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October 31, 2005
Does not compute
Jeff Pulver tries to make sense of the FCC's broadband and VOIP policies... and fails. VOIP gets regulated, while broadband access gets deregulated, for seemingly contradictory reasons. Jeff wonders aloud if the FCC is simply engaged in "a simultaneous effort to twist words and statutes to suit its own ends."
I'm not as shocked as Jeff at the FCC's actions, but I do question the Commission's decisions. The best way I see to reconcile the logic of the two orders is that the Martin FCC wants to stop being an economic regulator, yet become more of a social policy regulator. (Of course, with social policy limited to things like access for law enforcement, rather than universal access or consumer protection.) This is consistent with Martin's strong support for indecency regulation, potentially extended beyond broadcasting to other digital media.
Unfortunately, it's not so simple as that.
Posted by Kevin Werbach at 1:54 PM | Comments (0)
Flipping the pricing model
The traditional telecom pricing model is to charge for the basic service (voice connectivity), and you get other things on top for free. That model has largely been replicated on the Internet -- users pay access providers, and applications like Yahoo!, Google, and Amazon.com have to find ways to monetize something other than access. A good part of the dotcom bubble was due to the fact that Web-based companies couldn't "monetize" their traffic, and charging users directly was off the table. The companies that weathered the storm and prospered figured out alternative revenue streams. (Value-added services for Yahoo!, contextual advertising for Google, and transactions for Amazon.)
Now, along comes the broadband Internet. We seem to be proceeding in the same direction, with application providers finding indirect ways to monetize their usage.
But what if the connectivity were free, the applications were free, and users paid only for the add-ons? Could that ever work?
Well, Skype points out a future in which voice telephony is free, and revenues come from ancillary services like voicemail. And now, Sony has announced that it plans to release massively multi-player online games in which users pay only for add-ons and objects, not for access to the game itself. (Second Life already has a model somewhat like this.) Meanwhile, mobile phone ringtone revenues are zooming past $4 billion annually, even as basic telephony revenues stagnate.
These are true killer apps. Online gaming in particular is rapidly on its way to being, at the very least, the television of the 21st century. Is it too hard to imagine broadband being free, and the virtual economies of in-game objects and customized communications features becoming the "real" economy of telecom?
Posted by Kevin Werbach at 12:10 PM | Comments (0)
October 30, 2005
The telco mindset
From a revealing BusinessWeek interview with SBC CEO Ed Whitacre (Emphasis added):
Q: How concerned are you about Internet upstarts like Google (GOOG), MSN, Vonage, and others?A: How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?
Notice what Whitacre said. He expects companies like Google to pay SBC for providing broadband applications. And he plans to build that function into the network.
Be afraid. Be very afraid.
Posted by Kevin Werbach at 2:27 PM | Comments (1)
October 28, 2005
Colloquial
Today was the start of a small academic colloquium I organized on media and communications law. It was quite a stimulating afternoon. We're having dinner at Striped Bass, one of the best restaurants in Philly, and then back to presentations tomorrow morning.
I mentioned in the opening that it was appropriate we had this meeting on the day the FCC approved the SBC/AT&T merger, thus closing a chapter in telecom history. A new, integrated company called AT&T is emerging from that transaction, closing the circle of twenty years of telecom history. It's a fitting metaphor for the kinds of transformations we're seeing across the telecom landscape.
Of course, the FCC went at screwed things up by pushing back their meeting several times during the day. And the last I heard is that they finally gave up adopting the merger order today. They are still apparently fighting with Verizon over some potential conditions on its acquisition of MCI.
Then again, maybe that's appropriate. Confusion and uncertainty may be a more apt metaphor for the state of telecom today....
Posted by Kevin Werbach at 6:19 PM | Comments (0)
October 21, 2005
Kill the Competitors..., er, Parasites!
When I wrote the other day about P2P file sharing being the justification for broadband access providers blocking or filtering certain Internet-based applications, even I didn't think it would happen so soon.
Hasta la vista, Internet freedom!
Posted by Kevin Werbach at 9:10 AM | Comments (1)
Free Voice
Why is it so shocking for eBay CEO Meg Whitman to say that users will expect voice phone calls to be free in five years? Does anyone today expect to pay for email messages or instant messages? One can quibble over the timing, but not the ultimate outcome.
So the question for the telecom sector becomes, how to make money when you can't charge for a wired phone call? (Mobile phones are an important exception, at least until WiFi and WiMax do the same thing to them, but that's a few years off.) This seems to be the source of much confusion about eBay's Skype acquisition. Analysts find it strange to pay billions of dollars for a "phone company" if you think "phone companies" can't make money. In reality, the free voice future is a great justification for the deal. Who better to understand how to generate profits in this new world than Skype? They understand how to leverage a huge community and develop ancillary services that commmunity will pay for. The company has never charged a penny for in-network phone calls, and revenue is going through the roof.
"Our belief is that the winner in this space will be those that have the largest ecosystem," said Whitman. Reminds me of my early meetings with Larry Page and Sergey Brin of Google. They always focused on capturing the biggest share of Internet searches, figuring if they could dominate that ubiquitous activity, they would find a way to monetize it. Looks like they were right.
Posted by Kevin Werbach at 8:07 AM | Comments (0)
October 20, 2005
Blame it on the Parasites
Today, it's the ISPs complaining -- understandably -- about the bandwidth demands of video file-sharing. Tomorrow, it will be the telephone and cable companies who dominate broadband access. And they will use it as justification for breaking the neutrality of the Internet, by throttling or blocking certain traffic. Mark my words.
Posted by Kevin Werbach at 10:09 AM | Comments (0)
Venture capitalist Ed Sim laments the Web 2.0 hype wave:
I am starting to get extremely tired and frustrated about every pitch that I see now where a company claims they are a Web 2.0 company and lists their principal reasons for being Web 2.0. It reminds me of the mid-90s when everyone said they were an Internet company and sprinkled their pitch with wild growth expectations from Jupiter Communications.
This is what happens when the entrepreneurial and venture markets, after five years of spinning their wheels and revving their engines, see the market turning up once again. The innovations everyone is excited about are real, and the business opportunities are real, but that's not the same thing as saying WE'RE ALL GOING TO GET RICH.
Posted by Kevin Werbach at 9:29 AM
Breaking Apart at the Seams
Major publishers have joined the legal challenge to the Google Print service, arguing that it represents wanton copyright infringement. This as another battle in the ongoing conflict over intellectual property in the digital world, but I'm concerned it suggests something else: a challenge to the stability of the Internet as we know it.
The Net works because of a series of informal agreements. Root server operators voluntarily point to the right places to make the domain name system function. Backbone networks "peer" to carry each other's traffic without charge. And websites allow search engines to copy their content into indexes, even though at some level that action raises copyright concerns.
The Google Print lawsuit puts the last of these practices in question. On some level, copying a Web page to facilitate searching isn't all that different from copying a book to facilitate searching. And copying an RSS feed to put content onto another site isn't so different either. Unravel the notion that some content sharing benefits everyone, and therefore should be acceptable despite the nominal boundaries of intellectual property, and the Internet economy, especially the Web 2.0 economy, comes crashing down.
What's worrisome to me is that, just as the informal practices for sharing online content are being challenged, the informal practices for sharing Internet traffic and addressing are under stress as well. Backbone carriers Level 3 and Cogent are fighting about who gets to peer, as SBC and Verizon -- telcos with a very different culture than most Internet companies -- prepare to take control of two of the largest Internet backbones. And the whole system of domain name management is in play as well, thanks to the UN's efforts to establish a new governance structure.
Years from now, will we look back at this as the period when the Internet came apart at its seams?
Posted by Kevin Werbach at 9:10 AM | Comments (0)
October 14, 2005
Fiber or bust
Om reports a reader's post that Verizon is literally removing the copper wires from homes that subscribe to its FIOS fiber optic services, making it impossibel for users to switch back to DSL. I wouldn't be surprised if this is true -- why should Verizon run the risk of cannibalizing itself?
I'm reminded of what United supposedly did when they opened the new Denver airport. Several years before, Southwest had ambushed American Airlines by flying into Love Field, the old Dallas airport that was largely abandoned in favor of Dallas-Ft. Worth. American controlled most of the gates at DFW, which they used to keep out low-cost competitors. They didn't count on Southwest routing around them. United wasn't about to have the same thing happen in Denver. So it had the highway bridge leading to the old Denver airport blown up. The airport facility is still there, but the city would have to build an expensive new ramp to reach it. Pretty slick, huh?
Verizon's move, if true, is another piece of data suggesting that FCC Chairman Kevin Martin's gambit on network unbundling -- removing all sharing obligations for fiber networks -- will cut against competition. Then again, now that those sharing obligations are essentially gone even for traditional DSL, it may not matter.
Posted by Kevin Werbach at 4:50 PM | Comments (0)
Quack!
Jeff Pulver bangs his head against the wall as he realizes the FCC's order requiring certain VOIP services to comply with wiretapping requirements could sweep in far more than anticipated.
This is the problem with the FCC's current approach to VOIP, which comes dangerously close to, "If it looks like a duck, and quacks like a duck, it's a duck." The problem is that inevitably turns the whole Internet into a collection of waterfowl.
Posted by Kevin Werbach at 8:39 AM | Comments (0)
Word Travels Quick in These Parts
Martin Varsavsky, a brilliant entrepreneur and philanthropist, talks about the blogosphere's instant response to his announcement of his new startup, FON.
FON wants to be essentially a mobile Skype, turning WiFi hotspots into a wireless meta-network. It reminds me a great deal of Joltage, a startup I picked to launch at PC Forum in 2002. Joltage was ahead of its time and never got off the ground, but today WiFi is far more heavily deployed. And Martin knows how to build a company. So I'll be watching FON with interest.
Posted by Kevin Werbach at 8:10 AM | Comments (0)
October 13, 2005
I Want My Mobile TV
The TV network affiliates are scared to death (via PaidContent) about Apple's deal with ABC to make TV shows available on the Apple iPod at $1.99 a pop. They think it will erode viewership.
Personally, I can't think of anything more likely to increase my TV viewership. I haven't seen a regular network show in eons. (I have two little kids, I'm a sports nut, and if I have entertainment time left over, I'd rather fire up the XBox. Your mileage may vary.) Yet I'd think seriously about downloading some episodes of Lost onto my video iPod.
I want control over my media experience. I'll give my dollars and precious attention to the companies willing to give me that control. And I don't think I'm alone.
Posted by Kevin Werbach at 3:56 PM | Comments (1)
October 12, 2005
You can take it with you
Today, the first shoe dropped, as Apple introduced the video iPod. Video now becomes a mass-market mobile experience, to be consumed alongside audio and photos.
The other shoe will drop when mobile phone carriers launch DVB-H (aka television to cell phones) next year.
I suspect the iPod will ultimately be something of a gateway drug for mobile video. It will get people used to the concept, and sweep the early adopters, but the real usage spike will come as these capabilites are embedded into mobile phones. Not just playback, but storage of video on the handset. That's at least five years off for widespread adoption (as opposed to first introduction of the handsets). But that's not so long in the grand scheme of things.
Then again, part of me suspects that communications devices (for phone calls, email, and messaging, along with Web access) will remain distinct from media devices (for recording, sharing, and playing audio, photos, and video). If it's technically easy enough to share content between devices, perhaps my iPod successor will replace my camera.
And meanwhile, the wireless guys are still yelling about 3G (a technology for handling voice calls better) and the video guys are hyping IPTV (a system for re-creating broadcast television). Yawn. They should take a look at the future -- it's staring them in the face.
Posted by Kevin Werbach at 3:10 PM | Comments (0)
Thumbs up for Philly WiFi
The Philadelphia Inquirer has a very positive editorial about the city's municipal wireless plan, in light of the announcement that Earthlink will not only build the network, but will cover the deployment costs.
Municipal WiFi will stand or fall on the success of the Philadelphia project and the one in San Francisco.
Posted by Kevin Werbach at 9:52 AM | Comments (0)
IP Meets Communications
Susan Crawford explains why she, and other insightful scholars such as Larry Lessig, Yochai Benkler, and Tim Wu, see an important bridge between intellectual property and communications law:
"The copyright concerns that scholars have been focused on for the last ten and more years are proxies for the central problem facing the internet: private control of our internet experiences. We're moving from the conceit of owning information (the problem of IP, the problem taken on by Jamie Boyle in his 1996 Shamans, Software, and Spleens) to the conceit of owning the public internet itself – or, in other words, the conceit of owning flows of information."
As communications law person myself, I'm excited to see this development. Unintentionally, I believe, "cyberlaw" has largely been associated with IP, with communications seen as a narrow, technical offshoot of administrative law. In reality, the law governing the network is as important to what occurs on the network as the law governing creative works. We all have much to learn from each other's expertise.
Posted by Kevin Werbach at 7:13 AM | Comments (0)
October 11, 2005
Supernova 2006
We have a date and venue for next year's Supernova conference -- June 21-23 at the Palace Hotel in San Francisco.
It's early in the process of putting together the program, because things can change quickly in the tech world in a few months. Nonetheless, I'm on the lookout for amazing new companies, and for killer speakers (especially those who aren't "usual suspects" at tech conferences). If you or someone you know qualifies, please contact me.
Posted by Kevin Werbach at 11:29 AM
Two kinds of Internet video
Om Malik distinguisheds IPTV and "television over IP." The former, essentially the phone companies' latest resurrection of video dialtone, gets most of the mainstream press, but it's the more distributed form of IP video that will have the greatest impact.
On the other hand, the regulators are much better prepared to deal with IPTV than with video over IP. This is going to be a problem.
Posted by Kevin Werbach at 9:18 AM | Comments (2)
October 10, 2005
Value in the new Internet economy
If speculation in the coverage is to be believed, Moreover.com, a content syndication company started by Nick Denton, is about to be acquired for approximately the same price as Jason Calcanis' Weblogs.com.
That doesn't make much sense to me. It sounds like a challenge to Jeff Jarvis' notion that the network no one owns is more valuable than the network you own. Weblogs.com owns a few dozen blogs, out of thousands of influential ones and millions in the blogosphere as a whole. What AOL bought, really, was the network linking those blogs together.
My heart is with those who trumpet complete openness and interoperability as the matras of the next-generation Internet economy. Watching what's happening on the ground, though, my mind isn't convinced.
Posted by Kevin Werbach at 8:50 AM | Comments (0)
October 9, 2005
Another Bubble?
I got involved with the Internet in the early 1990s, and I joined the FCC to do Internet policy work in 1994. So I had the opportunity to see the last boom, bubble, and bust from start to finish. We're clearly experiencing now another upsurge of both rational and irrational exuberance. Is it another bubble?
What's different this time is that we have the experience of the 90s fresh in our minds. The excitement about the prospects of the medium feels similar to what I remember from 1994-1996, but back then the online community was tiny. The Net truly was a small world, barely on the radar of mainstream companies. Moreover, the level of entrepreneurial and venture capital activity in today's "Web 2.0" explosion wasn't the norm in the dotcom days until 1998 or so. Even in late 1998, Larry Page and Sergey Brin thought hard about open-sourcing the search technology that became Google, rather than starting a company.
I don't know whether this means we're more or less likely to experience a collapsing bubble this time around. Entrepreneurs and investors are more aware that what comes up ultimately goes down, and the recent Wall Street scandals should put a damper on the kinds of crazy IPOs we saw for dotcoms. On the other hand, the cycles are even faster now, the numbers even bigger, as Internet companies play to a target audience of billions.
Posted by Kevin Werbach at 8:00 PM | Comments (0)
October 8, 2005
State of Play
I'm at the State of Play conference in New York today. It's an academic conference about online gaming and associated trends, which I've been meaning to attend the past two years. I'm looking forward to a stimulating day. (Not least because of the multiple cups of coffee I just drank after driving up way too early from Philadelphia.)
Posted by Kevin Werbach at 8:37 AM
October 7, 2005
Buzzword compliance
From a voice mail I just received:
"Hi Kevin. I work at a strategic issues management firm... otherwise known as public relations."
When your own people know a euphemism is silly, isn't it time to give it up?
Posted by Kevin Werbach at 2:48 PM
Brightcove and the future of TV
Nice to see my friend (and Supernova speaker) Jeremy Allaire getting some love for Brightcove, his new online video distribution startup.
We're going to see major launches of transformative Internet-based and mobile video services over the next twelve months. Which means that, adjusting for adoption lag, 2007, or perhaps 2008, will be the Year of IP Video.
Posted by Kevin Werbach at 12:35 PM | Comments (0)
Media whoring
I don't know what's up, but I've been getting scads of press calls this week -- NY Times, Newsweek, The Economist, NPR, Congressional Quarterly, and Wired, just since Wednesday. All on different topics.
Perhaps just a coincidence, or maybe it's another data point that the tech hype cycle is a-boilin' once again.
Posted by Kevin Werbach at 12:27 PM | Comments (0)
Addressing the Blogosphere
In a deal that's small today but could have major long-term significance, Verisign announced it's acquiring Weblogs.com from Dave Winer of Scripting News. Good for Dave, good for Verisign, and, I truly hope, good for the Net.
I wrote about Dave's work on syndication and blogging technology six years ago in Release 1.0, and brought him to PC Forum, because he's one of the Net's true visionaries. (As an aside, it's interesting that, from my perspective at least, the building blocks of what everyone is now calling Web 2.0 were introduced at the height of the Web 1.0 bubble. No one paid much attention to them at that point except us geeks -- the mainstream was too busy feasting on dotcom mania.) Although he has a habit of alienating or turning on those close to him (including me), that shouldn't obscure the importance of the contributions Dave has made, and continues to make. He set up Weblogs.com when the blogosphere was a small collection of hand-crafted geek sites, as a central aggregation point for update notifications. It has remained low-key and amateur as services like Technorati and Feedster have scaled up commercially, at least until now.
Verisign runs key aspects of the Internet's domain name system, has a significant position in the telephone addressing world, and is the leading Internet security certificate vendor, as well as building a position in VOIP addressing, mobile ringtones and other markets. I've been saying for some time that they could be building a Microsoft-like position in Internet infrastructure, dominating key plumbing for next-generation services and applications. The markets Verigisn plays in generally aren't sexy, but they are highly strategic, and potentially quite lucrative.
I don't know entirely what Verisign intends to do with Weblogs.com. Probably Verisign itself isn't certain. What's clear is that Verisign correctly sees the blogsophere as a major emerging domain of online activity, superimposed on the traditional Web.
Posted by Kevin Werbach at 7:54 AM | Comments (0)
October 6, 2005
Have Fun at Web 2.0
Sorry I can't make it out to Tim and John's shindig -- sounds like it's going gangbusters. The continued upturn in the tech sector is getting me pumped up as I start planning Supernova 2006.
Posted by Kevin Werbach at 1:19 AM | Comments (0)
October 3, 2005
Good news, bad news
The good from yesterday -- my Eagles staged a heroic comeback from 18 points down to defeat the Kansas City Chiefs.
The bad -- I seem to have caught some kind of stomach flu. Classes today, and a Rosh Hashanah dinner party for 20+ people tonight, are going to be tough.
Posted by Kevin Werbach at 10:10 AM