This morning President Obama made his strongest endorsement yet for net neutrality, releasing a statement and video (see below) explicitly endorsing the reclassification of broadband services under Title II of the Communications Act, effectively regulating broadband as a utility (note, the change isn't Obama's to make, it's the FCC's, which is an independent agency).
If the FCC did make the change it would be the most significant update to broadband regulatory policy since 2002 when broadband was classified under Title I as a lightly regulated "information service." The change to Title II would mean broadband ISPs would have to adhere to regulations dating back to 1934. In one bit of good news for ISPs, Obama specifically said rates should be excluded from Title II regulation (which means usage-based pricing could still be implemented). Any proposed change is guaranteed to be challenged in the courts by ISPs.
There has been no shortage of stories in the last few days about the travails many people experienced when trying to watch President Obama's inauguration via broadband. While things worked flawlessly for many, for far too many others it was a frustrating and unfulfilling experience. As I wrote on Tuesday, the first "Broadband Inauguration" was a milestone opportunity for this new medium. Instead, it was a confusing flameout.
While I'm disappointed, I can't say I'm terribly surprised. Even as I was writing Tuesday's post, I found myself wondering if the Internet was really up to the task of handling this colossal and highly compressed live event. What I experienced personally that day, and have heard and read since, all underscore the massive inconsistency in users' experiences.
For example, Hulu worked fine for me. But when I tried to watch on CNN.com I couldn't even get the Flash plug-in to download (and btw CNN, talk about an inopportune time for a download!). I had no luck at NYTimes.com either. One person I spoke to this week said he couldn't get a stream at any of the major news sites and ended up watching at MLB.com of all places. Conversely, others reported no problems at all. No doubt you have your own particular stories.
So here's an attempt at putting all of this into perspective: no communications or transportation system is ever built to serve extraordinary peak demand. Instead they are built to serve typical demand plus an increment for periodic bursts. We don't have 15 lane highways so there's no congestion on Thanksgiving Day, while the other 364 days of the year 90% of the space is unused. Likewise, on inauguration day, wireless carriers were urging attendees to refrain from using their handsets for fear of overloading their networks. I can even remember back to the '80s when on heavy call days like Mother's Day, Ma Bell's gold-plated network would sometimes stymie me with an "all circuits busy" message.
And these are just a few examples. The reason things are this way is purely financial. It simply doesn't make economic sense to invest in so much extra capacity that's unused most of the time. No venture capital or institutional investor would tolerate capex budgets not supported by realistic use cases. The result is that on surge days like on Inauguration Day incremental available capacity is quickly swamped and many users expecting a flawless typical experience are disappointed.
If that's the sobering reality, then here's some good news. Tuesday's massive broadband interest, coupled with other heavily viewed live events, will likely spur further investment in all links in the Internet/broadband delivery chain. History shows us this is true. We may not have 15 lane highways today, but we often do have 4-5 lanes instead of old dirt paths because of cars' growing popularity 50-60 years ago. And we have 5, 10 and even 50 mbps broadband service now instead of pokey old dialup because Internet usage has soared in the last 10 years, demonstrating users' widespread willingness to pay and prompting huge broadband ISP investments.
For all of broadband's progress, it is still a relatively nascent medium. "Rome wasn't built in a day" as my father used to admonish me in my moments of adolescent impatience. On Tuesday, broadband's limitations became obvious. That was unfortunate, but I'm betting that next time around will be better.
What do you think? Post a comment now.
Topics: Barack Obama
Another milestone in broadband video's evolution will be marked today with the first "Broadband Inauguration." Like last summer's Olympic games, broadband will make it possible for millions of viewers around the world to experience Barack Obama's dramatic inauguration.
Last Thursday Mediaweek had a pretty good roundup of all the various news and entertainment web sites that are going to be streaming the proceedings live. Clearly there is going to be an intense battle for online viewers today, with various interactive and participative offerings planned.
While the bells and whistles will be fun, for me what's most noteworthy about the broadband coverage is the unprecedented access and sheer convenience that broadband has introduced for so many people. This will be particularly noticeable today for office-workers who lack access to a TV. For them broadband means they won't miss any of these historic moments. That's pretty transformative, and powerful.
Ordinarily VideoNuze is focused on the disruption and opportunities that broadband video is creating throughout the media landscape. But what the broadband inauguration (and President-elect Obama's use of the medium during his campaign as well as his weekly YouTube addresses) also shows us is that at a far more important societal level, broadband may be the most powerful communication and engagement technology ever created. The new President's call for an "era of responsibility," will be greatly facilitated by broadband's unprecedented ability to connect him directly to the world.
The broadband inauguration is indeed a big milestone. I expect many more are yet to come.
Topics: Barack Obama
As promised, I'm continuing to push further out onto the limb with my five '09 broadband predictions as the week progresses. Today's prediction is that net neutrality legislation will remain dormant for at least another year. Given Barack Obama's campaign statements pledging support for net neutrality, many who hoped it was finally at hand will no doubt be quite disappointed.
I suspect many of you may not even be familiar with net neutrality or why it's relevant so let me offer a short primer. As I wrote back in November of '07, in "Net Neutrality in '08? Let's Hope Not," the Internet has functioned as a level playing field of sorts. Broadband Internet Service Providers have not biased in favor of delivering one web site's content over another's (i.e. their networks have remained neutral). Since the government has maintained a laissez-faire Internet regulatory stance, broadband ISPs' own self interests have aligned nicely with staying neutral. In other words, it made good business sense for them to behave this way.
To simplify somewhat, net neutrality advocates believe that in the broadband video era, "good business sense" cannot be counted upon to ensure ISPs' continued neutrality; hence the need for regulatory intervention. Their concern is that because large ISPs' (namely cable operators and telcos) also operate incumbent multichannel video services and have financial stakes in certain content providers - both of whose financial health would be threatened by open broadband delivery - these ISPs will start to bias toward better delivery of sites in which they have some financial interest or with whom they have a particular deal. This would in turn disadvantage sites outside the ISPs' financial orbit, hurting not just these sites, but also larger democratic goal of consumer choice.
All of these concerns are hypothetically valid. But the problem is that these concerns have not translated into any provable pattern of ISP misbehavior as yet. Having sat through an FCC hearing earlier this year meant to surface such evidence, I can say first-hand that while there are isolated instances of bias which have been compounded by bungled ISP explanations and sophomoric PR miscues, net neutrality advocates have little more than their concerns and assumptions about ISPs' future behavior on which to base their argument for preemptive legislation. And this is precisely the reason why net neutrality will remain dormant for another year, at least.
Net neutrality remains largely a solution in search of a problem. I believe this will put it outside the guiding philosophy of Mr. Obama's regulatory forces. Having read both of Mr. Obama's books and listened to his words intently, I've long since concluded that he's what I call a "principled pragmatist." Mr. Obama has a core set of beliefs about how the world should work, but he chooses his battles wisely and with a focus on solving real, not imaginary problems. Mr. Obama and his team have plenty on their plates addressing the economic mess they're inheriting. Time will not be made available to create rules in any area of business where there's no evident harm to anyone.
This pragmatic approach means that when the rubber meets the road on net neutrality, Mr. Obama and his policy advisors are unlikely to be swayed by the free-speechers and academics who form the core of the net neutrality advocacy camp, unless they're able to bring far more supporting data (note, as the WSJ pointed out earlier this week, net neutrality support even among some content companies like Google, Microsoft and Yahoo is either waning or becoming ambiguous).
All of this said, it may be politically expedient to throw a small bone to net neutrality's advocates. So we may see some new guidelines introduced, but nothing approaching the level of what some are seeking. The only exception is if broadband ISPs themselves acquiesce, possibly in exchange for infrastructure subsidies that may be part of the planned trillion dollar stimulus program.
Though politics is a notoriously hard business to protect, if in 2009 if broadband ISPs do a good job of behaving themselves, they will likely see net neutrality backburnered. The FCC should be vigilant in monitoring the industry for signs of bias. And if they are able to prove the case, net neutrality will rightly get moved up in prioritization.
What do you think? Post a comment now.
2009 Prediction #1 - The Syndicated Video Economy Accelerates
2009 Prediction #2 - Mobile Video Takes Off, Finally
Tomorrow, 2009 Prediction #4
Back on December 16, 2007, I offered up 6 predictions for 2008. As the year winds down, it's fair to review them and see how my crystal ball performed. But before I do, a quick editorial note: each day next week I'm going to offer one of five predictions for the broadband video market in 2009. (You may detect the predictions getting increasingly bolder...that's by design to keep you coming back!)
Now a review of my '08 predictions:
1. Advertising business model gains further momentum
I saw '08 as a year in which the broadband ad model continued growing in importance as the paid model remained in the back seat, at least for now. I think that's pretty much been borne out. We've seen countless new video-oriented sites launch in '08. To be sure many of them are now scrambling to stay afloat in the current ad-crunched environment, and there will no doubt be a shakeout among these sites in '09. However, the basic premise, that users mainly expect free video, and that this is the way to grow adoption, is mostly conventional wisdom now.
The exception on the paid front continues to be iTunes, which announced in October that it has sold 200 million TV episode downloads to date. At $1.99 apiece, that would imply iTunes TV program downloads exceed all ad-supported video sites to date. The problem of course is once you get past iTunes things fall off quickly. Other entrants like Xbox Live, Amazon and Netflix are all making progress with paid approaches, but still the market is held back by at least 3 challenges: lack of mass broadband-to-the-TV connectivity, a robust incumbent DVD model, and limited online delivery rights. That means advertising is likely to dominate again in '09.
2. Brand marketers jump on broadband bandwagon
I expected that '08 would see more brands pursue direct-to-consumer broadband-centric campaigns. Sure enough, the year brought a variety of initiatives from a diverse range of companies like Shell, Nike, Ritz-Carlton, Lifestyles Condoms, Hellman's and many others.
What I didn't foresee was the more important emphasis that many brands would place on user-generated video contests. In '08 there were such contests from Baby Ruth, Dove, McDonald's, Klondike and many others. Coming up in early '09 is Doritos' splashy $1 million UGV Super Bowl contest, certain to put even more emphasis on these contests. I see no letup in '09.
3. Beijing Summer Olympics are a broadband blowout
I was very bullish on the opportunity for the '08 Summer Games to redefine how broadband coverage can add value to live sporting events. Anyone who experienced any of the Olympics online can certainly attest to the convenience broadband enabled (especially given the huge time zone difference to the U.S.), but without sacrificing any video quality. The staggering numbers certainly attested to their popularity.
Still, some analysts were chagrined by how little revenue the Olympics likely brought in for NBC. While I'm always in favor of optimizing revenues, I tried to take the longer view as I wrote here and here. The Olympics were a breakthrough technical and operational accomplishment which exposed millions of users to broadband's benefits. For now, that's sufficient reward.
4. 2008 is the "Year of the broadband presidential election"
With the '08 election already in full swing last December (remember the heated primaries?), broadband was already making its presence known. It only continued as the year and the election drama wore on. As I recently summarized, broadband was felt in many ways in this election cycle. President-elect Obama seems committed to continuing broadband's role with his weekly YouTube updates and behind-the-scenes clips. Still, as important as video was in the election, more important was the Internet's social media capabilities being harnessed for organizing and fundraising. Obama has set a high bar for future candidates to meet.
5. WGA Strike fuels broadband video proliferation
Here's one I overstated. Last December, I thought the WGA strike would accelerate interest in broadband as an alternative to traditional outlets. While it's fair to include initiatives like Joss Wheedon's Dr. Horrible and Strike.TV as directly resulting from the strike, the reality is that I believe there was very little embrace of broadband that can be traced directly to the strike (if I'm missing something here, please correct me). To be sure, lots of talent is dipping its toes into the broadband waters, but I think that's more attributable to the larger climate of interest, not the WGA strike specifically.
6. Broadband consumption remains on computers, but HD delivery proliferates
I suggested that "99.9% of users who start the year watching broadband video on their computers will end the year no closer to watching broadband video on their TVs." My guess is that's turned out to be right. If you totaled up all the Rokus, AppleTVs, Vudus, Xbox's accessing video and other broadband-to-the-TV devices, that would equal less than .1% of the 147 million U.S. Internet users who comScore says watched video online in October.
However, there are some positive signs of progress for '09. I've been particularly bullish on Netflix's recent moves (particularly with Xbox) and expect some other good efforts coming as well. It's unlikely that '09 will end with even 5% of the addressable broadband universe watching on their TVs, but even that would be a good start.
Meanwhile, HD had a banner year. Everyone from iTunes to Hulu to Xbox to many others embraced online HD delivery. As I mentioned here, there are times when I really do catch myself saying, "it's hard to believe this level of video quality is now available online." For sure HD will be more widely embraced in '09 and quality will get even better.
OK, that's it for '08. On Monday the focus turns to what to expect in '09.
What do you think? Post a comment now.
Closing out another busy week, here are 3 diverse broadband video snippets that hit my radar in the past few days:
1. YouTube Drives the Political Newscycle
Back in December, in 6 Predictions for 2008, I suggested that "2008 is the year of the broadband presidential election." This seems to become more evident with each passing week. I find that particularly when watching cable news, YouTube's influence just keeps on growing.
For example, I'm a fan of "AC360" on CNN, which I try to catch at 10pm each night. This week the show was constantly replaying the YouTube videos of Rev. Jeremiah Wright that have dogged the Obama campaign. Conversely, a few weeks ago, Obama got a great tailwind from the massive attention paid to the viral "Yes We Can" music video sensation by will.i.am. That of course was on top of the earlier "Obama Girl" phenomenon. Separately, the McCain campaign just yesterday fired a campaign worker for posting a controversial video on YouTube about Obama and race. This too was covered on AC360 last night. Then of course there were the YouTube co-sponsored debates, offering video-based questions that were constantly replayed afterward.
The point of all this is that broadband video has turned election coverage upside down, making it incredibly hard for candidates to control the political newscycle. The "democratizing" effect of YouTube means that on any given day, at any given moment, something may get posted which diverts the campaign's attention. And with major media outlets paying such close attention to YouTube, everything is immediately amplified. Not since the early 1960s when TV began influencing presidential politics have we seen a new medium have such a profound impact on an election. And we still have 8 months to go until November...who knows what's yet to come!
2. SI Vault is Addictive
On to something more fun, if you haven't yet checked out Sports Illustrated's new "SI Vault" site just launched this week, I suggest you do. It's a highly addictive trip down memory lane. SI has digitized all of its assets and also made available non-SI content, all in one easy-to-use location powered by Truveo. Focusing on video, I found Franco Harris's "Immaculate Reception" from the 1972 Steelers-Raiders playoff game and also Doug Flutie's famous "Hail Mary" pass to beat Miami in 1984. I could have spent hours at the site, although it's not perfect. I tried finding Tom Watson's 1982 U.S. Open chip-in at Pebble Beach to beat Jack Nicklaus, but alas no results were found. Obviously all this stuff is available elsewhere online, but SI Vault creates a great context for sports fans to enjoy themselves, wrapping SI and non-SI content together in one nice package.
3. Apple's Roadblocks are Baaaack