AT&T-backed Internet Innovation Alliance has sponsored a study by Nemertes Research which concludes that unless broadband providers invest $55 billion in their networks, the Internet might slow to a crawl by 2010. Of course, shrewd observers see this research for what it is: less a reasoned warning and more a lobbying tool to justify pro-carrier public policy initiatives.
According to a press release, the study predicts that brownouts or interruptions could occur as high-bandwidth Internet usage soars. Even worse, when the Internet does function, it might be a pain to use. "It may take more than one attempt to confirm an online purchase or it may take longer to download the latest video from YouTube," Nemertes warns.
Oh yeah? Tell that to Verizon, which today announced it has successfully completed the industry's first field test of 100 gigabits per second (Gbps) optical transmission. Verizon tested the transmission from Tampa to Miami using a live video feed from the telco's FiOS video service.
Granted, the test was conducted over Verizon's business network and no doubt AT&T, the Internet Innovation Alliance and Nemertes Research could argue that private business networks get all the investment capital needed because they are not regulated the same way as other networks. Still, Verizon concluded that the test "demonstrated that by deploying advanced electronics, an existing network system can easily and quickly [emphasis added] be upgraded to 100Gbps."
It seems to me that perhaps the Internet Innovation Alliance might do well to hook up with Verizon. Perhaps the two could figure out a way to dodge the 2010 brown-outs, slow-downs and sluggish YouTube loads.
FCC Chairman Kevin Martin has long had it in for the cable industry, for unknown, baffling reasons. But earlier this month Republican Martin raised the stakes in his war with cable by proposing a new set of ownership regulations that cap how many customers any given cable operator can serve. This perplexing pro-regulatory stance is at odds with Martin's generally conservative world view and runs counter to his proposed deregulation when it comes to newspaper and broadcast station cross-ownership requirements.
Martin claims that an obscure provision in the 1984 Cable Act, the so-called 70/70 rule, justifies his new clamp-down. The 70/70 rule is found in the leased access section of that bill and basically says that the FCC can enact rules needed to promote "diversity of information sources" if cable television is available to at least 70% of American households and at least 70% of those households actually subscribe to a cable service.
Martin thinks he's found a new weapon to hurt the cable industry with in this 70/70 rule and has been pushing the idea of new regulations based on his contention that more than 70% of capable households now subscribe to cable (as opposed to DBS satellite or telco-delivered multichannel video services.) But, setting aside the fact that the 70/70 rule relates to leased access (i.e. allowing third parties to lease capacity on a cable system) and not to ownership caps, Martin is, um, astoundingly and provably wrong on the 70% threshold finding.
He's right that 70% of U.S. homes are capable of buying video service from cable -- the statute stipulates that the 70% has to be cable systems with a greater than 35-channel capacity, which in all likelihood is almost totally synonymous with all cable systems today. As the table at the end shows, the top cable operators alone, which account for virtually all cable service in the U.S. today, passed 111.95 million homes at the end of Q3 07, representing about 97% of all households in the U.S.
But, as the table also shows, these operators served only 56.87 million basic video customers, representing only about 51% of all homes passed. Not even close to the 70% threshold.
Cable operators don't even represent 70% of all multichannel video customers, as the table at the end shows. (Most of these data came from the companies' quarterly financial reports, which are submitted to the SEC.) At best, cable companies serve about 65% of all video customers, with DBS providers and telcos grabbing the remaining market share.
So, what is Martin talking about? Turns out he surreptitiously asked a DC-based newsletter vendor, Warren News, to submit data from a yearbook that Warren has long published. "The TV Cable Factbook" used to be a bible in the broadcast world and it is based on surveys of individual cable systems and TV stations. Despite Warren's first-rate news coverage, the Factbook is widely known to be inaccurate or incomplete to the degree that it is just not useful for statistical analysis.
Each year fewer and fewer systems (and TV stations) answer Warren's questionnaire, so a lot of data goes missing, or is pulled forward from earlier years and thus instantly out-of-date. According to the Factbook data, U.S. cable operators pass only around 96 million households, which is clearly wrong, out-of-date, unreliable.
There are plenty of other sources of more reliable data out there, but the Chairman is apparently sticking solely to this one set of flawed data to justify his new regulatory campaign. Speaking today at a Media Institute lunch, Martin's fellow Republican Commissioner Robert McDowell expressed his own embarassment over the Chairman's crusade in light of the hand-picked and flawed data used to justfiy it.
"Why is the FCC suddenly changing its evidentiary standard?" McDowell asked. "I'm searching for the answers to those and other questions to no avail."
If I were Kevin Martin I'd feel bad about myself if the only way I could justify a regulatory push were to rely on one set of questionable numbers while ignoring all the rest. (Even Warren Publishing has noted that its data can't be used by Martin for this purpose.) I'd be red-faced that such a high-profile attack on an irrationally hated industry were so easily undercut with a mere glance at more reputable data sources.
Based on chatter I picked up today, Martin is likely chagrined that he rushed out of the gate so unadvisedly. The smart money is betting that Martin quietly buries this wacky proposal.
Cable industry tech supplier Pioneer might be in for a rough ride with its cable operator customers. The electronics giant is launching today an invite-only beta version of a new online service called SyncTV.
SyncTV aims to allow customers to buy individual cable channels and download any program from the channels offered. Details are sketchy at best -- Pioneer isn't saying which cable networks are part of the beta and although SyncTV plans to charge monthly subscription fees of $2 to $4, along with per program download fees of $2, the service will also supposedly be ad-supported, in part.
With so little info, SyncTV seems like a gimmicky test-run for Pioneer rather than a full-fledged service. It's hard to imagine that many big name cable networks will offer their full real-time line-ups on Pioneer, even if CBS-owned Showtime seems to be one of the participants in the beta test. Moreover, hardware and technology suppliers don't have the best track record in offering entertainment services. But these days you never know.
Posted by Cynthia Brumfield at 10:11 AM | Print | Comments (0)
The entire A-list blogosphere has swarmed onto one topic this morning: Amazon is going to unveil at a press conference today its much-rumored new portable book reading device, which is called Kindle. Newsweek's Steven Levy was given the scoop on the controversial gadget and Amazon snagged the cover story in the process.
What is Kindle? It's a 10.3-ounce, paperback-sized device that will cost $399 and it will be capable of storing 200 books. Kindle will come with its own EV-DO wireless connectivity system called Whispernet that will allow owners to download any of the digitally rendered books on Amazon (currently 88,000 and growing) for an average price of $9.99/book.
Although the business model specifics seem to be garbled in the article, Kindle owners will also be able to subscribe to and read newspapers on the portable reading unit, as well as subscribe to select blogs, weirdly enough on a premium basis, either $.99 or $1.99 per month. (I agree with Mathew Ingram that paying to read blogs is a non-starter of the first order.) Kindle-ites will also be able to conduct Google searches, look things up on Wikipedia and more.
Book purchases are a snap on the Kindle. Owners tap a key and download a book. "The vision is that you should be able to get any book -- not just any book in print, but any book that's ever been in print -- on this device in less than a minute," Amazon's Jeff Bezos told Levy.
Forget everything else about the Kindle but this simple statement and you'll understand why the Kindle might very well succeed where other ebook devices have, if not failed, then failed to capture the kind of press that Amazon is getting. There's a huge pent-up demand by millions of people to buy books that aren't available at the nearby Barnes and Noble or Borders outlets, which are basically virtually all books ever written.
These and other mass market-oriented brick-and-mortar booksellers have severely limited, low-brow selections and have all but wiped out speciality book stores across the U.S., if not the world. Amazon and other online booksellers have also done their part to wipe out independent booksellers, but they, at least, have deep and varied catalogs. But today's online booksellers can't gratify immediate needs. It takes days or even weeks for books ordered online to arrive.
Tens of millions of people do have immediate needs for books and they're called students. Or the parents of students. From high school on up, students are frequently asked to read or access scholarly or important books not available at Barnes and Noble or even the campus book store or even school libraries. Crises then ensue.
Ask any parent of an eleventh-grader how much pain they've suffered in trying to track down, say, Friedrich Durrenmatt's 1956 play "The Visit" at the last minute for a make-or-break semester project that his child forget to mention, and suddenly $399 seems a small price to pay for handy access to any book ever written. In frantic situations like these, $399 can crazily seem like a small price to pay for the book itself.
The point, however, is that the Kindle could catch on with that most prized group of consumers, young people, who grow up and continue doing what they did when they were students, thereby making innovations permanent. School systems and universities could also get into the act, subsidizing classroom or even student purchases of the thing. Along the way, the price of Kindle will surely drop.
It helps that Kindle doesn't have to be connected to a computer to get the job done. It also helps that Amazon, with its huge catalog and power in the publishing world, is backing this effort. Having a wireless connection is the icing on Kindle's cake. And despite the photos, Kindle isn't, apparently, as fugly as it seems.
I usually think that any kind of media service that requires the upfront purchase of a costly device is DOA because history tells us that this is so. But not, maybe, this time. Kindle, if it functions as well as Newsweek's Levy says, fills a real need and could catch on with the right demographic and slowly become a ubiquitous device that makes the bad-for-the-environment and ridiculous-to-produce printed book seem like a quaint vestige of bygone eras.
Posted by Cynthia Brumfield at 8:18 AM | Print | Comments (1)
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