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Optical/IP

LR's TIC: Get Me Video

NEW YORK -- Imagine a telecom world in which you can watch your neighbor’s own TV channel, the mobile phone industry is driven by advertising, Sean "P.Diddy" Combs has his own branded telecom service, and VOIP is ubiquitous.

These are some of the scenarios for the future of telecom, according to participants at Light Reading’s third Telecom Investment Conference, held here yesterday, drawing an audience from the service provider, equipment provider, and investment communities.

The biggest question gripping everybody, of course, is the money.

“The biggest problem is the majority of service providers don’t know where their future revenue is coming from," said Heavy Reading senior analyst Graham Finnie said in the panel discussion of fixed-mobile convergence (FMC).

Keynotes Joan Kratz, vice president of marketing for BellSouth Corp. Business (NYSE: BLS), and John Abel, executive vice president with the United States Telecom Association (USTA), both pitched services that have the potential to pump up the industry.

For Kratz, it’s business-quality VOIP, which could be sold with a suite of hosted telecom applications, including the possibility for fixed-to-mobile roaming (see VOIP Goes Mobile in NYC). For Abel, the future lies in video -- supported both by usage fees and advertising.

Abel, a self-confessed video addict who claims to have both a fiber broadband connection and a T1 line feeding digital video to more than 20 television sets in his home, says telecom providers are going to have to move into content to make money, especially video content.

”Humans behave like animals when they get around video,” said Abel. "They watch it, they keep it. They keep stuff that they don’t even ever look at… Voice is not the endgame."

Abel said that because most people don’t actually like cable’s linear programming model, programming-on-demand could give telecom providers a competitive edge in the battle for triple-play services. He believes one business model that could work for telecom providers is usage-based revenue sharing for on-demand video content. But he seems skeptical about whether his constituency could do it quickly enough.

Abel also said he expects to see advertising becoming a larger part of the telecom industry. For example, users could agree to get extra minutes from their mobile providers in exchange for looking at advertising.

On the FMC panel, Ken Zita, managing partner with Network Dynamics Associates, also said he sees advertising growing. He said the “dark side” of advertising could rear its head in mobile networks, to the point at which everybody’s mobile phones deliver targeted, personal, location-based advertising messages to the user.

On the technology front, there was much discussion of the emerging standards that will drive IPTV, IP convergence, and FMC. Heavy Reading's Finnie, who moderated the FMC session, said that telecom “supercarriers” are in the works as the industry gravitates toward bundled packages of wireless and wireline offerings.

IP Multimedia Subsystem (IMS) is the set of standards being hammered out in the 3rd Generation Partnership Project (3GPP) that will enable a single infrastructure for both fixed and mobile communications, said Finnie: "It's emerging as the de facto standard." (See IMS Guide.)

IMS could in turn boost the power of wireless networks, which are growing in size and influence,” said Finnie. “There seems to be a growing idea that wireless access will usually be the first link to the consumer."

Roderick Randall, senior managing director with Vesbridge Partners LLC, said the success of telecom carriers will depend on how they bundle and package new services with interesting content, to create new brands.

”Entertainment and bundles… something that gives people an emotional experience. That’s where the action is,” he observed. As an example, Randall said he expects the concept of branded Mobile Virtual Network Operators (MVNOs), to take off. “We might see the P. Diddy or Sean Combs mobile network,” said Randall.

Zita agreed: "Yes, it's all about brands."

But the real debate of the day came at the wine-tasting, a "Sideways"-themed battle of wines made from the Pinot Noir grape. The question of which was better -- a Sanford California Pinot Noir or a Domain Dominique Guyon Hautes Cotes-De-Nuits Burgundy -- was determined by raw consumption. According to Joe Bibbo, Sommelier, at the W New York Union Square/Olives, the crowd went for the California wine, consuming three more bottles than the burgundy.

— R. Scott Raynovich, US Editor, Light Reading

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dljvjbsl 12/5/2012 | 3:19:37 AM
re: LR's TIC: Get Me Video I should have not be as surprised as I was when I read this article. After all it came from the industry that gave us the on line pet food store. I have never read of such a bunch of insipid tripe as I did when I read the product concepts in this article.

This is an industry that is going to give us -- wait for it - the never before heard of idea of video on demand. We are all going to spend fortunes to watch the latest Hollywood blockbusters over a video link. There are also some very reasonably priced bridges in New York that can be had for modest down payments.

Another new idea is location-aware SPAM. After we spend most of our discretionary income on VoD services, (how many times has this prediction been made?) we are of course going to be delighted to carry around portable video devices that will play SPAM to us as we walk down the street.

rjmcmahon 12/5/2012 | 3:19:36 AM
re: LR's TIC: Get Me Video It looks like advertising based funding models distorts the reporting of information so much that it's hard to take any media seriously.

Here's another distortion printed by the SJ Mercury News. Reporters in Chicago are claiming that the phone companies and cable companies are in an epic battle to serve SV citizens. Anybody living in SV can see nobody is really wiring homes.

http://www.mercurynews.com/mld...

Epic fight looms to wire homes

CABLE, TELECOM OUT TO SELL HIGH-SPEED ACCESS

By James P. Miller and Jon Van

Chicago Tribune

CHICAGO - With the nation's two largest cable-TV operators reportedly poised to finalize a $17.6 billion purchase of rival Adelphia Communications, the race to bring high-speed Internet service into American homes appears likely to grow even more fevered.


Then on the same front page of the business section it's printed that executives from Google, billionaires, are "only" taking a $1 dollar in salary.

Obviously absent in this paper for years is the report about how SV billionaires are helping to fund open access networks and supporting the production of content which strives for a neutral point of view.

In my opinion, our "free market" press could take more seriously the issues of curriculum.

http://www.uwsp.edu/education/...

The Null Curriculum: That which we do not teach, thus giving students the message that these elements are not important in their educational experiences or in our society. Eisner offers some major points as he concludes his discussion of the null curriculum.

"The major point I have been trying to make thus far is that schools have consequences not only by virtue of what they do not teach, but also by virtue of what they neglect to teach. What students cannot consider, what they don't processes they are unable to use, have consequences for the kinds of lives they lead."

...

Eisner's position on the "null curriculum" is that when certain subjects or topics are left out of the overt curriculum, school personnel are sending messages to students that certain content and processes are not important enough to study.


Reporters from Chicage claiming epic battles going on in SV while local reporters in SV write articles about $1 salaries for billionaires does not represent what is important to our society.

Shame on us all.
dljvjbsl 12/5/2012 | 3:19:36 AM
re: LR's TIC: Get Me Video The article also quotes people touting IMS. This is the standard for creating applications that contains no guidance as to creating applications. It has a magic box that can solve all application problems but has left the design of the magic box as an exercise for the reader.

No wonder this industry is in deep trouble.
Scott Raynovich 12/5/2012 | 3:19:33 AM
re: LR's TIC: Get Me Video dljvjbbsll&!,

Let's try to be constructive here... do you have an alternative plan? The world will not devolve into a communications-free communist state. So let's hear your ideas for growth.

Scott
OldPOTS 12/5/2012 | 3:19:33 AM
re: LR's TIC: Get Me Video rjm,
I am glad I retired as I see Video going the way of VoIP, as a 'feature' and not a large profit center. Maybee your municipal IP transporter starts making sense, because only the content provider brings value and marketing savy, the rest are just features (materialgirl).

OldPOTS

I remember a telco (now acquired) asking about this in an RFP during the early days of FR/ATM. Not receiving a good answer they choose not to invest.
BlueWater66 12/5/2012 | 3:19:32 AM
re: LR's TIC: Get Me Video
A couple months ago we signed up from home VOIP, as have many of my neighbors. The costs of bundling Broadband, VOIP and Cable (and cutting out the @#[email protected]#%^ US RBOCs) is substantial. Quality is good.

But- this is an arbitrage play. It costs much less than buying the individual services. If I could roll cell phones into the mix and save another $40/mo, great. For the providers, the economics are terrible. These aren't really 'new' services. It represents cable cannibalizing the RBOC customers. Given things like gas in the US, which now costs $30-$40 per tank, I suspect targeting discretionary money is difficult. I'm completely into technology, but unwilling to pay extra for it. Most of the people I know also have a very very negative option of the RBOCs. Their customer service is terrible.

Good luck... if they push down capital costs fast enough to offer cool new services (fixed, wireless, video.. whatever) at a much lower total price point, they'll win. But- I'm not willing to buy their stock as they play that game of chicken.
paolo.franzoi 12/5/2012 | 3:19:31 AM
re: LR's TIC: Get Me Video
Scott,

The basic isssue is how to foster local loop investment. Now, there is a country quoted over and over again as having the lead in the deployment of broadband. That would be South Korea. Now, if we remove the folks who declare even KT's service fraudband we end up with 2 problems:

1 - What is the root cause of the investment in KT's service?

2 - Is there a way of emulating this root cause?

My answer to 1 is the same message I have posted here several times. The South Korean government has a broadband policy. To ensure it's implementation, the local access provider (KT) gets a cut of the content profits. So, it is in the best economic interest of KT to put out broadband. If you read our little set of boards here, you will see that to a man/woman they seem interested in removing profit from the local access provider. rj (at least) wants government to replace this incentive. My view is profit streamlines investment and stirs the pot better than the government.

2 - Emulation of this concept is very much on the way (in my opinion). As we move to triple play broadband only networks, I have posted about the concept of the carrier having direct business relationships with business partners. That these partners would get effective access to consumers (i.e. appropriate bandwidths and QoS management). However, there will be spotty service to those providers that want to come over the public Internet. At this point, there is shock and horror about openness. I go to then a little bit of commentary about where bottlenecks are in the network and point out that the access network massively oversubscribes the metro Internets and the Internet Backbone. At which point people then go pish posh of course we can oversubscribe, until you get real time services that take lots of bandwidth - like real time video. At this point, people decide that nobody really wants real time video and that storage based video is all anybody needs. Of course storage only companies will be up against stored + real time companies. Shrug, I see inevitability of this content access hotel.

seven
materialgirl 12/5/2012 | 3:19:30 AM
re: LR's TIC: Get Me Video Dear Scott:

The only constant is change. Your suffering will end when you let go of your attachment to the past. Let it go.

IP has changed the world. It certainly has changed telco business models beyond recognition. Trying to apply the future to past economic models in this instance will only cause pain. They are dead, so let them rest. We must deal with a new reality, not be sad over the old one.

You may not like our "communist state", but it is coming. The Internet was developed by scientists, not business people. It was designed as a tool to exchange ideas, not make profits. As a medium of intellectual exchange, like on your message boards, it is excellent. It is, however, just as horrible as a medium for making money.

We need to take a fresh sheet of paper, look at what we have now, and figure out how to best leverage it. We do not need to try to fit the new paradigm onto the old model. It just does not fit.
dljvjbsl 12/5/2012 | 3:19:30 AM
re: LR's TIC: Get Me Video
At this point, people decide that nobody really wants real time video and that storage based video is all anybody needs


What real time video is required in the market? Most VoD services supply either sports which is really a broadcast service or Hollywood movies which are by their nature stored.
dljvjbsl 12/5/2012 | 3:19:30 AM
re: LR's TIC: Get Me Video
Let's try to be constructive here... do you have an alternative plan?


I rally see that there is little hope for the telecom carriers. They seem to be fixed in the old model in which all applications reside on the network. Applicaions belong with providers who have competencies that relate to user need. Carriers have little if any competence in any of the new product areas that are opening up.

Hosted applications and fixed to mobile convergence are possible successes in the market. However the question is what relevance do the carriers have to these? Hosted business applications would seem to belong to exisitng providers such as Oracle, SAP etc. and new start ups rather than communciatoion companies who have no expertise in the area.

The msot constructive thing that could be done would be to plan for time when carriers have lost their end services market.
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