Content and services

The death of cable TV: Part XXIX

Submitted by acohill on Tue, 08/30/2011 - 14:28

I had a conversation last week with a new college grad who had just started a new job and had moved into a new apartment. The young woman had a couple of questions about her Internet connection, which she had purchased from the local phone company (DSL). I asked if she had considered a cable TV/cable modem package.

She said, "No, I never watch TV. I can get whatever I need from the Internet."

In a nutshell, the customer base of the cable TV industry is getting old and dying, and they don't have a plan to attract younger customers.

Groupon spells "bursting bubble"

Submitted by acohill on Wed, 08/17/2011 - 07:34

The Harvard Business Review says that Groupon is failing. The half price coupon service has apparently burned through nearly a billion dollars in venture capital and needs just a measly three-quarters of a billion to keep going. Apparently there were some VC folks and business managers who learned nothing during the dot-com era. Groupon apparently spent on growth without attending to a fundamental business requirement: you actually have to make money. So they outspent their revenue by a large margin in the naive belief there is no top to their market opportunity.

Skype HD video rolled out for Macs

Submitted by acohill on Mon, 08/08/2011 - 12:47

Skype has rolled out HD videoconferencing for Macs--it's been available on the Windows platform for a while. Here at Design Nine, we just upgraded our own business videoconferencing software to include multi-party video. We use Skype videoconferencing daily for internal communications in our three geographically distant locations, which saves us money on our landline phone bill. We use Go To Meeting for client meetings, and find the screen-sharing particularly productive when trying to discuss something like a spreadsheet financial model. If you are interested in making more use of IP video, don't scrimp on the Web cam. We have found that the better cameras, with integrated, high quality lenses and microphones perform much better--plan to spend $80 to $100. You won't regret it.

Required broadband comment: If you want to make good use of the HD quality, you'll need symmetric bandwidth of at least 1.5 megabits. What does that mean? It means it won't necessarily work as well with asymmetric services like DSL and cable modems.

The death of cable TV: Part XXVIII

Submitted by acohill on Wed, 08/03/2011 - 17:07

Here in Virginia, Roanoke County and the City of Salem are struggling with the same problem that many other localities in the country have: cable companies that won't renew franchise agreements. Comcast purchased an aging cable system from Adelphia a few years ago when Adelphia went bankrupt. At the time, Comcast promised the localities it would upgrade the old system so it could support improved Internet access. But the upgrade never happened, and so there is little competition, high prices, and poor service for broadband in Salem and parts of Roanoke County.

One of the problems that the cable companies have is that both their physical plant and their business model is obsolete. The fifty year old business model does not generate enough revenue to justify replacement of the old analog copper/coax infrastructure. So the companies are understandably reluctant to continue to make franchise payments and/or to make expensive upgrades.

To make matters worse, companies like Netflix, Amazon, and Apple are all eating away at the cable company customer base with better services that are not based on "500 channels and nothing to watch." If Apple, which has only been dabbling in streaming video, decides to throw the full weight of the company behind a serious streaming service, Amazon and Netflix will finally have some real competition. Apple did not build a 1 million square foot data center in North Carolina just so Apple users could back up their iPhoto baby pictures.

If the cable companies embraced the open access business model, they could turn things around very quickly, but so far, the cable industry has been unwilling to listen. Not so with some phone companies, who could also make a lot more money embracing open access; I've at least been able to have a conversation with some incumbents, but mid-level managers at the companies are still digging in their heels and refusing to change. So senior staff are stuck with a corporate culture that would rather have the company go bankrupt than change and prosper.

It's official: The DVD is dead

Submitted by acohill on Wed, 07/20/2011 - 13:17

Apple released the latest version of its Macintosh operating system today (OS X Lion). The software is available only via a download right now, and you better have a good, high capacity broadband connection if you want it, as the download is four gigabytes. Apple also announced that it will sell a version of the software on a USB thumb drive next month. In other words, no DVD version, not now, not ever. Apple has consistently led the way in media, including the 3.5 inch floppy, the CD drive, the DVD drive, USB ports, and Firewire, among others. If Apple is dropping the DVD, expect other computer makers to follow.

But note also that this shift to encouraging downloads of major pieces of software also highlights the need for homes and businesses to have adequate and affordable broadband connections, or be left behind.

Even more interesting, new Macs come with the ability to install the latest operating system from an entirely blank hard drive--as long as you have an adequate Internet connection.

Netflix raises prices

Submitted by acohill on Thu, 07/14/2011 - 09:54

Netflix has raised prices. I got my notice via email yesterday. They have unbundled streaming from the traditional DVD via mail, and you now can buy one service, the other, or both. The DVD service is still more expensive than streaming, which suggests that the cost of mailing DVDs remains significant compared to the cost of buying bandwidth to drag streaming content across the Internet. The pricing change also suggests that many customers have largely transitioned away from DVDs to streaming content, and Netflix is giving those customers, that don't care about getting DVDs, a break on price.

Services like Netflix, Roku, and Hulu are going to continue to put tremendous pressure on the providers of "little broadband:" the DSL, cable, and wireless providers. These old systems are running out capacity, and it's a race to the bottom for these firms. They can keep trying to upgrade the old systems, but the more they spend, the faster their customers use up the bandwidth.

Don't believe that? Take a look at the cellular data services market. AT&T and Verizon have abandoned their unlimited data plans and have put bandwidth caps on their services because they can't keep up with customer bandwidth usage otherwise. This makes the concept that rural communities will all get their broadband via the cellular providers rather silly, unless you subscribe to the notion that rural folks should be relegated to what amounts to the 21st century version of dial-up.

Facebook and LinkedIn: Be afwaid...be vewy vewy afraid...

Submitted by acohill on Thu, 07/14/2011 - 08:32

I just got an invite to Google+, the new Facebook-like offering from Google. So I created an account, and at first glance, I would say Facebook and LinkedIn have a lot to worry about. Note, however, that Google has a very mixed track record of success outside search and mapping. Anyone remember Orkut? It never caught on the U.S., although it has been successful in some other countries like India. If Google can do a better job of supporting business-oriented uses of Google+, both Facebook and LinkedIn will have to work very hard to keep their customer base.

Broadband and the emerging revolution in health care

Submitted by acohill on Mon, 06/20/2011 - 13:47

Take a look at this blood pressure cuff that connects directly to an iPod Touch, an iPhone, or an iPad. The data is stored and displayed on your own device, but the data is also sent to the manufacturer (Withings), where it can be shared with a health care professional. I'm not too excited about sharing my health information with a software firm, but what is important is that many of the standard diagnostic tools available to health care professionals are about to make managing your own health much easier, as well as giving you the tools to give your doctor much better information about your health. Doctors may be subscribing high blood pressure medicine based on just a few BP readings taken days apart, in the office, where the "white coat" effect on blood pressure is well known (your blood pressure is typically higher in the doctor's office, where you may be nervous about negative results). Compare that approach to health care to being able to easily take daily BP readings over a period of weeks or months to give a much better look at overall blood pressure. Couple this cuff with devices that reads blood sugar, heart rate, blood oxygen levels, and some other blood tests, and it will be possible to spend much less on doctor visits while actually getting better diagnoses.

Facebook: The go-go days are over

Submitted by acohill on Tue, 06/14/2011 - 15:50

Facebook growth has fallen dramatically, signaling that nearly everyone who is likely to have a Facebook account has one. The U.S., Canada, Russia, Britain, Norway, and Russia all posted lower numbers of new users and higher numbers of closed accounts. Like the blogging bubble of a few years ago, a lot of people have tried Facebook and have found they don't have much use for it. That's not meant as a criticism--I use Facebook for family stuff and like it--but it is a reality of online services going all the way back to the early growth of email. No online service can sustain double digit growth forever, and AOL learned this the hard way. What will be interesting to watch is if Facebook can institute internal cost and staff controls that keep the company in the black as their subscriber base stabilizes.

First NC, now Tennessee: Dumb Internet laws

Submitted by acohill on Thu, 06/09/2011 - 09:00

Tennessee legislators just passed a law making it illegal to transmit an image that could "..frighten, intimidate or cause emotional distress" to someone who sees it." And the person who suffers "emotional distress" does not have to be the person you sent it to. Suppose you send out a picture of a cat hanging desperately from the branch of tree to a friend. That friend forwards it on. Twenty forwards later, some cat lover sees it and is emotionally distressed that the poor cat is in danger. They look at the original sender of the email, report it to Tennessee law enforcement, and bingo, you are put in jail for a year and fined $2500 (you would have to be a resident of Tennessee).

Who writes comes up with these laws? Did they even think to ask a lawyer who specializes in constitutional law for an opinion?

Facebook facial recognition: "Creepy..."

Submitted by acohill on Thu, 06/09/2011 - 08:46

PCWorld calls what Facebook is doing with facial recognition "creepy." The social networking site has rolled out facial recognition software that tries to tag photos with your face in them without asking permission.

How many times do we have to keep going through this? I think I'm going to start a list of "Nerds Gone Wild" where time and again, some nerd at one of these companies decides it is really cool to violate everyone's privacy just because they stayed up late, drank a lot of Red Bull, and whipped up some crappy code. If you are interested, here is how to turn the, uh, "feature" off.

Is Apple about to take on Amazon and Netflix?

Submitted by acohill on Tue, 05/31/2011 - 16:58

Apple's annual WorldWide Developer's Conference (WWDC) starts on June 6th, just a few days from now, and speculation is building that Apple will finally tell the world just what it plans to do with the million square foot data center it has built in rural North Carolina. Among the fevered discussion is the idea that Apple intends to announce a TV and movie on demand service. If they do, it could change the whole playing field for on demand video streaming, which is largely owned by Netflix. TV shows and movies that are tightly integrated with the wildly popular iPad could very quickly cut into Netflix's business, and make Amazon's toehold in this area more tenuous.

Microsoft: Skype or hype?

Submitted by acohill on Wed, 05/11/2011 - 09:27

So Microsoft has purchased Skype and will integrate voice communications into various MS hardware and software products. The company paid an enormous amount of money for Skype ($8.5 billion), which is a projected future value of the voice communications firm. Microsoft obviously hopes to monetize what they bought, but what did they really get? VoIP technology is hardly cutting edge, and Microsoft has plenty of smart software folks that could cough up equivalent software in short order. What Microsoft really bought is the Skype customer list (hundreds of millions of people) and a brand name.

The problem Microsoft faces is a lousy track record of overpaying for technology and then running it right into the ground. Anyone remember WebTV? I do. It was doing extremely well when Microsoft bought it, then the whole product line disappeared rather quickly--Microsoft lost the entire investment. During the heyday of the dot-com era, Microsoft bought dozens of firms and then failed to execute.

What Microsoft has never been able to understand is that not everyone wants to use Windows, for a whole variety of reasons. Instead of trying to create great products, Microsoft has stubbornly tried to create scheme after scheme to force everyone to use Windows. How's that working out for them? Not so well.

If Microsoft is smart, they will maintain Skype as a completely separate unit within the company, keep the Skype brand, and avoid spamming current Skype users with forced efforts to drive them to Internet Explorer and/or Windows. If they don't do that and use heavy-handed marketing strategies that annoy Skype users, that will be a market opportunity for some other VoIP company to grow very rapidly--now that hundreds of millions of people are comfortable using VoIP instead of the phone, it won't be hard for all those folks to switch to some other service.

Apple is not tracking your every move

Submitted by acohill on Wed, 04/27/2011 - 08:36

I have waited a bit to write about the hoo-ha surrounding the accusation that Apple and Google were tracking user locations via GPS information stored in iPhones and Android phones. I suspected there was more to the story than was being cited in the news. And I was right. Apple has released a Q&A that explains what is going on, and it is indeed benign. Note that this applies only to Apple--I have not seen a similar statement from Google, although it is likely to appear soon.

Apple collects the location of WiFi hotspots and cell towers near an iPhone user so that applications that want to do things like tag photos taken with the cameraphone can work quickly, as opposed to having to wait as much as a minute or two to get data from a GPS satellite. There is a file that is transmitted to Apple, but data is encrypted and anonymized so that individual user cannot be identified. It is true that if you take that file from your iPhone, you could develop a rough map of where you have been, but only the owner of the phone or someone who knows the owner of the phone would be able to say, "Okay, I know where you have been." Apple cannot do the same thing because of the anonymity.

Having said that, the existence of the file on your phone could be used by law enforcement and/or become the subject of a sub poena and that data could be used to incriminate you rightly or wrongly in some legal proceeding. Apple intends to provide an update for the iPhone that will give users more control over this data. And that's the right thing to do.

"Don't worry about the cloud..."

Submitted by acohill on Wed, 04/27/2011 - 08:25

Just last night, at the opening of the Broadband Properties conference in Dallas, I had a discussion about cloud computing with a gentleman who assured me in soothing tones that from a security perspective, there was "nothing to worry about" because IT folks would be very careful and make sure cloud-based data was secure from hackers.

So this morning I read via the InnerTubes that Sony's online Playstation database has been hacked. The hackers managed to swipe the personal information and credit card data of 77 million users, which is probably the entire Playstation user community.

I'm not really opposed to cloud computing; it's a great convenience and I already make use of several "cloud" services, but the industry hype about cloud computing is naive and dangerous to those who don't understand the risks. And as I've noted previously, mainly for the benefit of twenty-something "IT experts," cloud computing is nothing but a mainframe with a longer cord to the user. And many of the security problems that we will continue to see with poorly designed cloud applications and services will be the direct result of programmers who either did not pay attention in class or were poorly taught. Those who fail to understand history are doomed to repeat it.

A primer on cloud storage services

Submitted by acohill on Tue, 03/29/2011 - 09:01

Here is a lengthy article, but if you are interested in cloud storage services, it is an excellent primer on the advantages and risks. Cloud services, in many ways, is no different than the old mainframe computing environment, gussied up with a snazzy interface. Here are my own thoughts on the topic.

Community-owned broadband networks have a bright future and will be the engines of economic development if they can weather the collapse of the incumbents. The fight in North Carolina is, at core, a rearguard action by the cable companies to prevent that collapse by making competition illegal at the economic expense of the communities they purportedly serve.

Is "Facebook depression" an actual problem?

Submitted by acohill on Tue, 03/29/2011 - 08:40

Is "Facebook depression" really a problem? Or is just an excuse for media outlets to scrounge up some news on a slow news day? I'm reminded of all those teasers for the local 11 PM news: "Your local news at 11--The dangers of dryer lint! Could it be causing the heartbreak of psoriasis? Tune in to find out!"

Uh, huh.

I'm not going to lose a lot of sleep over Facebook depression.

Death of TV, Part XXVII: ABC, NBC, CBS... and Netflix!

Submitted by acohill on Thu, 03/17/2011 - 10:15

The old TV empires are crumbling fast, and Netflix is speeding their demise. It just outbid all the other networks for a new original, uh, "TV" series called , which will star Kevin Spacey. Since you can watch Netflix on just about any device on the planet, there is even less reason to keep around one of those old timey television doohickeys. All they are really good for is as a large screen for your iPad 2, which does a great job of streaming live Netflix content in HD to them. More seriously, the big losers in all this are the cable companies. While Comcast furiously tries to close the barn door after the horses all bolted ages ago by trying to block Netflix, it will shortly become apparent even to cable TV execs that no one really needs them any more, unless the cable TV folks wake up and smell the coffee. And that rich aroma is open access. If the cable companies simply switched to being a massive pipe available to any service provider, including Netflix, they could quickly make enough money to pay off their massive debts. But I'm not betting that their olfactory senses are still working.

iPad users crash cable TV system

Submitted by acohill on Wed, 03/16/2011 - 18:25

Someone asked me just today if we really will need all the bandwidth that fiber offers, with the unspoken inference that DSL and cable modem service seems to be working just fine.

Uh-huh.

I came back to my hotel after dinner and found this article: TimeWarner rolled out its new "watch TV on your iPad" service and it's network was promptly overwhelmed by people who thought, "Hey, what a great idea...just what I have been waiting for." The cable giant had to cut back the number of channels available to just fifteen (cut 50% from the original 30). So anyone who thinks 1950s-based copper networks are just fine, the second biggest cable company in the country had its network crashed by a very small number of iPad owners. What happens when everyone tries to watch TV on a tablet device? And no, DOCSIS 3.0 is not the answer to that question. Symmetric, active Ethernet fiber networks are the answer.

In the future, will everything cost 99 cents?

Submitted by acohill on Mon, 03/14/2011 - 14:12

For about a week now, there has been a thread running around the InnerTubes about how the ebook readers are changing publishing. The Kindle is slowly taking hold, and though I was an early skeptic, there does indeed seem to be a place for a dedicated book reader. Amazon has made it so easy for authors to self-publish that many new authors are skipping the traditional New York publishing house route and simply putting their books on Amazon as an ebook. And money follows.

There are two sweet spots for pricing: 99 cents and a dollar and ninety-nine cents. At the former price, lots and lots of people will take a risk and try an unknown author. Amanda Hocking, in the past year, has sold almost a million ebooks--she doesn't make much on each sale, but she's made enough to quit her day job and work full time as a writer.

Apple started this with the ninety-nine cent music download, which was supposed to kill the music industry. What it killed was the record store. The book business has turned out a bit differently. The big box book stores (Barnes and Noble, Borders, Books a Million) killed the independent book store, and the big box book stores are killing themselves (see the sad slide to bankruptcy by Borders).

What's next? Well, the death of TV is already well underway, with the traditional TV channel business dying a slow motion death. Look for cable TV companies to follow in their footsteps.

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