[opendtv] Re: 20050509 Mark's Monday Memo
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Mon, 6 Jun 2005 08:32:29 -0400
i was just going to ignore this stupid response from Bert until I
became a Marxist...
At 7:06 PM -0400 6/5/05, Manfredi, Albert E wrote:
>
>The issue here is whether or not this fictious
>"utility" of yours effectively bypasses the gatekeeper
>problem. That is, whether it avoids having to keep
>certain bandwidth aspirants out. It does not, because
>its bandwidth is still limited compared with what its
>competition has (i.e. compared with cable and DBS).
Even the cable guys are trying to put more stuff into "their
spectrum;" everything has opportunity costs. But cable is trying to
do a bunch of things that would not be possible (or at least a viable
economic use) in the broadcast spectrum. For example, the spectrum
utility would not be expected to deliver two-way broadband services
to consumers in a market, although they might use IP multicasts to
deliver popular bits to the masses. And the broadcast spectrum would
not be useful for IP telephony - although the most likely bidders for
the spectrum that is being recovered will be the wireless telephone
companies.
So be careful what you ask for Bert, because in the long run, two-way
wireless phones can generate more money than any entertainment
application that uses the spectrum to deliver its bits.
As is the case in ANY REAL market, some aspirants will find the cost
of doing business too high. And some will find ways to develop new
businesses that generate more revenue than the traditional
entertainment applications that fill the broadcast spectrum today.
>
>The telephone system uses a simple strategy: first
>come, first served. If its bandwidth is in short
>supply, you simply get a busy signal. A broadcast RF
>utility can also use that strategy, which would allow
>those with 24 hr/day streams to have perennial access.
>Not very different from what we have today.
Apples and oranges. The phone network is built based on statistical
usage patterns that work quite well 99.9% of the time. Only when
there is a major emergency like 911 does the network run out of
bandwidth. But this is meaningless in regards to the spectrum utility
concept.
With the spectrum utility there is a marketplace for a scarce
resource. If demand exceeds supply of bits, then the price will go
up. If a potential user wants to deliver content on a 24/7 basis they
will need to pay the market rate at any given time of day. If there
are other users who will pay more for the bits during certain time
periods, they may decide that maintaining a 24/7 service is not
economically viable.
Frankly, I believe the days of 24/7 channels may be numbered, unless
there is a business model that draws people throughout the day and
night. Thus a news or weather channel may be 24/7. but an
entertainment channel would not program 24/7. This is true today. The
broadcast networks have huge chunks of time that they do not program,
leaving it in the hands of affiliates to fill the gaps. Some program
24/7; some shut down the transmitters at night.
As we move into a world where content is targeted at specific users,
the need for 24/7 channels is likely to disappear. If you look at the
most popular cable networks, most run their most popular programs in
a checkerboard repeat patterns. With local caching they could deliver
all of their content to "subscribers" using only a fraction of the
24/7 programming week. I can;t predict exactly how this will play
out, but I can say that building relationships between content
providers and their viewers (subscribers) is going to be very
important. In short, there will be much better loyalty to favorite
shows, than there will be to favorite networks. But then, this is
already true today.
>
>Or they could solve the problem by allowing only the
>highest bidders access to the spectrum. Again, not much
>difference from what we have today.
Really. The telcos will be surprised to hear this. they have been
trying to get their hands on the 700 MHz spectrum for decades.
I guess you mean the highest bidder for bits from a spectrum utility.
If that is the case, you are very naive. Today the conglomerates pay
virtually NOTHING for the spectrum they use. Their only cost is to
share a little commercial inventory with affiliates. IN the major
markets where they operate stations the average profit margin is in
the range of 25-50%. You don;t get these kinds of profit margins
unless external factors ( regulation) prevent real competition...as
is the case today.
>Or they could solve the problem by allowing only those
>with popular content to have access. Which again would
>favor the major conglomerates, as we have today.
Anyone with popular content "may" have an advantage for two reasons:
1. IF it is popular they can attract a large audience which in turn
will produce more ad revenues to pay for their bits.
2. Old habits die slowly. The popular content aggregators will
continue to have an audience as things evolve. And they will continue
to be in a good position to pay a premium for live content, the one
area where TV broadcasting continues to draw consistently large
audiences.
I'm not trying to put the conglomerates out of business. I just want
them to compete on a level playing field, and to pay for the spectrum
they are using.
>Or they could use your Marxist preferences of giving
>access to unpopular content (to each according to his
>needs, from each according to their abilities), based
>on some altruistic criteria established by some
>bureaucracy, which would only succeed at reducing
>access to popular content for the sake of giving local
>PTA meetings equal access. And viewership will
>decline.
This is really rude, and completely misses the mark.
All systems today carry some unpopular content, if for no other
reason than to meet public service obligations. Most cable franchises
include local access channels and deals where city and county
meetings are televised. Most TV broadcasters run some locally
produced public service shows. According to Eddie Fritts,
broadcasters provide billions of dollars of inventory for public
service announcements annually; he cites this as the compensation
that broadcasters are providing in return for use of the spectrum. I
call this getting off cheap, as the vast majority of these
announcements are run at times when the stations cannot make money
selling ads.
Bert is missing the forest for the trees. It is not bandwidth that
is scarce. It is good content that is scarce. If you gave each market
twenty 6 MHz channels, you would need more than one hundred 24/7
channels to fill that spectrum. But this misses the main point. If
all you need is a few hours a week to deliver your bits, the chances
are excellent that you will be able to find an affordable time slot
to deliver your bits.
By the way, I would expect that some portion of the bits in each
market would be assigned to public service applications, including
city and county commission and school board meetings. And I would
expect that a wide range of data services would be delivered by
public agencies to consumers using this spectrum.
>
>So your whole thesis falls apart.
Coming from you, this increases my confidence that I am on the right track.
>
>> The "copy protection paranoia" is just another
>> WALL that the oligopolies have erected to prevent
>> competition.
>
>Except that it's pervasive. Not just for industries
>that deal with media steams, such as TV
>broadcasting, but also for industries dealing with
>content that can be viewed any time, such as the
>Hollywood studios. But there are ways of making
>these non-real-time downloads quite secure, so in
>time the content creators will be more flexible
>and the broadcasters can use this new flexibility
>to their advantage.
Same industry, different applications.
The real question is whether programs broadcast in the clear need ANY
form of protection? Somehow these guys have been making fortunes for
more than 7 decades of radio and TV broadcasting without copy
protection.
The only reason that "piracy" exists is that market forces to
properly price the content do not exist. Is a song really worth a
billion dollars? In the future it will not be far fetched to sell a
billion copies of content for a buck a piece. New pricing models will
emerge that do a better job of allocating financial rewards for
content with broad popularity. And then there is the reality that the
best way to sell millions of copies of anything is to make it popular
by giving it away to promote it.
>
>> Non-real-time download is a huge threat to the
>> existing business model of television. It can
> > turn non-productive bandwidth into competition for
>> the most productive bandwidth, ...
>> It is CENTRAL to this discussion, not orthogonal.
>
>The discussion is orthogonal, because it's up to
>content creators to get over the paranoia. And
>content creators would be the ones who create the
>bits, whether it's in your single "utility" model or
>in the current multiple utility model. The same
>solution solves the bandwidth problem for either
>model. Hence, ORTHOGONAL to this discussion.
Wrong again. You keep citing 24/7 streams/channels. They eat up
plenty of bandwidth, but hardly anyone is watching much of the time.
If you replace this with a subscriber/download model, you free up
vast amounts of bandwidth.
>
>> I NEVER said that the rates would be regulated by
>> anyone. They would be regulated by the marketplace.
>> I did say that there is a role for regulation in
>> preventing a few major players from dominating the
>> new marketplace.
>
>That's doubletalk, internally inconsistent and
>contradictive.
Coming from the expert on this subject, I take this as a complement.
;-)
>If the marketplace sets the prices,
>by definition that means the highest bidder gets
>access. That is the definition of unregulated. If
>you weasel as you did above, then you're a
>gatekeeper that does NOT simply respond to the
>marketplace. You would need to keep certain
>content creators out in order to give "Turkish
>sitcoms" a chance at the airwaves.
This is absurd. It is not a question of keeping anyone out. It is a
question of keeping a few players from keeping everyone else out. If
there is a cap in large markets that says you cannot program more
than say 30% of the bits, then you still have plenty of access. You
just need to prioritize how you use those bits.
This should not be a problem, as no single oligopoly has control of
30% of the spectrum in any large market today. The caps that are in
place today are based on a percentage of the national market. These
caps would go away, as a conglomerate could buy access to every
market in the country. They would only be capped on how much of the
bandwidth they could control in any single market.
>
>> The utility concept changes the fundamentals of
>> the infrastructure, which is how we can achieve
>> higher levels of spectral reuse.
>
>Which multiple utilities can do just as well. Just
>give them a chance, which means shut off analog.
Your missing the main point Bert. The situation is NOPT going to
change with high powered ATSC broadcasts. This the the main reason
for poor spectral efficiency. You need to change the fundamental way
in which the spectrum is used in order to achieve higher levels of
spectral re-use.
>
>> I refuse to base arguments about the future on
>> what has worked in the past. I prefer to knock
>> down the barriers to real competition and see
>> how the marketplace responds.
>
>Spoken from someone who has nothing to lose and
>everything to gain from this strategy. Sell more
>copy, and with vague enough arguments which can
>be contradicted later, risk nada.
What do any of us have to lose...
Reruns of American idol?
Give it a rest Bert.
Regards
Craig
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