Technology Futures

Comcast and Time Warner have agreed to merge, with Comcast buying Time Warner. Although this merger has to be approved by Federal regulators, the article suggests that since the two companies don't have overlapping territories, it may well be approved.

The merger would combine Comcast's 22 million subscribers with Time Warner's 11 million subs, and Comcast has said it would sell off 3 million subscribers to keep the new company below 30 million customers. Supposedly that is some threshold that determines if the company will have too big an influence on the market.

This smells of desperation to me. Cable TV is dead, dead, dead, with Over The Top (OTT) services like Netflix and Hulu killing off cable and satellite TV. I was in a rural community for a week recently. There were three complaints:

• The lack of bandwidth is killing our Main Street businesses.
• No one can work from home because the bandwidth available is too limited.
• We are having a hard time attracting families because services like Netflix and Hulu are unusuable, and the kids are revolting.

Aside from the fact that copper-based coaxial cable is grossly inferior to fiber, the cable companies simply can't provide business class symmetric services over their "entertainment" networks in any sort of consistent way, and they know it. So they are going to merge to give them market clout on the content side, and they are going to continue to try to buy laws at the state level, like they just tried in Kansas.

In less than ten years, most American homes will have fiber. It is as inevitable as flush toilets, which were once considered a luxury. And when the dust settles, the communities that introduced competition by creating shared digital road systems are going to be doing much better economically.

In the nineties, as the Internet became more popular, there was a long-running and often tedious discussion of what the "killer app" was going to be that would make everyone get Internet access. I always thought the whole discussion was a waste of time, because it was obvious to me that at that time, email WAS the killer app. People signed up for Internet access because they recognized the value of email for business use, personal use, or both.

There is a similar discussion underway for broadband and particularly broadband over fiber (i.e. fiber to the home). I think it will be health services and applications. The Internet has already begun to disrupt the way health services are delivered, but we have barely begun to see what is possible. Today, services like Fitnet provide personalized interactive work out sessions, along with related products like the Nike collaboration with Apple that tracks runners and joggers. Apple watchers suspect that the company is going to roll out sophisticated new apps for both iPhones and Macs.

Other companies are preparing to offer doctor visits via HD webcam-enabled software, and if companies like Apple lower the cost of sensors that monitor your health (e.g. blood oxygen levels, heart rate, blood sugar and insulin levels) we could see significant changes in the way health care is provided.

The most potential is for improvements in the management of chronic health problems like diabetes and heart disease, where the ability of low cost sensor to provide hourly and daily monitoring of key information could lead to early diagnosis and better treatment.

Most of these services are going to require a broadband connection, and cutting out just one $80 copay for a doctor visit per month will easily cover the cost of a fiber connection to the residence. Communities with aging populations and/or are desirable retirement locations will want fiber everywhere to deliver health care services where they are needed.

A couple of weeks ago, a U.S. Appeals Court told the FCC that their net neutrality rule was invalid. This has caused a huge debate among broadband industry folks about what comes next. The court ruling hinges on the way the FCC categorizes services like TV, phone, and Internet as either a "telecommunications service" or an "information service." To make things even more complicated, the FCC definition of "common carrier" also factors into the rules.

I have read at least two dozen opinions about what all this means, and I have yet to see even one address what I think is the core problem: the FCC is trying to make rules about Internet use based on two definitions (information service, telecommunications service) developed decades ago when cable TV was based on a technology completely different from voice telephone service.

When we can deliver literally hundreds of services from competing providers over a single fiber strand to a customer, why are we trying to make rules based on outmoded and antiquated service classifications.

I have always been a contrarian with respect to net neutrality; despite protests from the incumbents over the FCC's net neutrality rules, I have always thought the incumbents were the biggest beneficiary of net neutrality, as it makes it more difficult to build a business case for a competitive network in a community. There is going to be some pain associated with migrating away from the current de facto incumbent monopolies that exist in most communities today. Better to get it over with sooner rather than later, and get more businesses and residents connected to a truly competitive fiber network, rather than trying to prop up the incumbents.

This CNet article is one of the best summaries of the foofaraw over the FCC net neutrality reversal.

I have always been a contrarian on this issue. The big fear is that if the incumbents are free to charge differential pricing for different kinds of content, content will get more expensive. The classic example, which is used in the article, is that Comcast or Verizon will charge subscribers $10 a month more to access Netflix or Youtube because those services use so much bandwidth.

My response is "So? They are running a business. They should be able to charge whatever they want. If they price their service too high, a truly open market will introduce competition and they will a) lose customers, or b) lower prices."

Now this is where some people will start grumbling about incumbent use of public right of way and the obligation of right of way users to be "fair."

If Comcast raises their prices on their old-fashioned copper infrastructure, it might create the right market conditions for a new company to lay fiber...in the right of way...and provide a better service at lower cost. Net Neutrality, as currently conceived, benefits the incumbents more than it hurts them by discouraging "true" pricing and thereby limiting competition. I suspect that the incumbents find it useful street theatre to complain about net neutrality but actually like it. It keeps the riff-raff start ups out of their markets.