fee of up to 5 percent of gross revenues. As I have mentioned earlier, the telephone companies' primary concerns with the local franchise approval process have less to do with money than with process and control.
The bi-partisan BITS effort includes many provisions that currently apply to cable video, while also including provisions on network neutrality that would prevent broadband providers from blocking access to content. The 77 page bill received favorable comments from industry, with more analysis and comments expected later.
If I recall correctly, Chairman Barton proposed BITS as an alternative denominator for IP technologies at a hearing previously this spring. If things aren't confusing enough, the debate over the appropriate rules for "VoIP" which stands for for "Voice over IP" converged with the emerging debate over the rules for "Video over IP" (VoIP versus ViIP), so BITS fits this bill, literally.
With e-Bay’s announcement Monday that it intends to purchase VoIP provider Skype International, my mind drifted back a few years to the Time Warner AOL merger.
That particular deal, first hailed then hated, is now back in the news again as financier Carl Icahn acquires shares of the parent company in an effort to force a stock buyback and spin-off of the Time Warner cable unit. Management, however, views the marriage of AOL's portal and content and Time Warner cable’s broadband access and content as a pretty neat thing, but the fascinating part about all this has more to do with the evolutionary gyrations that seem to be part of the e-commerce life cycle.
AOL introduced millions of Americans to something called the Internet, but suffered customer defections as increasing US broadband adoption plowed its way through everyday life. Former dial-up customers abandoned AOL for the high speed offerings of facilities-based broadband providers, primarily the cable and telephone companies. The broadband buildout occurred because cable companies, having been deregulated way back in the ‘90s, invested $85 to $100 billion in network upgrades to build a better – broadband enabled – mousetrap, while the telephone companies were preoccupied with a really nasty playground spat over “sharing.” Once that fight got straightened out, with lots of help from the government, the telcos began playing catch-up ball with a vengence.
E-Bay allowed millions of people to go to the world’s largest yard sale, all without having to veer across two lanes of traffic on a three-day weekend, but growth here too has slowed, and the company finds itself looking warily at other technology bubble survivors, Yahoo! Google, and Microsoft, with names that sound happy, warm and fuzzy unless they happen to be your competitors: in which case, they’re not. E-Bay, seeking additional sources of revenue, and particularly from international markets, bought a customer list for lots and lots of money, and something that rings another bell from the past, something called "synergies."
The dazzling insight in all of this, and I realize that you’ve been very patient, is that this is a really tough ball game to call. Part of the reason is that we’re in uncharted territory. Every now and then I hear that we're still only in the beginning stages of this revolution fired by rapid advances in information and communications technologies, but so many big companies have stumbled or vanished outright along the way. Another problem with trying to chart the right course may lie in the meteoric rise of some of these companies – Skype was founded way back in 2002 (by founders of Kazaa, the peer to peer music file sharing company) -- and today has approximately 53 million subscribers worldwide, which is some trajectory, like a Napster Trajectory.
At the end of the day, though, somebody has to build networks to reach consumers and businesses, wherever they may be, without which networks the new business models evaporate. Building a network in and of itself entails extraordinary risk, even without considering the possibility that Mother Nature might someday come along and take down a significant portion of your facilities, just like that. It’s complicated, pure and simple, with new and serious competitors emerging virtually overnight, and for that reason, a light regulatory touch is paramount.
Anything else creates arbitrage, or artificially herds markets into regulatory boxes that may or may not have anything to do with current realities: it's just too hard to call. Intermodal competition trumps intramodal competition, but let's face it, we're not even talking about partnerships across different technological sector platforms here, we're talking about global partnerships from different conceptual worlds.
