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more on : Telco's Arrogant Stand on Content
From: David Farber <dave () farber net>
Date: Mon, 2 Jan 2006 18:00:30 -0500
Begin forwarded message: From: Dewayne Hendricks <dewayne () warpspeed com> Date: January 2, 2006 5:25:14 PM EST To: Dewayne-Net Technology List <dewayne-net () warpspeed com> Subject: [Dewayne-Net] re: Telco's Arrogant Stand on Content Reply-To: dewayne () warpspeed com [Note: This comment comes from reader Andrew Odlyzko. DLH]
From: odlyzko () dtc umn edu (Andrew Odlyzko) Date: January 2, 2006 8:34:30 AM PST To: dewayne () warpspeed com Subject: Re: [Dewayne-Net] Telco's Arrogant Stand on Content Dewayne, There is plenty of arrogance on both the telco and content provider sides. But statements such as this one from Budde, and Whitacker's "What [Google, Vonage, and others] would like to do is to use my pipes free. But I ain't going to let them do that." make clear is that the key issue behind much of the posturing about open access and deregulation is the division of revenues from content sales between the content owners and the service providers. I don't know what Budde is referring to when he talks of telcos getting under 50 percent of revenues from content. In general,service provider takes are far higher. If you look at cable companies,they spend around 25 percent of their revenues on content, and getto keep 75 percent or so for the maintenance of the networks, profits, ... Satellite radio pays someplace between 5 and 10 percent of its revenuesfor the music they play. And NTT DoCoMo's i-mode pays only about15 percent of its revenues for content. (I don't know what the revenuesplit is on cellphone music ringtone downloads.) So it is natural that the content industry is salivating at the prospect of getting more competition in delivery, and boosting their takes. Getting something like 50 percent would do wonders for their finances. But what both the content industry and the telcos forget is that there simply is not enough money in content to pay for all the telecommunications networks. Connectivity, not content, is where the real money is, as has been clear for a long time, <http://firstmonday.org/issues/issue6_2/odlyzko/> So yes, the content providers and Internet companies like Google and Yahoo! can build backbones, but they can't afford to provide universal local connectivity. Happy New Year, Andrew P.S. There are lots of other comments one could make about this piece by Budde. For example, his rosy prediction for tele-presence flies in the face of numerous failures in video telephony. But that is another subject.
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- more on : Telco's Arrogant Stand on Content David Farber (Jan 02)