[opendtv] Re: More on Verizon & Google

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Thu, 19 Aug 2010 07:12:09 -0400

At 3:32 PM -0500 8/18/10, Manfredi, Albert E wrote:
Egalitarian has nothing to do with it. The point is, the Internet is for the most part ad supported, and that's why it is popular. If people had to pay by the minute, or by the number of hops their datagrams must travel across, or by the e-mail or web session, the equivalent of which they had to do with telephone service back when, the Internet would never have become what it is today.

Once again you are pulling stuff out of your A$$ Bert.

Advertising plays a minimal role in the generation of revenues to pay for the operation of the Internet. Total Internet ad revenues for the U.S. were $22.7 Billion in 2009. Most of this money helped pay for services that can be accessed via the Internet, NOT the physical infrastructure of the Internet. For example, ad supported search made up 47% of the ad revenues. Here is a good link to explain this.

http://www.looksmart.com/iab-releases-internet-advertising-revenue-report-for-200

People DO PAY for Internet access directly. Total global broadband access revenues were $164 billion in 2009 and are expected to grow to $210 Billion by 2014.

http://www.iptv-news.com/iptv_news/march_2010_2/global_fixed_broadband_revenues_to_exceed_us$_210bn_in_2014

The major difference from the old telco model is that consumers are paying for the pipe, and to a limited extent for some of the services you listed above. The typical broadband service includes access charges, e-mail hosting, and increasingly server space for website hosting.

When I said the Internet is egalitarian, I was specifically talking about the fact that the cost broadband service is all inclusive and spread out across all users of the Internet. This a huge departure from the old telco model, and even the recent wireless telco model where every service comes with additional charges.

Those who create services that can be accessed via the Internet can support the cost of these services in many ways. Some are advertiser supported. Some are paid from corporate marketing budgets. Some - like the hosting of this e-mail list - are public commons projects supported by donations and volunteer labor.

Swamp Head is paying about $15 per month for the hosting of our website and e-mail. We do not recover any of this cost with advertising, but one could say that the entire point of having the website is to help consumers learn about us and our products. Compared to other methods to reach the public this is a trivial expense; a Yellow Pages ad would cost thousands a year. Newspaper and magazine ads would be prohibitively expensive, as are TV and Radio. The Internet allows us to reach the public - or I should say the public to reach us - for next to nothing, and that my friend is very egalitarian.

As an Internet user, advertising is often as annoying as in any other medium, I don't like clicking on a link then getting an ad screen before I can access the content. But I do understand that the content may need to be monetized, and if an ad attracts my interest, I can click through and get some useful information. The reason that search advertising makes up such a large component of total Internet advertising is that it HELPS consumers find information and products that they want, as opposed to being barraged with ads for stuff they probably don't want.

Perhaps the ultimate "reward " from the Internet, is that moving bits for very low cost has exposed the huge costs that prevailed with earlier business models. The Telcos once charged us upwards of 25 cents per minute for long distance calls (much more for International calls). Now a broadband subscriber can call almost anyone anywhere in the world for only to monthly cost of the broadband service.


So, it doesn't make sense to push the TV industry back in time, to a model that the TV industry never had, and that the obviously successful Internet never had either.

Perhaps what you were really trying to say is that ads are seen by a whole bunch of people on the Internet. If that's what you were trying to say, thanks for making the case for OTA brodcasters having a nationwide footprint.

No Bert, that is not what I was trying to say.

I understand your concern that the telcos would like to maintain the old model of charging for every bit and for every service, and that they would like to take spectrum from broadcasters to expand and enhance their networks.

But the reality is that the Telcos are powerless to perpetuate this model. At best, they may be able to charge consumers who are heavy users a bit more than those who use less. Apple was successful in getting AT&T to offer unlimited data plans when the iPhone was introduced. As a result AT&T has been playing catch-up to build out their networks to meet the demand. The recent change to plans with data caps appears to be a step backwards, however, it too may be more egalitarian.

I just switched all four of our Family Plan lines to the $15/mo data plan that provides 200 MB of data per phone. Turns out that none of us were using more than about 50 MB per month, and as a result we are now saving $60 per month, while heavy users can still get a GB/mo for less than the old $30 plans.

Unfortunately, someone has to pay the billions that the Telcos are paying the government for the right to use the public spectrum. This is nothing more than a spectrum tax.

Perhaps you are right that we should continue to allow broadcasters to use the public spectrum, virtually for free. Looking back in time, TV broadcasters did provide a valuable service, one that the public enjoyed and heavily utilized. But this is no longer the case.

Today only a small percentage of the public uses the service. I believe a major reason for this is that TV broadcasters have refused to update their business model and develop services that the masses want. To be fair, the conglomerates that provide most of the content for the Broadcast TV service are moving on to new business models, while trying to suck what little life is left out of the old model until it dies.

Where are the next generation broadcasters, and what is their plan for the 600 MHz spectrum?

Regards
Craig


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