more on IP-Based TV Will Revolutionize Entertainment

[David Farber <dave () farber net>]

------ Forwarded Message
From: Bob Frankston <Bob2-19-0501 () bobf frankston com>
Date: Fri, 29 Apr 2005 16:02:03 -0400
To: <dave () farber net>, 'Ip' <ip () v2 listbox com>
Subject: RE: [IP] IP-Based TV Will Revolutionize Entertainment

I keep writing about the need for a utility model -- if you follow this
story you find that real IP TV means that owning the facilities is a
liability and those who don't have a compelling advantage. The business wire
story is just a press release without any insight at all.

First, I'll just note that the "this revolutionize entertainment thing is
nonsense" -- it's a clone of CableTV. What will revolutionize entertainment
is unfettered peer distribution of new sources of content. This is a
separate topic including what happens when controlled distribution is no
longer viable with most old content on DVDs and only a little doled out in
other channels at any time.

Getting back to connectivity business models, as I've pointed out in the
past we need to be very careful in translating this story. VoIP is an
internal technology of the Telcos and it's a generic edge technology. There
is essentially no relationship between the two. Faux Telephony companies
like Vonage and just about all "names" confuse the issue. Skype, Free World
dialup and others are edge-defined.

When we apply this to IPTV we find that it's the opposite of the Internet --
it's more a spat over whether the glass fiber is lit up one way vs another.
This is extremely important within the Regulatorium. It's also about the
closed world of Tellywood in which content providers had to fork over equity
to get distribution. The carriers are trying to wrest control from the
CableCos in a life and death struggle within their world. It's all about who
will own us rather than any thought of liberation.

The real question is why I can't just to go to HBO and others and subscribe
directly or even indirectly. There's a special exemption for those who own
six foot dishes but not for the rest of us. Look at http://www.akimbo.com --
use the Internet as a transport but have a Set Top Box as a destination.
That should satisfy the DRM requirements -- it looks and feels like a
CableCo but they don't have the overhead of owning facilities so should be
far more efficient.

But they have little interesting content. Why can't they do what the
CableCos do and just offer the same channels? Hmmm. The reasons seem obvious
-- the real puzzle is why there is no anti-trust action?

If you follow this one step further you come to a very stark conclusion --
those who don't have their own infrastructure have a major advantage over
those that do.

If we do not allow collusion between the content providers and the transport
providers then owning the facilities is a major competitive disadvantage.

We've seen this in VoIP but the large capital expenses and cellular income
has kept this stark reality from being too obvious.

I do note that Comcast has announced that their Internet service is very
profitable in its own right but how can you sustain a major price advantage
with commodity transport? You can't. You can't recover the costs based on
the value of the transport because the value is external. I keep comparing
it to charging for garbage collection on the resale value.

Again, I'm talking about IP transport, not about services like TV. Just the
transport by itself.

IP connectivity is one of the purist commodities. You can't differentiate
yourself except by selling more, you can't afford any fine grained billing
and even then can't assure the packets won't accidentally ride a competitors
infrastructure and we need it as a public good.

Is there an alternative model?



-----Original Message-----
From: owner-ip () v2 listbox com [mailto:owner-ip () v2 listbox com] On Behalf Of
David Farber
Sent: Friday, April 29, 2005 14:51
To: Ip
Subject: [IP] IP-Based TV Will Revolutionize Entertainment


------ Forwarded Message
From: Monty Solomon <monty () roscom com>
Date: Fri, 29 Apr 2005 09:43:27 -0400
To: <undisclosed-recipient:;>
Subject: IP-Based TV Will Revolutionize Entertainment

IP-Based TV Will Revolutionize Entertainment; SBC calls for
``light-touch'' regulatory approach to ensure consumers receive new
technology quickly

20 April 2005, 10:02am ET

SAN ANTONIO--(BUSINESS WIRE)--April 20, 2005--IP-based television
will change the way consumers watch TV while opening a new
competitive choice for millions, said Lea Ann Champion, senior
executive vice president of IP Operations and Services for SBC
Communications Inc. (NYSE:SBC) at a U.S. House Energy & Commerce
Committee hearing about the future of new technology.

Champion demonstrated the capabilities of IP-based video or IPTV for
lawmakers and urged them to avoid imposing incumbent obligations on
new entrants in the video services market that would discourage
deployment of the new system.

...

http://finance.lycos.com/qc/news/story.aspx?story=200504201402_BWR__BW5581


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