Future of TV

We are pleased to offer the inaugural issue of the Future of TV newsletter to our readers—you'll need to subscribe to obtain future issues.

by Jennie Bourne and Dave Burstein Future of TV [August 27, 2004]

E-mail editor jennie (at) futureoftv.net and point the way for us.

The future of TV is: Any program, any time, anywhere. Add to that created by anyone, and remarkably immersive. Delivering it now, and making it affordable is tougher. Technology is only one part of the picture. The goal: one day, actually having something to watch.

Keiko Harvey's Challenge—Provide The Best Video Service in the World
"We're going to be absolutely competitive with cable on video," Keiko Harvey trumpets. Verizon's spending $3 billion on fiber in 2004 and 2005, with literally $20 billion planned to finish the job. Ivan's crews are digging as I write in Texas, California, and Florida and Rockland County, New York.

Harvey's first goal, a basic video offering like current cable, is keeping a large team busy. That's not nearly enough. "Good enough" simply isn't.

To profitably pull customers away from cable, Verizon will have to use the fiber to be dramatically better, not just cheaper. Brian Roberts at Comcast, battling satellite, will constantly be raising the bar. Verizon CTO Mark Wegleitner understands; he's actively exploring what he can do with switched video.

Verizon's Ultimate Weapon: Open Choice Video
Verizon engineers are working on how to blow away cable with an extraordinary offering: an open net that includes everyone's programming. No decision has been made, and the goal will probably require the next generation equipment due In 2006. A Verizon fiber customer might have the choice of a Verizon package, DirecTV, Echostar, BskyB, Akimbo African movies, 14 different branches of Christian programming, 40 different college football games every Saturday, every local government meeting, and Hindi, Hebrew, Greek or Spanish with multiple channels in each. There's no technical reason why Verizon fiber couldn't offer Time Warner cable programs near Cablevision's Long Island headquarters, and Cablevision programs across the street from the Time Warner's amazing 55 story castle.

The engineering isn't trivial, and the network will need more robust switching and peering. This isn't what Verizon is buying today, although key suppliers getting ready if Verizon says go. It's proven at small scale in Europe, and coming to Amsterdam and Utah. (Bravo, UTOPIA.)

Behind the news: Stakes rising in U.S. three-player game

Satellite beat the pants off cable Q2, which actually lost subscribers. They will have to accelerate upgrades. Brian Roberts of Comcast tells wall street he'll offer 50 and 100 Mbps cable modems, PVRs to everyone, and video on demand servers with the capacity to timeshift 70 percent of all programming. That technology all is available today, but the street will not be happy with the capital spending. Higher profits and more cash may be the telco trump card.

Ben Verwayen: "Stupid for a Telco to Do It All"
"We'll provide the networks and technology. That's what we know." British Telecom's Chairman is very clear "We build networks as well as anyone in the world. We can service customers and bill them. But we don't know how to create movies or television programs, and if we try are likely to fail. We'll partner with people who do know. If we make our network open, and provide the tools to make it easy to reach our customers, they'll create a far richer offering than we ever would."

BT's massive server network, code-named Sky ++, will be open to every producer, channel and creator. If they live up to their promise, and price the service for a fair profit, it will be a natural home for all the video going to Britain—and maybe the rest of the net. If they price too high, they may earn more per each program, but will only have a small market. Unlike the U.S., BT has only limited cable competition, so they may be tempted to act like a monopoly. Future of TV hopes Reynolds, Verwayen, and Danon can look further than that, without needing a shove from the regulator.

Bill Smith's 57 percent Solution
For video, double DSL speed with an extra line. Three TV channels require 10 Mbps with current compression, which with HD will jump to 20 Mbps or more. The new ADSL2+ is designed for "up to 24 Mbps", but often won't reach that in practice.

BellSouth CTO Bill Smith has an answer. "We are only using 43 percent of our copper." he said at SUPERCOMM. "The industry has been building for years to 2+ lines per home and expected line growth, but that's changed. Bonding 2 lines will often be the cheapest way to get video speed." SBC is thinking similarly.

Bonding 4 or more lines is already in use, providing 10 Mbps and more for businesses. George Hawley predicted years ago it will spread to the consumer market, and BellSouth's interest is inspiring companies including Adtran to make inexpensive gear.

Copyright 2004 Jennie Bourne and Dave Burstein.
The first issue of the Future of TV Newsletter is reprinted with permission.

The Future of TV: Everyone's programming, all the time.