May 31, 2011

Chasing Broadcasting's Future?

                “Broadcasting’s Future Is All About Mobile” the headline proclaimed in TVNewsCheck, the daily commentary on all things broadcast related. “[T]he future of broadcasting is personal, mobile devices – smart phones and tablets.”
            The author, Harry Jessell, a perceptive commentator on and protector of the broadcasting business, attributes this conclusion to an “epiphany” he had while reading stories of how streaming broadcast information was delivered by mobile networks during the recent epidemic of tornadoes. He was moved by one family’s report that they huddled in their bathtub while keeping abreast of developments by watching TV reports on their iPhone. “They saw it as a lifeline.”
            Amazingly, of course, the people huddled in the bathtub weren’t benefiting from the use of the broadcast spectrum; they were receiving it in a much less efficient manner over the wireless network. Instead of this important common information being broadcast to multiple mobile devices at once it was instead streamed individually to each viewer on a traditional one-to-one wireless channel. It is precisely this kind of one-to-one rather than one-to-many delivery of video content that is exacerbating the spectrum shortage in this country.
            “All the great technology and expertise that broadcasters can bring together to cover storms mean nothing, if they can’t deliver it to people where and when they need it,” the article wisely observed. “Where and when they need it” clearly wasn’t in the TV room or the bedroom on a big screen set; it was in the bathtub as a frightened family huddled together around their iPhone.
            But American television broadcasters have thus far failed in their promise to bring television to the mobile device on a widespread basis.
            Ask any laptop, or tablet, or handset manufacturer why they don’t add the antenna and software necessary for mobile digital television (mDTV) and they’ll tell you it’s because there is a dearth of content available from the local TV stations. Sure, there was a much ballyhooed test of mDTV in Washington over a year ago, and a handful of stations across the country are actually transmitting, but the promise of using television spectrum to deliver to devices that aren’t in the bedroom or kitchen is just that, only an unrealized promise.
            Without a doubt, broadcasting is the most efficient means of delivering common content to a large audience. Yet television broadcasters are not stepping up to take advantage of their spectrum to provide mobile services. Meanwhile mobile carriers such as Verizon Wireless are embracing broadcast concepts. The CTO of that mobile operator recently announced that their new high-speed, high-capacity LTE network would include a one-to-many broadcast component.
            Television broadcasters continue to promise they’ll eventually do something. “Coming up later this year or early next is mobile DTV,” the TVNewsCheck article claims. That refrain has been playing so long that it’s now in reruns. Major device manufacturers took broadcasters’ assurances at face value a couple of years back, only to be burned when the content never materialized. mDTV was much ballyhooed at April’s NAB Show, but little beyond “Stay tuned for updates” PR has followed. [Note: my firm, Core Capital Partners, invested in mDTV technology].
            Which brings us to the topic of the highest and best usage of broadcast spectrum. Verizon Wireless is investing billions in a new LTE network that will include point-to-multipoint broadcast capabilities. The vast majority of broadcasters, however, haven’t invested the less than $100,000 necessary to begin distributing mobile DTV. And all the while broadcasters rail at the Obama Administration’s proposal to allow some of them to voluntarily sell the spectrum the government gave them for free (while permitting them to exploit digital technology and move their signal on to another channel).
            I’ve been mystified why broadcasters have declared jihad against the voluntary spectrum auction. Getting big dollars for an asset for which you paid nothing while still being able to run your traditional business over cable (the vast majority of its reach anyway) and maintain a broadcast signal at another point on the dial seems a pretty good business proposition – unless you really are serious about providing new and innovative services and need all that spectrum.
            Actions speak louder than words and the broadcasters’ inaction on mDTV resounds like a thunderclap. The reruns of “mDTV is just around the corner” are, like an over-exposed sitcom, growing stale. Absent action the “we’re special, we’re innovative, we can’t quit using this valuable spectrum” argument rings hollow.
            I still believe that many broadcasters are planning to offer mDTV and will not sell their spectrum. But they sure have a strange way of going about that. Harry Jessell is right, broadcasting’s future is all about mobile. What’s hard to understand is why so many broadcasters are running away from that future and in the process discouraging manufacturers from putting mDTV devices in the hands of consumers – even when they’re huddled in the bathtub. 

May 3, 2011

Consumer-Facing Carriers

“Never Pay for the Internet” the window posters proclaimed all over London last week. This simple five word declaratory statement sums up the challenge in the escalating debate between wireless network operators (especially in Europe) and the offspring of Silicon Valley.

Wireless carriers (in Europe they prefer to be called “operators,” a term that eschews the concept of carriage while emphasizing participation in a broader ecosystem) have been calling for the Internet companies to pay for access to their networks. This so-called “two-sided” revenue model has both the consumer and the content provider paying for use of the network. The operators argue that Google, et al, pay content delivery networks (CDNs) such as Akamai to facilitate the delivery of their content before it is handed off to the wireless network; thus, why shouldn’t they also pay for the wireless last mile?  

The Internet companies, in response, point to the consumer as the appropriate party to pay the carriers. If the consumer wants the ability to receive ever-increasing amounts of data services they should pay for it, just like the consumer pays for more legroom on an airplane.

This is where the sign in the windows of London identifies the problem. Competition among networks for customers has put the consumer in the enviable position of being told they won’t have to pay for access to Internet services. “Free It” the advertisements of British network operator 3 proclaim to promote their unlimited data plan, for instance. The policies that created wireless network competition have trapped operators between holding market share and giving away capacity for ever-increasing data demands. So long as there is one carrier willing to offer its capacity at a low price (or for free), the other carriers must play along thus bringing those who run networks to loggerheads with those who use the networks.

While wireless operators are pinned down fighting other network competitors the folks from Silicon Valley have been operating behind the lines to gut the networks’ major asset. Knowledge of how the network is laid out and how consumers are using that infrastructure has been ripped off by Google and Apple. While the recent news media kerfuffle about Google and Apple devices storing and reporting user location information has been portrayed as a “bug” or a software “mistake” it is far from such an accident in reality. When Google pings its Android software 1,000 times a day with instructions to send information back to Google’s computers, it I hardly a “bug.” [Admittedly, “bug” was a description used by Apple, Google’s canned statement prattled about “a better consumer experience”].  

One would think that the most important information a network operator has is information about the network itself and the behavior of its users. Google and Apple, however, got the network to rat itself out by collecting and transporting this information to be accessible by Apple’s and Google’s computers. The amazing thing is that the network operators allowed it to happen – but the fact that it did happen is prima facie evidence of how network operators are culpable for the decreasing importance of the networks themselves.

Perhaps it is understandable how a network operator could see the world differently from a consumer service provider. Nevertheless, the wireless world has moved from a network-facing business to a consumer-facing business. “I run a network” has been replaced by “I relate to consumers.” How services interface with subscribers in the differentiator – and there is still an opportunity for network operators to regain this lost ground.

Since Apple and Google have shown their true colors regarding consumer privacy, network operators could become the consumers’ privacy protector by not allowing such information to pass without consumer consent. It’s not that the use of information is bad – it’s whether I as a consumer have any control over the use of the information I create. A trusted wireless operator could become my information banker, securing my privacy and permitting withdrawals on my terms rather than Silicon Valley’s terms.

If wireless carriers are truly going to become “operators” participating in the broader ecosystem their focus needs to shift from running networks to managing the information created by the 21st Century’s digital networks. The Silicon Valley mafia hijacked that information, but they could quite possibly be in the process of blowing their escape with the goods by exposing what they were really up to.

Rather than a Quixotic search for the two-sided payment Holy Grail wireless companies can go for the gold of the 21st Century – a new paradigm for use of the information created by an all-IP network. The key to that shift is the information in the network itself. A company with a consumer-facing orientation would recognize it’s all about information, not infrastructure.