Think the Internet will replace TV ? Think again

Craig Moffet of Bernstein Research was asked to testify before the Senate Commerce Committee on the subject of Net Neutrality. His comments were of course right on the money. The interesting conclusions that can be drawn from his testimony are just as relevant to the discussion of the future of media on the net as they are to net neutrality.

Craigs sites facts and figures that should make anyone who believes that the net as alternative to TV is just around the corner, or will happen this decade for that matter, rethink their position.

‘Some of the nuggets from Craigs testimony

“despite a great deal of arm waving from “visionaries,” our telecommunications infrastructure is woefully unprepared for widespread delivery of advanced services, especially video, over the Internet. Downloading a single half hour TV show on the web consumes more bandwidth than does receiving 200 emails a day for a full year. Downloading a single high definition movie consumes more bandwidth than does the downloading of 35,000 web pages; it’s the equivalentof downloading 2,300 songs over Apple’s iTunes web site. Today’s networks simply aren’t scaled for that.

In a series of recent research reports that I entitled “The Dumb pipe Paradox” — which I believe provided the original impetus for the Committee’s invitation to testify today — I tried to address the expectation that the telcos are rapidly rushing in to meet this need and to provide competition for cable incumbents. In fact, by their own best estimates, they’ll be able to reach no more than 40% or so of American households with fiber over the next seven years.

And most of that will be in the form of hybrid fiber/legacy copper networks, such as that being constructed by AT&T under the banner of “Project Lightspeed.” These hybrid networks are expected to deliver 20Mbs average downstream bandwidth. After accounting for significant standard deviation around that average, that will mean many enabled subscribers will actually recieve far less. I and many others on Wall Street harbor real doubts as whether these hybrid networks will provide technologically sufficient to meet future demands

More importantly, in 60% of the country, there are simply no new networks on the horizon, and the existing infrastructure from the telcos — DSL running at speeds of just 1.5Mbs or so — simply won’t be adequate to be considered “broadband” in five years or so. That includes wireless networks, by the way. Current and planned wireless networks — including the over-hyped Wi-Max technology — offer the promise of satisfying today’s definition of broadband, but simply can’t feasibly support the kind of bandwidth required for the kind of dedicated point-to-point video connections that will be required to be considered broadband tomorrow.”

Craig is right. The last mile into our homes wont have enough bandwidth to support all that we will want to do via our internet connections at home. There is no moores law for bandwidth to the home. THere is a huge misconception that bandwidth will just continue toexperience unlimited expansionfor every broadband household. Its what we are used to with hard drives, processors, all technology. It gets faster, cheaper, bigger. Thats not the case for the next decade with bandwidth

The net result is that TV is going to be TV, delivered like TV for a long time to come. (I consider IPTV to be regular TV). There wont beenough bandwidth for it tobe any other way.

The problem is that our consumption of digital media at home will continue to grow. The bandwidth we want to consume will many times exceed the bandwidth available to us at that time.

The viewing of internet video will continue to grow. We will upload and download more and more video, consuming increasing amounts of bandwidth. We will want to download movies in High Def quality. Digital pictures will increase in resolution, and we will upload and share our lives through digital pictures that consumes multiple mbs per picture. Too do all of the above without limit, where and when you want to do it just cant happen. For the vast majority of us, there wont be enough bandwidth for at will , unlimited downloads.

You heard it here first. In the next few years, if you have multiple heavy net users at home, you will be scheduling your internet time and downloads. Instead of Net Nanny at home, you will have Download Nanny on yours and the kids or roommates PCs. If your roommate tries to download a 2gb movie at 9pm, and you still have to work to do later, you cant face the risk of the connection slowing to a crawl and timing out . You are going to set Download Nanny to pop up the dreaded “I dont think so Tim” window that reschedules the download to whatever open time it calculates is available based on the average download speed at any given time of day for your internet connection.

We will reach a point in the next few years where we are complaining about internet speed all the time. This wont be a corporate issue, it will be a home issue. We wont be able to do all the things we want to do on the net how and when we want to do it.

As far as the idea that everything we will ever want to watch on TV, the concept of unlimited video on demand from the internet ? The videos will be out there, stored on the net somewhere. THe problem is, you wont be able to download them and watch them whenever you want. You will be able to download them when you have bandwidth available and can schedule time to do it.

Kind of like the way it workswith cable and satelliteTV PPV and VOD today

It will be fascinating to see how it all plays out.

45 thoughts on “Think the Internet will replace TV ? Think again

  1. Interent has changed my life and almost replaced TV.

    Comment by Bob Johnson -

  2. keep up the good work !!

    Comment by ed richard -

  3. its great to see some energy back in basketball. im a old celtics fan and have found all the nba got boreing until this year. congrads to both finals teams !

    ed🙂

    Comment by ed richard -

  4. well internet is fast becoming the newest and most advanced digital fad nowadays, I definitely think that its going to replace television, I wouldn’t have been able to meet my current girl in webdatedotcom in not for the internet

    Comment by thynoe123 -

  5. Consistent w/ this blog post, AP article this weekend (5/14) headlined “High-Definition Video Could Choke Internet” — http://news.yahoo.com/s/ap/20060514/ap_on_hi_te/net_neutrality

    Comment by JohnD -

  6. There was a Bloomberg article last Thursday that reminded me of this post and earlier ones on bandwidth concerns. The Bloomberg article (“Global Crossing Burns `Short-Sellers’ on Higher Network Demand,” 4/20/06) discussed the recent rally in Global Crossing’s shares “on higher demand for fiber-optic networks.” According to the article, Global Crossing’s stock has “climbed 41 percent since March 10, the date of last month’s short-sales statistics.” The article noted, “The company’s advance has been part of a rally by telecommunications-service providers including Level 3 Communications Inc. on speculation increasing usage of the Internet for video, music and telephone calls will boost traffic on their networks.”

    Comment by JohnD -

  7. “Business Week” on how YouTube is either “the next NBC or the next Napster”–
    http://www.businessweek.com/magazine/content/06_15/b3979093.htm

    New study of on-line video viewing habits–
    http://www.adage.com/news.cms?newsId=48501 (subscription required)

    Comment by JohnD -

  8. Mark and Craig are right – bandwidth supply is not going to change drastically over the forseeable future, while bw demand will grow (a lot).

    I also agree with the conclusions – the video experience won’t change much and consumers will resort to complaining, time-shifting and other avenues to satisfy the demands.

    I’d also like to add another related point. There won’t be large scale investment opportunities as a result of this bandwidth shortage. In other words, “cable bypass” will remain a pipedream for video entrepeneurs and their soon to be poorer investors.

    I’ve looked at this opportunity countless times and discussed it with many people. It keeps coming back to this… Why, exactly, will consumers unplug their video service?

    Yes, cable doesn’t innovate very well. And nobody really likes their cable co. But, they’ve got competition in satellite keeping them sorta honest. They’re finally doing DVR, and expanding their catalog with VOD. They’ll never do Long Tail content as well as the Internet but it takes alot to get consumers to switch.
    Is IP delivered video going to be cheaper? No.
    Better Quality? Definitely No.
    More selection? Yes.
    1 outta 3: Baseball odd’s…

    There are countless failed attempts at “cable bypass”. This started in the early 90’s (Orlando trial), was reborn in the late 90’s (broadcast.com – don’t get sensitive, mark. i know it was mostly about place shifting) and now a few device based plays (akimbo, iptv) are throwing their hat in the ring…I just don’t see it. And besides, even if it does catch on with consumers, I’m pretty convinced that the lion’s share of profits will flow back to the content owners who will view all revenues from the platform as cannabilistic to their existing revenue streams and extract the profits, accordingly…

    That being said, it’s exciting to see so much innovation with video happening (again) on the web.

    Comment by Jeff Schrock -

  9. There are a couple of tenants in computing that have held true and I always daresay will:

    1. The amount of storage available to a given user is about 2/3 of that they want, which is what they say they NEED.

    2. The amount of network pipe available to a given user will be about 2/3 of that the content-providers offer them. The user will say that they NEED to have more.

    3. Any new computer technology is counteracted by software and/or content that overwhelms it and spawns the next cycle. Lather, rinse, repeat.

    Comment by Charles Boyer -

  10. The Internet has already replaced TV in my life. Aside from major sporting events, I watch no TV, but after work, I can spend hours on the internet.

    Comment by Soccer Player -

  11. Video on Demand will replace TV when the bandwith is supported. until then video on demand online can be made available on a pay per view model, pay per minute. PPV with DRM to protect copyrights. for more on Videos On Demand check out XonDemand.

    Comment by Hoover -

  12. I touched my first computer as a 14 year old in 1967, and have spent my entire life in computing and networking for companies that were the biggest in their industry at the time (CompuServe and UUNET). While I haven’t done the math lately, I suspect that backbone network bit rates have grown at comparable rates to CPU speeds, for the reason that the underlying basic electronics are similar. Both networking and computing have similar usage phenomena as well — the applications grow to fill the available capacity.

    When the capacity exceeds demand, application developers tend to waste resources, focusing on what interests the user/customer first, and worrying about efficiency later (usually when aggregate demand grows to exceed capacity). No one worried about compressing modem communications, disk files, video streams, etc until the limits were reached and became annoying.

    It will be interesting to see what happens with audio and video compression. I’m of the generation that paid stupid amounts of money for turntables, cartridges, amps and speakers to get maximum fidelity. I have a 61″ Sony Grand Wega monitor because I’m looking for the same level of video reproduction that I get with my 25 year old audio system. But folks now as always have a choice — fidelity versus convenience. You can’t plug an MP3 player into my high-end audio system and get a sound that’s anywhere near the quality of what comes from a well-engineered CD. But my sound system probably weighs 200lbs, so I can’t carry it around with me. A portable radio was the best we could do when I was young.

    Interesting choice with video too. The best images I get are from HDNET (thank you) if the source is 1080i or better. Next to that, the local off-air broadcast is best because they don’t have to worry about last-mile bandwidth (although the signal from the network to the local broadcaster has been compressed anyway). One of the more technically advanced local stations made a brave (but I think stupid) choice during the first rounds of the NCAA tournament: they split their digital broadcast into 4 streams and showed four games at the same time. I guess they forgot that our local team (Ohio State) was still alive, and most folks would rather have watched that one game in HD than four games in SD.

    As I have posted here before, I tend to agree with Bill (#18) that there are some things which need to be broadcast in real time, but most programming can be broadcast when convenient. Once we get to the point where most people have a DVR, then on a 100 channel system, you can broadcast 100*24 = 2400 unique one hour programs every day and people just record them as they go by. Let’s say we need to drop from 100 channels to 25 to open enough bandwidth for minimally compressed HD, and you still get 24*25 = 600 one hour slots per day. I’d guess that the constraint at that point is finding programming. It will be like magazines — some shows are tremendous, most are crap.

    And there will still be a place for stuff streamed on demand from web server. While a program is still in the “off-Broadway” stage, it will stay on the ‘net. But if it gets really popular, it will shift to a true broadcast media because of the delivery cost.

    PL

    Comment by Paul Lambert -

  13. The big thing currently is that TV stations are fighting a rear guard action against the new players, and thus will lose. They are losing face time, and thus losing revenue. But if the broadcasters instead chose to become part of the infrastructure, then they could make quite nice revenue.

    There are a bunch of business models here, but i don’t forsee the current players transitioning to them voluntarily. It is going to come from some of them dying, giving up their broadcast licenses, and then new players moving in. This is too far outside their organisational character.

    Comment by Brett Morgan -

  14. This is a very interesting topic, especially with the growth of the internet and the need for more bandwidth. It will be interesting to see just how soon fiber will be introduced to every household.

    Comment by Tkeysites -

  15. Check out Broadwing.com.

    Comment by JC -

  16. Even my mom was able to follow http://www.mariposahd.tv/easy123 and download mariposaHD via BitTorrent. The independent series I helped produce is available for free download in 1080i, 720p, and ipod formats. So far so good with distribution across the world.

    Enjoy it.

    -Jeff

    Comment by Jeff -

  17. Irrespective of the pipe, channel or technology, you also need to look at the content. TV can be a social activity for a group of people in a room, whereas the interaction with the net is broadly with one individual controlling the I/O. The content differs this inetraction.

    Comment by ClickRich -

  18. Could they stop it? Not legally. I believe the end game to this move would be Cox takes away loser channels to make more space for data, and the rest falls into place over time.

    Comment by Tiany -

  19. The network can stay dumb, as long as the endpoints are smart.

    Content will not transition from all-broadcast to all-on-demand overnight. It will be gradual. What is easy to provision right now, is caching content at the neighborhood or set-top level – this can be done *right now* with those of us who have DVRs provided by cable or satellite providers, requiring only software upgrades. Oh wait – we do this anyway by setting our DVRs. TiVo users get content cached for them automatically based on their viewing history. DVR users already get content on demand with zero extra network overhead.

    All of the scenarios that the tiered-internet proponents prattle endlessly on about involve people demanding completely random-access to whatever content they want whenever they want it. In real life people are not nearly that random. They are, in fact, extremely predictable. These predictions can be used to deliver the vast majority of content before it’s actually wanted. There will, of course, be exceptions but those exceptions will likely be in the “under 10% of viewing” category, or will fall under the heading of live events. Existing infrastructure handles live events just fine. I watch sporting events, concerts, etc. in 1080i HD as they happen. I’ve been doing this for six years now.

    Tiered Internet is at best a solution looking for a problem, and at worst an extortion scam dreamed up by ISPs.

    Comment by Erik Carlseen -

  20. “In the next few years, if you have multiple heavy net users at home, you will be scheduling your internet time and downloads…. We will reach a point in the next few years where we are complaining about internet speed all the time.”

    Uh, Mark? Been there since 1994, bud. And since broadband penetration will NEVER reach about 30% of the US, there will be a significant portion of us that will stop using the web for anything past e-mail, since it will largely be unavilable to us.

    Unless we go to a South Korea model and make it a public policy to guarantee broadband access, the digital divide of the late 1990s will seem like wishful thinking as almost a 1/3 of the country becomes internet orphans, with dial-up as their ONLY option.

    And Comcast STILL won’t fire up their cable that ends at my mailbox…have I posted lately how much I hate that company?

    So I guess, long story short, you’re right. It’s just for a lot of us, we reached that point a few years AGO, not a few years from now.

    Comment by Bill -

  21. on tv will always be tv: a computer can easily be made as easy to use as a tv to its user. To the point the user need not even know the internet is involved.

    With a DSL connection, compression (400mb = 1hr divx video for example) and also the ability for your computer to continuously download content (even while not at home) could make all this a reality. Especially if the tv (computer) learns what you like and only predownloads that content.

    The idea that tv will not be on the internet in all blazing glory in the next 10 years is insane. Any and every person in this country that wants internet access can have it. Via a satellite, cellular phone connection, dsl, broadband or whatever the internet will easily reach the homes of everyone soon (its mostly a case of people not really wanting it or needing it right).

    Comment by rich -

  22. I agree, I think TV will always be TV. There will be those who barely can operate TV, much less a computer.

    Comment by Ron Wilson -

  23. “We will reach a point in the next few years where we are complaining about internet speed all the time.”

    I disagree with this, because companies won’t get serious about offering bandwidth-intensive video until the infrastucture is there. We won’t complain about services that don’t exist.

    Comment by gadget boy -

  24. The last mile bottleneck is real but solvable. Dropping loser digital TV stations is one way of freeing up bandwidth, another is to run fibre, another will be to put in dedicated download lines…and so on.

    Compression technologies are indeed improving. And biggish, easily transportable hard drives in the form of a USB key chain or an iPod are becoming cheap and ubiquitous. Realistically, when my neighbour and I want to swap kids’ movies we put them on a couple of old 20 Gig drives and sneaker net them down the hall.

    The real issue is creating a revenue model which is capable or recognizing that the mdeium of transfer is no longer in the hands of deep pocketed companies who could be sued for real money for copyright violation. Right now no such model exists. I-Tunes is a start; but until the MPAA is willing to recognize that the day of the $2.99 feature download is about the best they can hope for, “free” is going to be the only price term file sharers understand.

    Which bodes ill fo the content biz as it is presently constructed.

    Comment by Jay Currie -

  25. It doesn’t have to be an all or nothing proposition. Certainly there is time sensitive content like sports or breaking news that will always be best if broadcast, either OTA, cable, sat, or IPTV multicast. And there will also be a very large group of people that don’t have broadband. But for everyone else, most video content can be viewed in non real time.

    Mark’s point about the bandwidth just not being there is ture, but I believe that there will be an incredible consumer demand for more and more bandwidth, and the networks will have to build out, and it will happen sooner rather than later.

    The only way it is holding together right now is because the network operators are effectively throttling the content that is already out there, i.e. carefully chosing what content they offer, but not nearly all that is out there. But if HDNet or others offered their service through IP, even though Cox doesn’t carry it as TV channel, I would then suck down bandwidth through my ISP on a unicast feed, making even less efficient use of the available bandwidth.

    So with iTMS and others offering what amounts to TV programs over IP, we are already circumventing the TV offerings from our tradiional TV network operator. That WILL expand to the bursting point, and the ISPs will scramble to build out. How long do you think it will be before iTMS offers larger resolution than 320×200? Do you think they have an iPod with a larger screen in the works? Will there be others (M$) that are moving to get in the game? (A:Soon, Yes, Yes)

    As for the non cable options, DSL bundled with sat is attractive. Get your broadcast/multicasts through the sat, and everything else though DSL. Did I mention that the new DirecTV box they are giving away comes with a USB 2.0 jack on it? Others have predicted a round of baby bell aquisitions that could even swoop up Echostar.

    There are lots of ways that transitioning to IPTV can happen in short order, in spite of the lack of bandwidth.

    Comment by Bill Paul -

  26. All good thoughts, but I too feel that TV is far from being a dinosaur. Even with compression, caching and etc, these will not provide the integrity for live simulcasts, e.g. the super bowl in HDTV. Bandwidth is not the only issue. Distance will be an issue as well, especially in rural areas, this will cause so much latency that you would be able to listen to the 1st quarter of the game on the radio before you see it on the TV. The only true real time content that can be delivered will be to those closest to the provider. Sure peer to peer technology is improving, but if you get a source that begins in Florida and you are in California, how long will it take to receive your data, with all the network congestion? The result will be people will still need satellite or TV Antenna’s to watch live content, with all that infrastructure to support, I cannot even imagine how much the consumer will pay, thus TV stays fairly similar for years to come.

    Comment by Scott R -

  27. As a good case study in Mr. Cuban’s concern over bandwidth, see Paul Kedrosky’s post here– http://paul.kedrosky.com/archives/2006/03/19/march_bandwidth.html Also, Kedrosky references a “Washington Post” article available here– http://www.washingtonpost.com/wp-dyn/content/article/2006/03/15/AR2006031502707.html

    (Earlier musings by Kedrosky on television availability through the Internet failed to mention bandwidth concerns. See what I linked to in comment # 10 on this thread.)

    Comment by JohnD -

  28. No, I never thought the internet would replace the TV. Only a moron would think that.

    There is a better chance of mustard gas replacing the nuclear weapon.

    Comment by JR Ewing -

  29. The thing is I think it won’t be the telcos and cable ops that push the IPTV envelope, it will be the consumers. There is nothing stopping the consumer from buying a network media player now, and there is nothing stopping a virtual network operator from offering a set top box plus programming bundle, piggybacking on your existing broadband connection. With nothing to slow that down, the demand will grow whether anyones likes it or not.

    All the current big network operator players will do their best to corral the consumer into their walled gardens, but the internet brings too many options to effectiviely control the delivery of the content. The consumer will choose the best $$/Mbit they can get, which puts the cable and telcos in a pickle. Advertise data rates or advertise TV services? Cox is advertising 9Mb here.

    So if some Mark Cuban biz venture came along and offered a set top box/DVR for $199 plus $30/month, with 150 decent channels, he could turn some heads, and most likely generate some subscribers in large numbers. Predictive caching, trickle streams, and order your show in advanace can keep the instantaneous bandwidth reasonable.

    Would Cox like that? Certainly not. Could they stop it? Not legally. I believe the end game to this move would be Cox takes away loser channels to make more space for data, and the rest falls into place over time.

    Comment by Bill Paul -

  30. I agree that what I described is much more compatible with a younger demographic. Also, consumers are probably not willing to trade their time in exchange for content. But that’s one point that I was trying accentuate with my example. I don’t think queueing content to view at a later date is a negative, necessarily. You’re not utilizing your bandwidth while you’re at work or asleep for anything important. I think it’s true that if people are willing pay, they want downloads to work fast. But we also have to consider the different ways to pay. We know that nobody really wants to pay with their time. People are willing to pay by watching ads, though. But that goes back to an argument that you’ve made in the past that I agree with. Since people want media cross-platform and on-demand, there are obviously going to be different products you’re selling them. You can sell them IPTV, low res streaming TV with an ad on a web page, portable high-def content, or whatever. My point is that the market is fragmented and you can now accomodate these different segments with different offers.

    Right now, you see incongruency with current forms of digital distribution compared to what experts expect in the future. Most companies do what MTV has done and use their online content as a supplement to their regular programming (MTV Overdrive). Others are actually put their original content online (CBS with the tournament, ABC/Comedy Central on ITunes, Comedy Central with The Office webisodes). But my argument wasn’t against what you said about IPTV, it’s about TV being delivered in the same way for a long time to come. What’s stopping companies from making the content available as SVCD CD images right now? It plays on 99.9% of DVD players and most people wouldn’t notice any difference between that and a DVD. You can fit an entire 2 hour movie onto a CD in KVCD format and you really can’t complain about the quality of that. That would download in few hours on any non dial-up connection. Combine that with a stream and you have portability without sacrificing quality.

    Aside from the example of college students, citizens of other countries are doing their best to circumvent artificial windows. A study done by Envisional said that 18% of TV downloads come from the UK and 16% come from Australia… with the US accounting for only 7%. It’s clear that there’s a market for non-streaming IPTV, if you can call it that.

    I just have the same problems with “big media” that you do. Their desire to control their content through windows and distribution is generally a bad business practice. You can’t support production costs of a telelvision show by just selling it on ITunes and you probably never will be able to do that. But the market of foreign viewers (torrent downloaders) that currently outnumber US downloaders 93% to 7% (same Envisional study) respectively shouldn’t be overlooked.

    My argument is that people are trying to look past what’s happening right now. There has to be some middle step between TV now and IPTV. I have a hard time believing that a lack of consumer knowledge will lead to a direct transition to IPTV. With more options emerging on a daily basis, I think we can expect that the long tail and its fragmented preferences will have its say in digital distribution.

    Also, is HDNet always bundled with ESPNHD or is that a Time Warner Manhattan thing? Just curious.

    Comment by Chris Duncan -

  31. the telcos want us to think there is not enough bandwidth, but there is… they just want the ability to charge more for it. they just need to work on best way to handle the traffic… they also need to get more market penetration (more customers) instead of acting like the market growth has stalled out. ironically, the more devices that can be used for downloading video, etc, the more $$ the telcos stand to make.

    Comment by Shawn -

  32. Mark, you suggest that we’ll be dragging hard drives to the video store. As the old saying from 1970s computer science circles goes “never underestimate the bandwidth of a station wagon”. Still applicable today. Funny how so many so-called smart people aren’t wise enough to see the problems you see.

    Comment by Brad Hutchings -

  33. Paul Kedrosky on the increased availability of traditional media content through the Internet (i.e. NCAA tournament games on-line)– http://paul.kedrosky.com/archives/2006/03/18/daytime_as_the.html (And the article on the subject from “The Economist” that Kedrosky references– http://economist.com/business/displaystory.cfm?story_id=5637169)

    Comment by JohnD -

  34. Chris
    you make some great points. And for the college crowd, those on university networks in particular, you are right. Your PC is your TV or already connected to it. Its no big deal. Thats dorm life. Or roommate life where your personal media consuption is in your bedroom.

    Hit the workplace. Get an apt. Get your regular cable modem . Have your 9 to 5 or more eaten up by work and other responsibilites beyond then, and your use of time changes.

    Your time becomes your most valuable asset. Each and every year it gets more valuable.

    So while you are prime demo for advertisers, and we are seeing them spend money on the net to get you. While you are the optimal users of technology, if you look at the majority of content being delivered today and how its delivered and to who and where, you guys are in the minority.

    WOrk done at home is exploding. The reliance on bandwidth to speed that work being done at home is growing faster. Dinging the roomies for only 50k is cool to let movies download overnight works great when myspace and homework and downloads are the primary use of your bandwidth.
    Its not as good when you and your roomies have jobs that require you to send and receive multi megabyte files for work where and when you need them.

    Plus, bit torrent is cool when it works. And its ok to start and restart downloads when they are free. When you decide to pay, you want it to work and work fast.

    Personally, i think we are going to ship around hard drives, or people will go to Hollywood Video and just pay to load up the hard drive with movies.
    Walking or driving to the video store and loading up is faster, cheaper, better and will be for the next 5 years or so. Particularly as users start expecting HD.

    Comment by mark cuban -

  35. Hey Mark,

    Besides being a market trader ( http://www.mysharetrading.com/ )myself, I’m an electrical engineering student.

    There is a technology on the horizon already that can transmit / receive broadband internet through your GPO ( General Power Outlet ). Imagine that – just plug your power on and you’ll have the internet.

    If you want more information contact the Engineering department from my university. http://www.eng.uts.edu.au

    Comment by George Polizogopoulos - Trader -

  36. The pipe is not the problem, because people will wait for something free. If we’re talking about a online distribution model, just look at piracy. People have ALWAYS been forced to wait for their content in that setting. When dial-up was prominent, pirating groups made sure that the downloads were in chunks of 1.44 MB to accomdate floppy disks and ensure that broken downloads would not ruin a transfer completely. With the rise of our current broadband system, they usually come in 15MB chunks that are extracted and come together as one CD image. Still, a connection that can’t accomdate streaming (that’s what we’re talking about here, isnt’ it?) is not necessarily a negative. People in their teens and 20s now have absolutely no problem with time-shifting. It’s about delivering content for younger people, not necessarily porting television to their computers. Plus, current broadband connections are being seriously underestimated. People are willing to order a movie from Netflix and get it the next day… and that’s amazing. But downloading it over night is bad somehow? Let’s just put it into raw numbers here. If you can get 50KB/s (which is more than enough to have a family/roommates comfortably surfing), then you can do a 2 gig download in 11 hours. That can easily be supported by torrents and they are far from perfect. A marketing research survey I did with NYU Stern students found that nearly 75% of respondents had watched a movie for the first time on a computer. While that discounts the fact that converging home entertainment environment will allow for streaming of video from your computer to TV, it still emphasizes the changing habits of our younger generations. IPTV won’t replace traditional television in terms of lowest common denominator entertainment, but I think we can expect them to take a significant hit from niche-targetted and interactive content. I think that the argument Mark makes carries weight when referring to “channels” moving to IPTV. However, I think that we can also expect that consumers will be more receptive to shows as brands and an individual entity. Basically, my point is that serialized content on its own would have little trouble being successful if it could capture its niche audience.

    Comment by Chris Duncan -

  37. The pipe is not the problem, because people will wait for something free. If we’re talking about a online distribution model, just look at piracy. People have ALWAYS been forced to wait for their content in that setting. When dial-up was prominent, pirating groups made sure that the downloads were in chunks of 1.44 MB to accomdate floppy disks and ensure that broken downloads would not ruin a transfer completely. With the rise of our current broadband system, they usually come in 15MB chunks that are extracted and come together as one CD image. Still, a connection that can’t accomdate streaming (that’s what we’re talking about here, isnt’ it?) is not necessarily a negative. People in their teens and 20s now have absolutely no problem with time-shifting. It’s about delivering content for younger people, not necessarily porting television to their computers. Plus, current broadband connections are being seriously underestimated. People are willing to order a movie from Netflix and get it the next day… and that’s amazing. But downloading it over night is bad somehow? Let’s just put it into raw numbers here. If you can get 50KB/s (which is more than enough to have a family/roommates comfortably surfing), then you can do a 2 gig download in 11 hours. That can easily be supported by torrents and they are far from perfect. A marketing research survey I did with NYU Stern students found that nearly 75% of respondents had watched a movie for the first time on a computer. While that discounts the fact that converging home entertainment environment will allow for streaming of video from your computer to TV, it still emphasizes the changing habits of our younger generations. IPTV won’t replace traditional television in terms of lowest common denominator entertainment, but I think we can expect them to take a significant hit from niche-targetted and interactive content. I think that the argument Mark makes carries weight when referring to “channels” moving to IPTV. However, I think that we can also expect that consumers will be more receptive to shows as brands and an individual entity. Basically, my point is that serialized content on its own would have little trouble being successful if it could capture its niche audience.

    Comment by Chris Duncan -

  38. What I think you’re predicting is a digital version of Tivo’s time-shifting, in a sense. I could “subscribe” to the content I want to watch each week, and it would be delivered as bandwidth is availble. That would work for me, anyway.

    I think one thing that will have to happen, though, is that cable/DSL providers will have to embrace P2P technologies: right now, as I understand it, there’re boxes in neighborhoods which act as hubs/routers/switches for the broadband and digital cable connections in that neighborhood. Why not add BitTorrent-like firmware to those boxes, along with some storage, to distribute the content-download load? That way, if a lot of people in our neighborhood want to watch, say, Desperate Housewives’ ExHusbands (the spinoff show), it would be coming from the local P2P client, not all the way from the cable office where the head-end received it.

    Comment by Tim -

  39. Mark,
    The thing you’ve missed out on is distributed downloading. Think Bit Torrent. It won’t provide “unlimited” bandwidth, but it will allow us to download shows that are popular within our local network. It makes cross-country backbones less relevant to this discussion.

    Comment by John Dueck -

  40. I think it’s somewhat shortsighted to think of the future expansion of “bandwidth” only in terms of what the wires will carry. Do we really need to be wired to be “wired”?

    Comment by Peter T Davis -

  41. I have to disagree with you on this one Mark.

    There are two points you are not considering, that I think are going to make a big impact.

    1. Compression technologies continue to become more efficient. Go check out some 1080p movie trailers at Apple using their H.264 CODEC. Theses 1080p clips perform beautiful quality at less than 10Mbs and 720p is around 6Mbs. This will only get better, the trick is to leave the architecture open to new CODECs, unlike the ATSC spec.

    2. Cable already has enough bandwidth to do whatever they want. It just so happens that they are using it to send all those cable channels to you today. Using some simple math a single coax in the home at todays technology has the ability to carry over 5Gbs (that is a G as in giga). With newer versions of encoding this only gets better. Here is how it works. In most Metro areas today they are running on a 900Mhz cable system. Each analog channel takes up 6Mhz and using QAM256 the same channle can carry approximately 45Mbs. You can do the math, but the point is that if the cable companies want to go to “On demand” programming or supply big Throughput for Internet, they have more than enough bandwidth to send you whatever you want.

    The problem is not the last mile bandwidth, but the technology and the backbone, where does the media come from how is it controlled? To your point TCP/IP is not that great at carrying Video content, it is inefficient. But the reason is not the last mile it is the backbone infrastructure. The telcos might not be ready but the cable co’s have been ready for some years now. They saw this coming when they starting building for the first wave of broadband.

    Thanks for the interesting insight, I found it very intriguing.

    Ben

    Comment by Ben Drawbaugh -

  42. Remember 5 years ago when baseball signed a shared revenue agreement for income generated through the internet? That was a small blip on the radar, and some laughed at Selig. I thought the agreement would eventually bring financial equality into MLB (like for the NFL) so teams in Kansas City and Minnesota can survive. Back when they signed it, I pictured something 20 years away when shared revenues would eliminate the Yankees-Dogders-RedSox-Met spending domination. So I placed my MLB watching on hold for some time. Hopefully the cash equalizing can take place sooner. Until then, baseball will be off my radar.

    Here is a link to an article on MLB shared internet revenues: http://www.tnr.com/doc.mhtml?i=w050221&s=marchman022205

    Greg

    ps-Mavs just moved to #1 on BoxScoreBasketball.com’s objective rankings system.
    http://www.boxscorebasketball.com/topten.htm

    Comment by greg -

  43. I don’t think queueing content to view at a later date is a negative, necessarily. You’re not utilizing your bandwidth while you’re at work or asleep for anything important. I think it’s true that if people are willing pay, they want downloads to work fast. But we also have to consider the different ways to pay. We know that nobody really wants to pay with their time.

    Comment by wow powerleveling -

  44. I’m sure the internet will replace tv in the next couple of years. And I don’t think you need huge bandwidth to watch tv online. There are plenty of sites where you can watch free tv online and even listen to radio channels, like http://www.tevootv.com . Heck, this one has free HBO and even Al Jazeera!

    Regards,

    Comment by Richard -

  45. WOrk done at home is exploding. The reliance on bandwidth to speed that work being done at home is growing faster. Dinging the roomies for only 50k is cool to let movies download overnight works great when myspace and homework and downloads are the primary use of your bandwidth.

    Comment by runescape money -

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