Wednesday, September 16, 2009

A Confederacy Of Dunces

Dana Kaplan sent me an e-mail last week with a link to a very interesting article about certain ISP's in the U.S. (including Time Warner and AT&T) lobbying for a crippled definition of broadband by the FCC.

Dinosaur, meet asteroid.

Has there ever been a more stupid attempt by an industry to resist the very technology and services that could ensure its long-term survival?

This is not to imply that dinosaurs resisted technology and services. Perhaps I muddled the metaphor.

Companies like Time Warner are under siege from satellite television, because there's no franchise agreement they can good-ol'-boy through state legislatures or city councils that restricts the ability of consumers to get television from the sky. And without the generous profit cushion of monopolies, their television business is floundering.

But wait, you think. Everything, absolutely everything, is moving to the Internet: television shows, on-demand movies, every kind of content imaginable. Even better, merchants charge for much of this content. So if Time Warner embraces the broadband content delivery model, they could partner with these companies and profit handsomely. And even better, broadband delivery via satellite still has substantial quality issues, so it could be used as a distinguishing selling point for cable.

Instead, Time Warner is trying to throttle the amount of content consumers can download, while at the same time spending almost no money (based on recent earnings reports) upgrading their broadband infrastructure.


It's really quite incredible how little sense this makes from a business model standpoint.

Here's another excerpt from the article, with a little bit of genius from AT&T:
AT&T did not propose a specific connection speed, but cautioned that "setting [the] baseline too high would thwart Congress' intent to ensure universal availability and adoption of broadband services."

"There are a host of aspirational broadband services that are beginning to emerge in this country, as well as myriad sophisticated applications involving streaming video, real-time voice and the like. All are no doubt 'broadband' services," AT&T said. "But for Americans who today have no terrestrial broadband service at all, the pressing concern is not the ability to engage in real-time, two-way gaming, but obtaining meaningful access to the Internet’s resources and to reliable email communications and other basic tools that most of the country has come to expect as a given. Fulfilling that need is the appropriate national priority at this time."

AT&T: defending the poor and needy. How noble. Of course, "reliable e-mail communications" and other basic Internet services are entirely accessible with trusty dial-up modems. That's not why people get broadband. What AT&T wants is to charge broadband prices for services that need only dial-up speeds.

Yes, you pay for it, but that doesn't mean you should actually USE it. Know your rights, as The Clash would say.

It's difficult to understand how these companies can survive the inevitable evolution in on-demand content delivered via the Internet with their current tactics. Clearly, they don't want it to happen, they don't want to be a part of it, and they want to charge consumers who use this content delivery system "too often."

What I wonder is when this business approach has EVER been successful.

The only explanation I can think of is that these giant cable companies have done business a certain way for decades. Their approach has been to establish monopolies in certain territories via franchise agreements. It's old-school, lobbying legislators and City Council members.

It was slow. Very controlled. Largely non-competitive.

Satellite television, to some degree, blew up that model.

Now, new business models are completely redefining how consumers use their broadband connections, and these dinosaur cable companies are losing control of that, too. On-demand content is impossible to stop--it's ridiculous to consider the notion that it could be stopped, or even slowed down. But instead of partnering with these content delivery companies, they've created this Maginot Line that is downright embarrassing and clearly doomed to fail.

Yes, both dinosaurs and the Maginot Line have somehow appeared in the same post. I will stop now.

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