Be on the wave or under it
The News – 04/01/02
Broadband Content Wars
old chicken and the egg problem for sellers of broadband services.
This problem has confronted any new communications medium, from
radio and television to fax machines to the Internet: no one
comes because there's nothing there; there's nothing there because
no one comes.
in this case, broadband doesn’t represent any radically new
capability. It’s just more of the same, but faster. Despite
fairly steep adoption rates, the broadband industry is finding
resistance among users who can’t justify ponying up twice as
much money ($45 - $50 a month) for faster access. And don't
even get me started about the clueless telephone companies that
won't extend the reach of DSL in fear of losing fat corporate
those who have broadband clearly like it. According to a 2000
study by Arbitron/Coleman,
consumers with broadband access spent an average of 22 percent
more time each day with electronic media, devoted much more
of their daily electronic media time to the Internet, and were
far more likely to use downloaded and streamed audio and video
content than dial-up users.
and Coleman’s 2001 update to the earlier
study found some very interesting trends:
- Nearly a third of American Internet users, or roughly 20 percent of all Americans, have broadband access. Nearly two-thirds of those get it at
work while only a third get it at home. Only 15 percent have
broadband in both places.
- Residential broadband satisfaction levels remain exceptionally
- Those with broadband access spend as much time using the Internet
as they do with radio or television.
- Entertainment—and not just speed—can potentially fuel future
residential broadband adoption.
- Streaming media show little potential for “hurting” traditional
broadcast media and will more likely complement radio and
- Heavy downloaders of music share many similarities with heavy
consumers of prerecorded music. Those who listen to a lot
of streaming audio share many traits with heavy radio listeners.
- Recent restrictions on audio downloading are having an impact.
- Awareness of the halting of media streams due to the rights
controversies is high, and many of those who have encountered
discontinued streams have easily found other sources of streaming
audio that deliver similar programming.
- Even among those who have broadband access, technical limitations
continue to present a significant usage obstacle for streaming
- Video downloading has achieved little more than novelty status
Redefined (2001) by Ernst & Young and Cap Gemini Ernst
& Young (from the Department of Redundancy Department) recommends
that content owners let go of their paranoia about controlling
the entertainment medium and go with the new flow:
The future of content will be about
having on-demand access to it, not ownership of the physical
medium [ . . . ] The explosion of digital broadband access means
multiple new revenue opportunities for content producers, the
creators of entertainment, news, software and business applications.
As one CEO reflects, “technology will fundamentally reshape
the way content can be delivered and stored.” Content producers
who want to capitalize on the new opportunities will apply creative
new approaches to advertising as well as take full advantage
of the mix of revenue generators including content subscription,
pay-per-use, time-specific pricing, mobile content and digitization
of existing content.
was based on 128 in-depth interviews with CEOs and executives
in the communications, entertainment, and enabling technology
industries and analysis of secondary data from more than 100
information sources around the world. Among the study's other
major findings and predictions:
- Online advertising is in a sort of purgatory right now, but
the CEOs surveyed are generally upbeat about its long-term
prospects. “Advertising in the digital world will be a lot
more effective. Consumers will have a choice to either remain
anonymous and receive content for a premium, or surrender
some personal information and receive the content with some
personally targeted ads,” predicted one CEO.
- Content producers who had been distributing their content for
free or with traditional pricing will migrate rapidly to other
models, such as subscriptions and per-transaction pricing
and time-sensitive pricing.
- Content packagers have emerged as a pivotal point of value creation.
The term content packager describes an Internet business model
in which an electronic intermediary helps people find what
they're looking for by matching its knowledge of the customer
against its knowledge of information and applications. The
study even identifies application service providers (ASPs)
as potential content packagers.
- Network players finally have to place their bets on services.
Network operators, with their core network franchises imperiled,
must diversify into value-added services in order to survive.
Revenue from data transmission is growing 18 percent per year,
but that growth rate is beginning to slow and the prices are
falling so rapidly that network operators are experiencing
declining returns on their network investments. On the other
hand, CEOs have noticed that revenue from communications-based
services is expected to balloon by an average of 68 percent
per year for the next four years.
- Four implementation challenges guard the gates to a company's
success. Winning the war for talent, building an agile organization,
focusing on the customer and improving operational support
systems surfaced as the universal business challenges shared
by CEOs in the communications, entertainment and enabling
technology industry sectors.
Arbitron/Coleman and the E&Y&CGE&Y studies paint
a rather rosy picture of the broadband future. But other voices
are warning that broadband’s penetration is slowing and folks
won't necessarily pay for online content. We’ll take a look
at the other side of the issue in the next SNS.
Cap Gemini Ernst &
Shameless Self-Promotion Dept.
Nothing to push or pump at this time.
our survey on corporate policies on home use of network
StratVantage has launched a new service, CTOMentor™, designed
to allow Chief Technology Officers and other technical leaders
to get rid of the Guilt Stack, that pile of magazines you’ll
get around to reading someday.
CTOMentor is a subscription advisory service tailored to
customers’ industry and personal information needs. Four
times a year CTOMentor provides a four-hour briefing for
subscribers and their staffs on the most important emerging
technology trends that could affect their businesses. As
part of the service, subscribers also get a weekly email
newsletter, Just the Right Stuff
™, containing links
to the Top 10 Must Read articles needed to stay current.
These and other CTOMentor services will let you Burn
As part of its launch, CTOMentor is offering a two-part
white paper on peer-to-peer technology: Peer-to-Peer
Computing and Business Networks: More Than Meets the Ear
Part 1, What is P2P?
, is available for free on the
. Part 2, How Are Businesses Using P2P?
- Nano-whippersnappers or Buggy Whip Slayers?
Business Week recently did a round-up on the topic of nanotechnology.
For a technology with such a mammoth, paradigm-changing,
old-line-business-killing potential, BW takes kind of a smarty-pants
attitude before settling down to a serious consideration of
the phenomenon: “300 nano-whippersnappers in the U.S. and
overseas are targeting what promises to be a new Industrial
Revolution. Nanotechnology will leave virtually no business
untouched--or unscathed. The ability to create materials from
building blocks the size of a virus will unleash unprecedented
capabilities.” Makes me think of the smug buggy whip manufacturers
of the turn of the 20th century. Note to people
who make things for a living: Westfield, Mass. once
was home to companies that made more than 90 percent of the
world’s supply of buggy whips. There’s one buggy whip maker
there today. The rest were run over by cars. Nanotech isn’t
a car; it’s a fast train a-coming.
- I Want This Phone: Alert SNS Reader
Larry Kuhn sends along another cool phone: the PC-Ephone,
which is based on the full-blown Windows CE operating system,
unlike Microsoft’s impending SmartPhones. One of the coolest
things about the phone is it has a 4-inch, 640 x 480 resolution,
256 color TFT LCD screen, thus bringing portable devices into
the range of desktop PCs circa 1990.
Even more interesting, PC-Ephone has licensed Wicom Networks’
family of 802.11a products and plans to make them available
in their phones this year. As previously
mentioned in SNS, 802.11a is much faster than its brother,
802.11b (WiFi), giving up to 24Mbps speeds. The technology
uses the 5 GHz Unlicensed National Information Infrastructure
(UNII) band, thus avoiding potential interference with other
applications in the 2.4 GHz band, such as Bluetooth and WiFi.
You can see why I think
the 3G network providers need to worry about 802.11 networking.
- Monster Server Farm: Now that’s a
lot of horsepower! Pixar’s film, Monsters Inc., was rendered
in the Pixar Renderfarm, which is powered by 250 Sun Enterprise
4500 servers, running Solaris™, each having 14 UltraSPARC™
II microprocessors, 14 gigabytes of system memory and 196
gigabytes of local disk space for a total of 3,500 processors
in production with nearly four terabytes of main memory. The
mind boggles. I'm taking bets as to when this decade you can
buy this kind of capacity for your desktop. Or your palmtop.
Return to Mike’s
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14, 1928 - July 5, 2003
Jane C. Ellsworth
20, 1928 - July 20, 2003