Don’t Waste the Internet on TV – Protect the Future of the Internet

I had a very enjoyable debate with Avner Rosen of Boxee yesterday at SXSW.  We tended to go around in circles defending our positions. His (to paraphase): the internet will do what cable and satellite do, but it will do it better. That MicroSoft and Apple among others will in the future come up with new ways to do it all better than we can now.

Mine: Of course the internet can support video, but it cant do it as well as the current digital cable and satellite distributors can, nor is there a profit model that would ever incent content providers to switch their content from the internet to TV.

I wont rehash it all here, but the most salient comment came from the audience when someone asked “Whats the difference if the gatekeeper MicroSoft/Google/Apple rather than Comcast/Time Warner/Directv/Dish ?”

Of course the questioner was right.

Bits are bits . The economics of content are going to search for the best place to be monetized, regardless of the delivery platform.  I think the current model will be the place content finds, Avner seemed to feel it would be some future internet.

It shouldn’t matter.

We both seemed to agree that one of the biggest future changes for the internet will be an increase in bandwidth. The question the needs to be answered is “how will all the new bandwidth, both on the backbone and in the last mile be used ?”

Will it be used for digital video content, ie, TV ? Why would we want it to be used for TV ?

The internet has the opportunity to continue to be transformative. There are applications out there that can change the quality of our lives.  Im not talking about the ability to update your facebook, or check out what where everyone is at on 4Square and twitpic what is happening to your friends and followers. Social Media is one more amazing communication platform that is impacting our lives. But its not tranformative.

There will be transformative applications that need all the bandwidth they can get. Medical, Transportation, Defense, Gaming, Simulations and who knows what. As computers become more powerful, we need to be able to send more data to the cloud where they can crunch data and return it to us.

That is the value of an open internet. The things we cant imagine today. The applications that are just dreams because  they dont have enough horsepower and bandwidth to work today. I want the internet to be a platform for amazing. Not Gilligan’s Island reruns.

I recognize that with openness comes the risk of the least common denominator dominating.  Porn has just as much right to dominate the net as any other app. But should it ?

Yes it should. The lesson of TV over the internet vs TV over digital cable or satellite isnt about openness. Its about the value of Application Specific Networks. DIgital CAble is an application specific network. Its only job is to serve up content and it works very well.

The FCC needs to recognize this and start working with internet broadband providers to define tunnels,  Private Virtual Networks  or just plain reserved bandwidth that are saved for future applications. When a transformative application presents itself, there should be an opportunity to define the network to optimize that application.

In the event some form of ubiquitous entertainment comes first ,  takes over the net and saturates it, how is the FCC going to solve the bandwidth traffic jam ? They wont ever be able to put the bandwidth genie back in the bottle. Screaming at broadband providers to spend the money wont work any better than screaming to expand highways helps to alleviate rush hour traffic

The FCC wants Internet 2 at universities to flourish and develop new things. But where are they going to roll them out to if all of our bandwidth to the home is being used for some new form of 3D virtual fantasy sports?

I just dont think these things will just manage to take care of themselves.  The reality is that when we run into future internet application roadblocks our politicians will jump in the mix and attempt to “solve” the problems. You know where that will get us.

We need to start the process now of putting some bandwidth to the home away for a rainy day. Not only do we need to preserve bandwidth in the last mile, but the FCC also needs to  figure out a way to create a transparent market or exchange that allows competing applications a means of knowing how and when they will have access to bandwidth when, not if,  it becomes constrained.

And if you really want to make things interesting, the company that is doing the most work on realtime markets and competing for resources that i know of ? ….. Google.

Deal with it today or struggle with it in the future.

55 thoughts on “Don’t Waste the Internet on TV – Protect the Future of the Internet

  1. Pingback: TV over IP: Bricht das Netz zusammen? | Digitaler Film

  2. Pingback: Gofastle Global News » GNC-2010-03-15 #559 My SXSW Wrap up!

  3. I think Mark’s assessment is correct for the current state of the web. He is spot-on to consider the ramifications of moving too much programming bandwith into the web with the limitations it has today, but this is clearly the direction in which we are headed.

    Even TimeWarner and Comcast are in favor of the TV Everywhere concept which will continue to drive in this direction.

    If we reflect on other industries that have faced this kind of issue we had the following:
    * Automobiles – Henry Ford building a car for every household at a time when roads were very low quality and not ready for the onslaught of vehicles.

    * Internet – America Online pushed dial-up telephone networks to their limits due to extended off-hook times that ran the phone network batteries dead.

    Roads are much better now and the phone systems were upgraded…just in time for us to stop using the home phone.

    These and numerous other examples underscore Mark’s suggestion that a plan be put into action to address the future demand on the internet. I’m sure the service providers are working toward serving this demand.

    In general I think Avner’s view aligns with consumers’ expectations, and service providers will find a way to address how to deliver it to them.

    I share Avner’s view in this regard – beliveing that once we get our training wheels off and have our HDTV and handneld devices all linked to the Web, the quality of the roads will rise to meet our needs.

    Comment by bobboots -

  4. Pingback: Avner Ronen: The Future of TV - PSFK

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  6. Pingback: The Future of TV – When Boxee along with the Internet is not in the Circlee with the Ball | TechYell

  7. Hey Mark

    I saw your debate @ SXSW and followed up with a post on our blog – thought you might want to see what one interested observer took away.

    https://fivewords.mckinney.com/post/2010/03/22/the-fight-for-your-tv.aspx

    Cheers,
    Trevor.

    Comment by trevorobrien -

  8. Pingback: Google Tries TV « The Media Mash-Up

  9. Pingback: The Future of TV according to Avner Ronen/Boxee | The Wadi

  10. “If the net was the end all be all for content, you would see a bunch of people releasing movies that cost millions or more on the net instead of in traditional outlets. YOu dont. Until you do, the old approach wins”

    Strawman alert! Of course no sane person wants to release a multi-million dollar movie on the net INSTEAD of traditional channels. Moreover, no competent person says the net can scale to REPLACE cable NOW, and nobody who can add thinks incentives exist NOW to make people SWITCH to OTT. All of the technical challenges you’ve cited, however, can be solved, and I believe they will. Even you hedged at the end of a post (“Think the Internet Will Replace Cable…”) by leaving open the possibility that it could happen in just a few years. And when the technical challenges are solved, new services will be enabled, and consumer behavior may change as well.

    I agree with you that LG would likely seek to reduce risk. But if OTT distribution becomes the norm, then LG will need AMC much less for distribution (or not at all). Risk can be reduced in other ways, like finding someone else with cash. AMC would have less power in the value chain. When you have less power, you tend to get less money.

    CDs were vitally important for any music biz in 1998. CDs are still important now, but a hell of a lot less so. Technology has enabled new distribution channels, shifting power away from traditional gatekeepers and middle men by making their distribution function a lot less important. The result hasn’t been great for those middle men (i.e., the major record labels). With OTT, I think we’ll see another power shift.

    JimmyDaDa

    Comment by jimmydada -

  11. A quick follow up on this:

    “The current model of paying a monthly subscription for a large bundle of ad supported channels will have to change in the future. I think more and more shows/channels/studios will have to adopt the “HBO pay-tv” model to support their business.”

    Free TV provides family time, the televeision is one of the last truly communal experiences modern society provides – asking people to pay for this kind of experience after 50 years of primarily free content excludes the social discussion which is intrinsically connected and additionally excludes projects on cost of living increases and the shrinking middle class.

    Comment by satyricon1969 -

  12. “The current model of paying a monthly subscription for a large bundle of ad supported channels will have to change in the future. I think more and more shows/channels/studios will have to adopt the “HBO pay-tv” model to support their business.”

    This doesm’t make sense to me personally – The attractiveness of free TV is that it’s free and spnsors can reach a highly focused demo. Personally, I don’t think this will change. I also disagree with the posistion that Carriers will never find a way to develop rev streams based on porting Intenet conent on to your TV. Developing exclusive content, clipping and repurposing content specifically for use online and proviing a couch-based experience to experience that in could and would prove extremely valuable for some – not all – but some networks. 80% of some network demo’s are multi tasking when they watch anyway. In basketball you watch the players feet – I think in terms of this discussion we need to look specifically at attention span, viewer behavior, demographics and use that to specify the possibilities more accurately.

    Comment by satyricon1969 -

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  14. Or apple get’s direct OEM relationship with TV manufacturers.

    Comment by satyricon1969 -

  15. Pingback: Don’t Waste the Internet on TV – Protect the Future of the Internet | Mark Cuban | Voices | AllThingsD

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  18. The current model of paying a monthly subscription for a large bundle of ad supported channels will have to change in the future. I think more and more shows/channels/studios will have to adopt the “HBO pay-tv” model to support their business.

    Cable rates keep going up and up because networks are making less and less money on advertising, and that’s due to an unlimited supply and audience fragmentation. The ABC/Cablevision feud, ComcastVersus/DirecTV feud, TimeWarnerCable/FOX. As their ad revenue continues to sink, they’ll raise their rates to compensate, and if consumers cable bills keep getting higher and higher, and they realize at the same time that they only watch a dozen of the hundreds of channels they get, they may “Cut-The-Cord”.

    This will ONLY happen when alternatives like Boxee, or AppleTV become much more attractive than they are right now (basically, they need local LIVE sports delivered over the internet, which probably won’t happen for awhile).

    Personally, i’m thinking Apple will have an upgraded AppleTV with an app store and a Nintendo Wii-like controller which will sell 50 million units in a few years. BTW, I’m getting this advertising collapse from Bob Garfield’s “Chaos Scenario” theory, i’d love to hear a discussion between Mark and Bob on that.

    I also agree with Mark that RIGHT NOW the Internet is NOT a better delivery medium for video, but networks will improve and I bet 10 years from now you can have 100 million LIVE 1080p streams of a single sporting event delivered over the internet.

    Comment by thnewsom -

  19. Pingback: Boxee Blog » The Future of TV

  20. Instead of bringing the TV to the internet bring internet content directly into the TV. You can market content through the web and monetize and command a higher CPM.

    Comment by satyricon1969 -

  21. From a multimedia or transmedia angle you could dedicate the bandwith based on media type.

    Comment by satyricon1969 -

  22. It makes convergence irrelevant. the question is who will be the first to perfect the model.

    Comment by satyricon1969 -

  23. “the most salient comment came from the audience when someone asked “Whats the difference if the gatekeeper MicroSoft/Google/Apple rather than Comcast/Time Warner/Directv/Dish ?”

    Of course the questioner was right”

    That was me. Thanks.

    Without a compelling reason to do so, customers rarely change accustomed behaviors.

    Comment by wackywebname -

  24. Pingback: Digital Society » Blog Archive » Saving Bandwidth For A Rainy Day

  25. the way to reserve bandwidth to the home is to put fiber to the neighborhood or home. Several of the cable companies have done this and now getting more bandwidth is just a matter of getting the latest DOCSIS modem.

    I used to work for “the” phone company and more recently at&t used to have all of my business. The cable company pricing for internet blows away at&t. cox has my home phone and verizon/droid has my wireless.

    Comment by allenc417 -

  26. Please, for the love of humanity, stop camel-casing Microsoft. They stopped doing that eons ago.

    Comment by Brade -

  27. “From MC>cutting the cord is popular among about 17 people. But its not as bad for cable as you think. Why ? Because if you truly do consume tv you find out very quickly that unless you want to watch old shows and movies on Netflix, that you spend more buying it ala carte than you do with a basic cable subscription”

    Just because I’ll pay the same or more doesn’t mean it won’t be bad for someone in the value chain. Example: Lionsgate begins thinking that it’s the brains behind “Mad Men.” So, it decides to bypass its co-production partner, AMCTV/Rainbow, as well as the MSOs, to go directly over-the-top (OTT) to consumers. I might still pay the same for Mad Men, but Comcast (or another MSO) looses at least some control, and it’s pretty fricken bad (i.e., disruptive) for Rainbow. So, if OTT becomes the norm, there will likely be lots of disruption for some, and probably opportunities for other.

    Best,
    JimmyDaDa

    Comment by jimmydada -

    • except that there is no way LionsGate does it. Why ? because they assume 100pct of the risk. They eat the production costs of millions of dollars per season and they they hope and pray they sell enough of it to cover costs. Not a good business. Just ask the movie and music industry.

      Right now AMC pays them per eps. They still may have to deficit finance the show, but they know exactly what their risk is. Until the risk equation changes significantly, the model wont change very much at all.

      If the net was the end all be all for content, you would see a bunch of people releasing movies that cost millions or more on the net instead of in traditional outlets. YOu dont. Until you do, the old approach wins

      Comment by markcuban -

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  30. Internet is a huge term to describe, a big network that based on a specific communication protocols. The problem with the Internet is that it’s working on several layers in parallel and each layer has its own downside.

    The bandwidth you talked about is related for many of the layers. I always think about bandwidth as type of a big pipe that lets all the communication to go through it.
    The problem with this pipe is that it’s not big enough for our needs and dreams as you said.

    In order to make this pipe grow we need to support it in most of the layers.
    For example, it won’t be enough to change only the wiring because we will need special devices like routers that not exist yet to support the new speeds and then we will need to make changes of the basic protocols so so the new devices will be able to deal with it. These changes will cause users to update their operation systems to support the new protocols.

    The good news is that companies all over the world are working on all the issues mentioned above.Only last week, Cisco revealed its new router that the people is Cisco claimed it will change the Internet world as we know it.

    A new IP protocol was already developed and all the new devices and operation system support it already so we can see that the world is getting ready for the big change.

    It will take some time but finally this pipe I mentioned will grow and when it will happen it will become a legitimate application specific network like you said in your post and there will be no difference between Cables, Satellite, the Internet or any other application specific network

    Comment by Elicoi -

  31. Mark,

    You are starting to sound a bit out of touch. Every post these days is a doomsday prophecy about how we are running out of bandwidth. Surely you remember when a 14.4K modem was blazing fast?

    It is a simple reality that technology marches forward, and the more bandwidth people consume, the stronger the incentive becomes for people to develop new and innovative ways to satisfy the demand.

    There are real physical limits to how many bits/s are necessary to deliver an exceptional audio/video experience; after all, there are only so many pixels per square inch our eyes can see, and only so many bits/s our ears can hear. There is however no such limits on the amount of bandwidth future technology will be able to deliver.

    In 10 years, the 10’s of Mb/s internet providers are able to reliably deliver today will be laughably small; just like the 14.4Kb/s of the 90’s are today…

    From MC> Actually, 14.4 was never fast. More importantly modems are a bad example. If you what you said was true about technology marching on, we would just see faster and faster modems over traditional telephone lines. Better technology, right ? But, there was a physical limit on how fast modems could go over copper phonelines. Then the limit was reached and phone modems died. Thats why you never saw anything above 56k A better solution was needed.

    And there was DSL, Which hasnt died, but hasnt blossomed into unlimited bandwidth either and has real distance limits. Now we also have coax and fiber. there is plenty of room for bandwidth expansion there, but its not cheap.

    At some point in the distant future we will see gbs to the home, but its going to take a bubble in a market that rewards it in order to support the financing required.

    Technology does indeed march on, but it doesnt alway march in the formation you want it to. Its amazing to me how little about the network alternatives that people involved with the net truly know

    Comment by xier03 -

  32. Hi Mark:
    Great commentary on the true potential for increased bandwith.
    Since you were one of the Internet TV pioneers with Broadcast.com-your opinions were especially interesting.
    While watching mindless viral videos on YouTube is escapism for some-it’s certainly not the “highest and best use” for what more bandwith,processing and storage can do for Web 2.0.

    Comment by predictiontracking -

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  34. The thing you always seem to miss Mark is this…

    Internet is brought into most homes on the exact same pipes as cable/sat. It’s essentially the same thing, and it’s also essentially those pipes that limit internet and what we are referring to as TV. They are one in the same, and the old process of TV is not as effective as even over the air digital (i.e. I can get higher resolutions with a contraption of coat hangers for free) and is actually wasting the bandwidth it takes up on those pipes.

    I don’t care how TV shows get to me, I can watch them anyway in the same resolution on my TV via internet or cable or over the air, all that matters in the end to the consumer is if it’s a good price and convenient to view how they want (Hint: Cable & Sat are not in most cases either). Don’t forget here that you as a cable network (and providers) work for us, so stick to your guns… but if someone else comes along with other options (we’ve been handcuffed for years), don’t be surprised when people actually like and want to try options.

    From MC> Of course you dont care how you get your TV. Why would you? The question is whether or not you care if you get other applications that might be displaced so you can watch TV over the net.

    Comment by Randall Jenkins -

  35. The number one single greatest issue I have with my cable provider is the remote control. Sometimes I’ll press the 10 second rewind button, you know the one with the little loopy arrow thing, and nothing happens. I’ll press it like 10 times in a row, and nothing will happen. But then all of a sudden, like a minute later, it will jump cut backwards in time about a dozen times or so, all in 10 second increments, hence turing the thing i’m watching into some kind of alt rock music video from the 80s. it’s as if the remote / receiver remembers every button I click at one moment, then decides to unleash a fury of commands well after I had given up on what I had actually wanted to do in the first place.

    So in the future, whether it’s content delivered from TV or internet, can we please get remotes that work?

    Comment by nathanielpark -

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  37. I will side with Jeff on this and submit that FCC regulation of internet bandwidth is unlikely and more so unnecessary. At the risk of dating myself, I’ll point out that had the pleasure of working with Vinton Cerf on one of the world’s first large-scale global commercial applications for the internet and I would wager to say Vint would balk at the notion of FCC regulation.
    One perspective to keep in mind is that FCC regulation of airwaves was absolutely required to avoid interference i.e. to keep the very limited allocated ‘pipes’ free and clear for the broadcasters. Note too in the radio domain, there are very few broadcasters (compared to the consumers) and the information delivery was based on a push model. Broadcasters had to pay to get rights to their rights to the transmission pipe. In internet is more of a pull model. Demand volume on the internet pipe is based on the consumer requesting the information. The publisher has little control on the rate of information being used over the internet. And unlike limited radio frequency bands, ‘potential’ internet capacity is unbounded.
    At the end of the day, the utilization of the internet comes at a price. That price is being paid for by both us the consumers by our subscription packages for DSL, cable, etc., and by the organizations that wish to deliver the content to us. So the open market will self-adjust and provide the bandwidth needed based on demand.

    Comment by classicax -

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  39. P.S. We’ll never run low on bandwidth. There is a supply of bandwidth. There is a demand for it. And a price. These three factors will adjust in the internet provider market place the same way they adjust in every marketplace in existence.

    What might be next is a billing method that differentiates between types of surfing and different bandwidth-using activities and thus applies a different billing structure according to the activity.

    Comment by Jeff Nabers -

  40. Mark,

    Where would the internet be today if 10 or 15 years ago the FCC came in interfered with internet in one way or another?

    Where will the internet be tomorrow if the FCC comes in and interferes with the internet?

    The idea that the government or any person or group of people can know what the market needs is preposterous. We became the most powerful country in the world very quickly in a period of very free markets.

    As our markets become less and less free, we lose wealth and power. If the FCC interferes with the internet by following the advice of you or anyone else, it will be the nail in the coffin of the US empire, economically speaking.

    I agree that transformative applications are what’s next, and I’m excited!

    What the market wants, it gets. Mobs of people can be stupid. But a bunch of people wanting to slouch around and watch TV aren’t going to take opportunity away from productive companies with large buying power. Couch potato Joe isn’t going to pony up lots of money for internet TV because he has very little. Google and others will. So they will not be denied their bandwidth needed to deliver the transformative solutions you mention.
    :-)

    Jeff

    Comment by Jeff Nabers -

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  43. Good thing Yahoo didn’t agree when they bought Broadcast.com for bazillions? ;)

    From MC> Actually , it wouldnt have matter. We were doing back then what I suggest now. We created a fully multicast enabled network and had mcast specific peering arrangements in place and were growing it quickly. Until Yahoo shut it down. We knew from day 1 that demand for bandwidth would always grow faster than supply and planned for it

    Comment by Dave Zatz -

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  45. “..nor is there a profit model that would ever incent content providers to switch their content from the internet to TV.”

    If you mean is they won’t switch now from conventional cable to Internet, then that would be true, but it’s not relevant. They’re not switching; they’re doing both.

    I’m close to “cutting the cord” with my cable provider. When I discuss that with people (both techies and non-techies), I haven’t found a single person that doesn’t like the idea. When I get what I want through Boxee, Roku, Hulu Desktop, or someone else, why would I keep paying my cable for a “subscription package” designed to squeeze the most out of me? A lot of companies involved in delivering cable content are fat and inefficient. Some that I’ve dealt with are are very unimpressive. In the next five years or so, when over-the-top is the norm, it will introduce some serious competition (and disruption) for these folks. With disruption comes innovation. What will it be? I don’t know; I’m trying to figure it out.

    You may be right about bandwidth congestion; however, you won’t be the first. Robert Metcalfe, the inventor of Ethernet, predicted a catastrophic collapse for 1996. When that didn’t come true, he had to literally eat his words (the put is speech in a blender).

    From MC>cutting the cord is popular among about 17 people. But its not as bad for cable as you think. Why ? Because if you truly do consume tv you find out very quickly that unless you want to watch old shows and movies on Netflix, that you spend more buying it ala carte than you do with a basic cable subscription

    Comment by jimmydada -

  46. I don’t see the point of confusing efficiency with effectiveness? Nor do I see the point of trying to play Internet and cable as adversaries. I think the Internet can and should win the time-neutral VoD market, since there is little to gain from multi-cast type solutions that make sense for “TV”. Internet means markets, competing not as cost centers for the pipe providers, but as value drivers for the consumer. There is still much more value to be provided to the consumer in choice and experience, and the heavy hand of central-planning by big cable cannot beat the marketplace of the internet on this front. The incidence of private peering arrangements will simply increase as markets will make this all cost effective. Cable wins live-broadcast hands-down, and Internet compliments this. Hey, right now I can get VoD from Amazon, Netflix, Playstation Store, iTunes, and Cox Cable. Cox has a great digital cable UI for TV, but awful for VoD in terms of usability. The competition can only be incentive for them to improve this. Honestly, I think there is room to expand the pie in addition to talking about market share as a zero-sum game.

    From MC>Ive always said that the video on the internet can happily complement traditional TV Providers and their VOD offerings. The problem for those that want everything over the net is that with the exception of Netflix, every content provider only pays on commission. None have enough confidence in their business model to pay any minimum guarantees to more than a smattering of big media companies

    Comment by seanupton -

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  48. Content providers can’t make money on the internet but they aren’t making much on TV either. Profits are shrinking. It’s the end of scarcity. So whether or not content providers have an existing monetization strategy on the web is irrelevant. If consumers want to get their content on the internet, then content providers have to put it there. Or die. Go where the consumers are first, find out how to make money second.

    Comment by mateo2 -

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  50. Mark – you’re absolutely right, but it’s not going to happen.

    Politicians and bureaucrats won’t be willing to stash away bandwidth for tomorrow, because they derive power from allocating it today.

    Now, if you convinced them that creating Artificial Scarcity would expand the power base, they might listen. But why would they create a future bonanza of power for a future administration to wield?

    Comment by Ike Pigott -

  51. This sounds to me to be “if it isn’t broken, don’t fix it”, but discoveries are made when road blocks are in front of people. Sure, we may run low on bandwidth, and better compression techniques may then be discovered.

    By using your logic, maybe cable companies should just provide internet service and not waste their bandwidth on TV. Then Dish/Directv should handle only TV, and the phone companies should handle on phone service. Each of these companies are wasting their bandwidth on multiple services.

    Of course, prices will go through the roof, that is what happens when you stifle competition.

    From MC> If you look at revenue per bit, an argument could easily be made that Broadband providers should not provide TV, but go all IP and put all bandwidth out to bid.

    Comment by grantcline -

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  53. Doesn’t the FCC basically function to preserve bandwidth (spectrum) for different kinds of social good applications?

    I’d prefer to completely control my 100Mbps down for myself. Wouldn’t you?

    Comment by Morgan Warstler -

  54. Mark, watched the debate at SXSW yesterday and thought you were right on. Obsoleting asset structures is not a process that takes place overnight, if ever at all. I look forward to continue watching all the MMA I can consume from HDNET on my 52″ flatscreen and not on my 13″ monitor!

    Comment by bloodsweatandbeers -

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