We are in the final days…of TV1.0. The signs are everywhere. Most recently, I received an invite (thanks to a sympathetic reader) to beta test Joost–a combo software client and web-based content library that allows the user to demonstrate for themselves that the old way of doing things is numbered.

TV1.0 is the familiar old broadcast model of one broadcaster sending to many, passive “receivers.” TV stations send their signal out and we sit and watch it. Defined by limited spectrum, there were only a few channels, shows appeared in their set time slot, for the defined number of minutes less the minutes devoted to the ubiquitous ads. Shows are designed to appeal to the broadest number of people and offend the fewest. Cable changed very little except that it gave you more channels. PBS introduced the idea of voluntary subscription support–but remains in other ways locked into the broadcast model as well.

There’s lots to hate about this model of video. (And I’ve been happy to jump in; see “Die TV. Die! Die! Die!” or “Why You Want Real Bandwidth”.) I’ve called the emerging model “DV” for Downloadable Video. The basic idea is that when bandwidth is no longer scarce (e.g. when we have fiber to the home) and we can download video to our hearts content, then the reasons for the old, annoying way of getting video will go away and new forms will emerge that cater to our obvious interest in watching shows whenever we want to, unlimited by advertiser-defined time slots, and uninterrupted by ads. Shows can be designed to appeal to the passionate viewer and world-wide, cheap, direct-to-consumer distribution can be counted on to provide an audience to support even the most specialized shows.

Joost plays in to this because it has become the most credible contender for long-show, commercially-produced content king. (YouTube has the short piece, self-produced end of the DV market pretty much sown up–and in some ways is even further into a DV1.0 world.) Joost first hit the news as the brainchild of the same guys who brought you the telephony-disrupting Skype and terrified the music and video businesses with Kazaa. The trick in all these enterprises was leveraging the unused bandwidth of customers using an idea described as peer-to-peer aka P2P. In return for the downloaded service you get you let the network use your spare uploading capacity.

Joost uses this technology as well and so holds down their main operating costs…but the real splash came when they began to sign up real, long-form content and supported it with in-video advertising. That gave them both content credibility and a visible business plan–something no similar competitor has. The jury is still out on whether long-form content has to be supported by advertising that is embedded in the download or whether, like YouTube, advertising can be on the supporting web page or whether, like iTunes, a pay-per-view model is possible.

Part of what is interesting about Joost is that they are setting up to be a very social site. They’ve got chat, you can invite friends, and there is an API for new widgets that could further extend the ability to hook into IP services and RSS feeds. This opens doors. Conceivably one could invite friends from all over the country to watch the same show or sporting event and chat online while it was playing. No doubt “clubs” will arise focused around particular shows and scheduled meetings. RSS will allow for further amalgamation and integration with other services and video feeds.

But the proof is in the pudding; or in this case, the viewing. I recently sat down, played around with the (very slick) interface and actually settled in to watch a commercial TV/now DV show. It played at full screen on my laptop–there was noticeable blockiness but no actual hesitations even though the feed was being relayed over my wifi. Cox had provided me access to the first real, commercial television show I’ve streamed down and watched in its entirety over the internet instead of watching it when it was scheduled to be on cable. It’s a sign. We’re in the final days of TV1.0.


(Like the idea and have found by clicking through that Joost is still in beta and requires an invite from a user? Happy days: GigaOm’s influential NewTeeVee blog has the pull to get a simple sign-in sheet for its readers. You can use it too.)

Incidently, there are other, less high-profile startups trying to do something similar. The Joost page on Wikipedia points to several. I’d particularly recommend the Democracy site and player.

None For You, Former BS Customers

Recent announcements have made it clearer than ever that AT&T is putting the former BellSouth territories in a lower service tier. At least for the next several years it is not going to offer BellSouth’s former territories nearly the level of service that it is trying to develop in its home, the former SBC region. The probability that AT&T will become a serious third challenger in upcoming battle between Cox and LUS has significantly dropped. Should they seriously enter the fray it will be mainly to challenge the idea LUS represents.

Costs More; Serves Fewer
AT&T recently announced that it is revising upwards the cost of its Lightspeed network upgrade project and lowering its estimate of how many people it will serve. (Without that upgrade AT&T can’t offer video competition to cable or a significant bandwidth increase to customers.) They’re now going to spend 41% more offering the service to a million fewer users. And that has serious consequences as Nyquist Capital points out:

Regardless of its true cause, this budget slip significantly changes the economics supporting AT&T’s decision to avoid laying fiber. Previously, AT&T could deliver video services at 1/3 the cost of Verizon. With the slip AT&T’s cost per home went up nearly 50% and is almost 1/2 the cost Verizon FiOS FTTH solution.

Reaction to the fiber to the node (FTTN) plan had already been mixed, with many analysts faulting AT&T for not going straight to a FTTH network. This admission by AT&T is sure to increase that criticism and to increase demands that it follow Verizon in going directly to FTTH without the wasteful interim step. The problem, though, has always been money. AT&T doesn’t have any and can’t afford to go beyond the cheapo solution. They’ve depleted their credit buying up their expensive telephone company brethren instead of preparing to compete with cable as Verizon is now doing. Leveraged to the hilt, they can’t afford to build fiber without causing considerable shareholder pain and the consequent drop in stock price.

BellSouth’s Territories
But if their national plan is uncertain there is little doubt about what is in store for the BellSouth territories that AT&T recently acquired.

They get very little.

AT&T’s plan is now described thusly:

AT&T said it now plans to pass approximately 18 million households by the end of 2008. The company said that number doesn’t include its plans for the Southeast [The former BellSouth region], which could increase the number past 19 million homes.

If you factor in the number of subscribers in the AT&T and BellSouth areas you’ll see that this means that former BellSouth customers will see about 8.3% availability…and the rest of the AT&T country will see 32% availability. The possible one million houses passed in BellSouth territory amounts to about 1/3 of the households in relatively wealthy, densely populated Miami and Atlanta–and that’s not factoring in Orlando, Charlotte, Nashville, or Jacksonville. It’s not likely that southern folks outside the very largest metro areas will see Lightspeed upgrades and the U-Verse video product in the near future.

So what do the rest of us get? Satellite.

Yup. Satellite. AT&T’s latest announcement is that it is extending it’s WildBlue partnership to the BellSouth area. The best subscribers can say about its “up to” 1.5 meg download speeds, glacial uploads, and massive latency is that it is better than dialup. But apparently not enough better to convince most of its rural target population to switch at current prices–satellite broadband has not been much of a success and hasn’t gathered any subscribers in locales where the population can choose DSL or cable modems.

So it doesn’t look like AT&T will change the current equation for most of BellSouth’s former footprint. As no place in Louisiana is any longer list of the 15 largest metro areas in the South, we aren’t likely to see much of what little new tech AT&T rolls out. Welcome to the 21st century Louisiana, courtesy of your incumbent telco.

During the fiber fight BellSouth tried to tell Lafayette that they were about to bring competition to town. It was pretty clear even then that under the most optimstic scenario we’d still see only limited deployment. Now it’s even clearer that we’re unlikely to see even that.

Lafayette made the right decision in voting to build its own network. Without it we’d have to count on Cox to upgrade us even though they would have no significant opposition to prod them locally. With it we’ll have inexpensive access to the best technology available anywhere in the country.

Cox Leads the Way

According to a story in MarketWatch Cox is the first cable company to agree to disable the fast forward button on its video on demand product. Video On Demand (VOD) has been attractive for the cable companies largely because it emulated a DVR without the expense of providing a DVR box in the home. DVR’s are popular for three reasons: 1) they allow the viewer to “time shift” — to view a show whenever they want; 2) to skip boring and repetitious ads, and 3) to spend less time on a show because you’ve skipped ads. (If you don’t have a DVR, trust me, you want one.)

From the story:

Walt Disney Co.’s two big TV networks, ABC and ESPN, have struck a deal with cable operator Cox Communications Inc. to offer hit shows and football games on demand, but with the unusual condition that Cox disables the fast-forward feature that allows viewers to skip ads, according to a media report Thursday.

Obviously this is not good for users. A little less obviously it is grand news for TiVo who sells the most successful independent DVR. It is easy to to evade the new “requirement” that you watch ads.

Here’s the trick:

  1. DON’T rent a DVR from the cable company (they can make their DVRs reinforce this new policy if they choose)
  2. Do buy a TiVo (or use an PC-based alternative like MythTV)
  3. Tune into your Video On Demand channel
  4. Navigate to your movie or show (cable navigation is a pain you can’t avoid)
  5. Record it on YOUR OWN device
  6. Watch normally: whenever you want, and power through the ads in the way you power through the ads found in normal broadcasts.
  7. (Yes, it really is that easy. This attempt to control consumers watching habits will fail and lead to a resurgence of independent DVRs and a dramatically reduced take rate for Cox’s DVR products. Buy TiVo stock now.)

I already follow the above procedure with Cox’s current VOD, even without the incentive of Cox trying to force ads on me. Recording shows is part of my default behavior, it allows me to pause for the phone, set up supper, catch up on some little chore, rewind to catch critical dialog and the like–recording on my own equipment allows me to pause and rewind using TiVo’s silky-smooth interface and fast local storage. It makes a world of difference in the user experience. Cox’s interface, mediated by a clogged-up network is slow, so painfully slow that my son refuses to use it and called me up to give me the what-for for suggesting that he do so. (I still think it is basically a good thing. Cox is providing you with a very nice library of recorded material. Just use it in conjunction with your own DVR.) (And, yes, Cox’s network is clogged up–I still, months after local launch, regularly get a “network busy” signal which abruptly throws me out the system I try and access the VOD channel. Consequently, I haven’t developed any habit of use. Cox really needs to fix this if anyone is to treat the service seriously.)

I’d like to say that LUS won’t succumb to this ploy by the content providers but, frankly, I don’t believe they’ll be in a position to resist if Cox’s collapse leads to new standards for cable companies and their emerging telecom competition. This is one of those rare places where competition does not work for you. As long as cable companies had an effective local monopoly on wireline video they were able to resist the content providers demands that they not let users skip ads–and up to now they have refused to cripple their DVRs or VOD content despite unrelenting pressure. In truth, content providers had little leverage. If they wanted cable viewers in Lafayette (or Atlanta or Miami) to see their VOD content they had to deal with Cox or simply not sell in that market at all. Enter prospective competition from the likes of AT&T. Now the possibility exists that content providers can give an “advantage” to one provider by refusing to sell content to their competitor unless they restrict their customers. Usually the way to exert this pressure is to refuse to sell to the new entrant–AT&T in our case. It is unusual for an established market leader like Cox to lead in giving in to supplier’s demands. Once one provider in a market gives in the others will have to as well–or decide to operate at a competitive disadvantage in order to preserve their customer’s rights. How likely is that? Easy answer: Not very. And since regional markets differ (Cox and AT&T serve different, if overlapping, regions) each competitor that gives in spreads the new practice to new areas of the country.

Expect a general collapse, courtesy of Cox’s leadership.

I repeat: Buy TiVo.

A National Broadband plan? Europe and Eisenhower Show the Way

Everybody from Lafayette’s Mayor Durel, to Jim Baller of Baller-Herbst, to Michael Dell of Dell Computer, to the president of the United States seem to think that we really, really ought to have a working National Broadband plan. We should. And friends, it’s not rocket science.

We’re not nearly as clueless as we think. Some developed Western countries have figured it out–their experiences should apply to ours. Filter that through the US’ own success in building a complex, expensive national infrastructure network and you’ve got a pretty detailed outline.

The European Experience:
VuNet reports on the Fiber To The Home market in Europe. While France, Scandinavia and The Netherlands are deploying significant fiber, the rest of Europe is not moving forward. The article notes that:

“In part, this is due to a lack of initiative from utilities and local authorities, but also because markets are dominated by incumbents and cable operators which have no incentive to make hefty investments in brand new infrastructure.”

…Generally speaking, there is less interest in building FTTH networks from conventional national telecoms operators, which argue that the approach is too expensive to carry out on a widespread basis.

…The majority of former state-owned monopolies, for example, have instead committed to fibre-to-the node.

Sound painfully familiar? It should. That could be AT&T they’re talking about. Incumbent duopolies have little incentive to build new systems which would provide abundant bandwidth when they can continue to sell an expensive, scarce resource over a paid for, if antiquated, network. The US is in exactly the same fix.

What’s the solution? Don’t worry about cajoling the incumbents. Find a infrastructure provider that is differently motivated. Sweden shows how that works:

FTTH is most advanced in Sweden, where the technology is used for 650,000 broadband subscriptions, or over 27 per cent of the country’s 2.3 million residents.

The study pointed out that the 150 municipal networks serving these customers tend not to be owned by conventional telecoms operators, but by utilities or local authorities.

So Sweden, with about 2% of the EU‘s population has more than half of its fiber-connected homes and a take rate (NOT homes passed, actual subscriptions) of 27% of the population. That is amazing.

You’d think any country that wanted to figure out how to encourage real broadband and extensive use in a modern Western economy would take a lesson from this. Here’s a proven national strategy: encourage local communities to take on the task. They know what their citizens need. They’re willing to take the longer view. They’ve got no baggage of old networks to protect. And they’re not interested in squeezing the maximum return out of their customers.

The American Experience:
The Eisenhower Interstate Highway System.

No one any longer argues that the Interstate Highway System wasn’t the best economic investment since the Louisiana Purchase. The return on investment has been astronomical and it hard to imagine the modern US economy without it.

That system is owned and operated by the states and the states provide 56% of the funds necessary to build and maintain them. There is an elaborate set of standards and inspections and a significant amount of federal “guidance” in contracting and costing.

An extensive, expensive, successful state-of-the-art national infrastructure has already been built in America. We know how to do it. Just apply the lessons learned:

So here’s a real national strategy in a nutshell: Adapt the Interstate Highway model to a municipal ownership model.

1) Offer a 60-40 local/federal split to communities everywhere for the expensive last mile builds on their locally-owned rights-of-way.
2) Offer the same for the states to build the interconnects within their own states and tie-ins to neighboring states using rights-of-way along state highways (and their interstates).
3) Every community decides how much it wants to spend and the nature of the network they want; if it accepts the Federal money it adheres to federal rules in its construction and maintenance.

Sure there are details. I, for one, would impose traditional common carriage rules on the communities that accept federal money or federally funded interconnects. And I’d want a “no speed limit” clause built into the law. (Yes, that’s a joke.)

But those sorts of things would be extras. They’d not be necessary to accomplishing our national goals. The above is all that is critical. In a decade we’d have an “Interstate High Broadband System” that would be the envy of the world.