The recent announcement by DirecTV that it plans to initiate a broadband video download service in advance of making broadband access more widely available illustrates the driving force behind major network investments by carriers: it’s all about the video.
Video services provide the additional revenues necessary to justify the massive network upgrades currently underway at many
That Advanced Home Video Delivery remains the Holy Grail for the media world also explains why Google emphatically endorses Net Neutrality legislation, in rare agreement with its potential arch-rival Microsoft. In the future, both Google and Microsoft may stand to benefit from having high volume, dumb pipes that connect directly to the consumers.
Having said that, Google and Microsoft sincerely hope that the telcos and other competitors to cable (as well as cable itself) finish the job and build those Big Fat Pipes. If they fail to do so, the Googles and Microsofts won’t have the capability to reach consumers with their video offerings, and instead will be left to fight over market share for browsers and search engines, which seems so 90’s: been there, done that.
Then again, if the above premise is true, it’s probably the only thing about Net Neutrality that can be defined, because if we are dealing with a nascent market – broadband – it is likely that we are also dealing with a nascent problem – that of network carriers allegedly blocking access or otherwise interfering with unaffiliated entities, such as Voice over IP providers, for example, to ride over the carriers’ broadband pipes.
While the connectivity issue might today be considered as looking highly theoretical, if not overly dramatized, given that it does not yet appear to be happening on a wholesale, across the board basis, at the very least it provides for strange alliances, such as Google aligning with Yahoo! and Microsoft, all competitors, lining up on one side, and screaming about what the terrible cable and the telcos, on the other side, might do tomorrow if left unchecked (read: "unregulated").
Hint: the cable and telcos find little to agree upon, of late. That they violently agree upon the need for legislation on this issue (a legislative solution in search of a problem) should tell observers that something is either very right, or very wrong, with the current state of affairs.
For a nation of couch potatoes, though, these questions presumably pale in comparison to what's really important: who wins on "American Idol." Just think: you can watch American Idol on TV at night, then vote for your favorite contestant by cellphone by calling a “toll free” number (this is provided so as not to economically inconvenience people using landline phones).
Cingular customers have it even easier, though; Cingular is a big sponsor of the show. All Cingular customers have to do is text V-O-T-E + the 4 numbers of their favorite contestant. If you haven’t endured enough “performing,” you can also check it all out again that night or the next day on your broadband connection, where you can vote again, post comments, and wallow in as much manufactured human drama as you can possibly stand.
What about the Cingular tie-in with the show? This is the sort of cross marketing that promotes (in addition to manufacturing human drama) a certain cell phone service provider. In addition, perhaps it might lead a cell phone manufacturer to create specific icons for certain uses in conjunction with a specific cell phone network provider, created to promote a specific show, such as an icon that symbolized voting: it might even say Vote! against a background of little stars.
Or the phone provider/manufacturer combination might seek to further promote a specific show or specific network, available not only on cable, but simulatenously premiering over a broadband connection, where voting might available in real time on an interactive basis (with a “click of a mouse” or if mobile, by pressing a button), all brought to you by your telco video or cable or satellite provider, a true simultaneous telecast.
In other words, it is not too far out of the realm of speculation that a wireless carrier/manufacturer combo might cut a deal with one or more wireline vendors to make customer interaction easier, such as by creating shortcuts that worked only on with certain equipment or on certain networks. The opposite arrangement might also as easily occur -- with a wireline/device manufacturer pair cross marketing with a wireless network operator. In fact, there probably are an infinite number of variations on this theme.
Would these commercial arrangements cross over into violating Net Neutrality, whatever it is? Do we want to restrict, far in advance, specialized cross marketing efforts of this sort by dictating what carriers can and cannot do with their networks, before they finish pouring money into holes in the ground?
Gene Kimmelman, head of Consumers Union, and a frequent critic of cable companies and their business practices, had this to say during a Senate Commerce Committee hearing yesterday on the telcos’ attempts to bypass or streamline the local franchise approval process:
“I have heard more praise of local franchising than I have in 20 years.”
Well said. The telephone companies are currently locked in a battle with incumbent cable companies suddenly in love with local franchise obligations they have long derided, but only because the telcos would like to compete with cable companies – on broadband to consumers, on video delivery, even on voice services.
That the telcos find themselves fighting for what once were their own voice customers goes along way to describe the topsy turvy world that the network convergence around Internet Protocol for delivery of everything has created. Where once isolated technological platforms delivered distinctly different service sets – such as voice and video – today's world has become broad and blurry, with service providers engaged in an all out fight to win customers by delivering as many technological capabilities across advanced networks, some of which haven’t even been built yet.
In another indication of the strange dynamics surrounding this fight, during yesterday’s hearing the telcos found themselves aligned with what would seem to be strange panel-fellows: public interest advocates, who apparently welcome the price lowering potential that large, well funded, and well run companies would bring to the multi-channel marketplace currently occupied by cable and satellite companies.
According to comments filed at the FCC sometime last year on video competition, cable companies have the lowest customer rating of any service sector, public or private, as measured by a particular study, which study included the IRS. Without too much elaboration, that takes some doing. And while satellite video delivery services provide some competitive alternative to cable, according to the GAO, only another wireline multi-channel video provider truly has the potential to lower consumer prices. Enter the telcos.
Not so fast, counter the municipalities, some 28,000 of them nationwide (this figure is subject to some real sway, but let’s just say there are “lots and lots” of them): the munis want the telcos to go through the same application process that the cable companies went through, which refrain is echoed by the cable companies facing off against their newfound would-be competitors.
But since even Boot Camp isn’t Boot Camp these days, and competition, with more choices, and for a distinctly different product at lower prices will benefit consumers, various consumer oriented advocates appear to endorse telco entry at the local level by going through a streamlined, perhaps national or state wide approval process with some conditions that they contend would benefit local entities, such as Public Educational or Government (PEG) channels requirements, payment of a fee in lieu of a franchise fee, conditions that would prohibit redlining, and Net Neutrality provisions.
The latter condition, or set of conditions, over which everybody by now seems to have attained some very hardened positions regarding what thou shall and shall not do as a network operator, may well be a sticking point worth remembering – once everyone decides what exactly “it’ is. Like the prominent ad campaign for e-Bay – did they really feel that left out not using a catchy vintage pop song for their ad? – “it” has wide appeal and can make all the difference in the world for those who care.
In yet another sign that none of this is going away anytime soon, in another hearing yesterday before Congress, and one fairly widely reported, representatives from several technology companies (mostly favoring Net Neutrality provisions) getting raked over the coals by members concerned about their market entry decisions with respect to China.
It seems that while these companies believe that everything over here should be open, fair, and enlightened, the importance of gaining market share in
The Senate Committee on Commerce, Science and Transportation will hold a hearing this morning on municipal broadband networks. The Committee will hold another hearing tomorrow morning on the local franchise approval process: the pair of hearings aptly reveal the shifting issue points of view that make telecom reform so difficult to address.
Municipalities that want to build their own broadband networks have been opposed this year at both the local, state, and even federal level by the cable and telephone companies seeking to build broadband networks. Generally speaking, the telcos and cable companies have not been in wild agreement on any issue in telecom reform, although the big telcos seem lately to be less vociferous in their opposition to the munis.
(Note: there is an officer of a small, rural telephone company testifying in the hearing today.)
The reason for the big telcos’ diminishing enthusiasm for opposing municipalities is that the group involved, the locals, are pretty much the same crowd that the telcos must impress with their contention that the franchise approval process should be streamlined or even eliminated (the subject of tomorrow’s hearing), where the big telcos find themselves opposed by not only the locals… but also cable.
The big shootout comes tomorrow – where the witness list includes the CEOs of Verizon, AT&T, opposed by cable, consumer advocates and proponents for local issues.
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The FCC held its monthly open meeting today in
The choice of Keller is symbolic: Keller is the first community in the nation in which Verizon introduced its Fiber to the Premises (FTTP) video service to compete with cable. Verizon continues to roll out this service to many customers within its footprint, both within and without Texas; although Texans have some advantage given the state legislature’s overhaul last year of the franchise approval process: franchises for video competitors to cable are granted at the state level, rather than local or municipal level, which is designed to streamline and therefore accelerate the process.
AT&T, based in Texas, also is in the process of deploying a network capable of delivering video to consumers using a slightly different network model, but the bottom line is the same: cable faces increasing competition from both satellite programmers and wireline delivery platforms, including Broadband Over Powerline (BPL). During the meeting, FCC Commissioner Adelstein noted in some detail the dramatic changes in video delivery on the cutting edge of technology.
The FCC is devoting considerable energy to the subject of video competition and delivery, looking not only at how cable programmers deliver service bundles to consumers but also whether the current franchise approval process (which occurs at the local and municipal level throughout much of the country) is producing unreasonable delays for potential competitors to incumbent cable operators.
Though I hate to do this, but it is Friday, after all, and irresistible, given the subject matter: Stay Tuned!
