Business from the home

A wise warning from Shelley Powers:

  At issue is not that broadband companies are becoming overwhelmed, but that the same companies providing broadband are beginning to perceive that online video offerings such as Netflix WatchNow, Hulu, iTunes, and so on could become an eventual threat to their bread-and-butter operations: offering entertainment packages. Capping broadband use to prevent competition is against the law in this country. If this is the situation, when reason fails, the courts will then need to become engaged. I have to think the ISPs know this, and such knowledge will give them pause.

The trick for carriers is not to protect doomed business models, but to pursue benefits to incumbency other than trapping and milking customers the usual way.

The Net is a sea of bits: a rising tide that lifts all but the boats that defy its nature. The carriers have enormous advantages here, and not just in billing out the usual scarcities, or leveraging the lame assumptions all carriers, cable included, inherit from the late Ma Bell.

For example, I have Verizon FiOS at my apartment in Boston. I get 20Mb of symmetrical service for about $65 a month. On top of that they offer some premium services, only one of which I want: offsite backup. I’d try to get it, but there’s no link to the service on that page; just a promo. So I’ll give up on that for the moment (I’m in Santa Barbara anyway) while I point to the Verizon FiOS Internet for Business pricing page. Here the prices start at levels much higher than home pricing. What’s the difference? I can see reasons for charging a bit more, but why that much? How much business does this kind of Old Skool captive-market tiering prevent rather than encourage?

For that matter, why should my Internet service take a back seat to television, which soaks up most of my actual fiber-to-the-home bandwidth. Says here that’s 2.4Gb downstream and 1.4Gb upstream. Most of the downstream is devoted to live TV that I don’t watch. Most of the upstream is wasted.

Think about what could be done with that capacity. Don’t think about any business that now exists, much less of protecting it. Just think about what new uses and businesses could grow in those wide-open spaces. Think about how those new businesses would justify even more fiber-to-the-home build-out by Verizon and everybody else.

5 comments

  1. Minifortunes’s avatar

    Whatever the reasons for broadband providers’ trying to cap bandwidth, they should feel threatened by online entertainment providers. I watch most tv shows as downloads through the XBox Live Marketplace and movies through P2P sites. I wouldn’t have cable tv if my homeowners association didn’t provide it. I have Time Warner Business Cable, and while they are upgrading their fiber connections to compete with FiOS, I can’t help but feel that it’s nothing compared to the bandwidth wasted on tv signals. Of course, that’s just me.

  2. Doc Searls’s avatar

    Minifortunes, it ain’t just you.

    At LinuxWorld Expo this week, I went by the booth of a software developer for Linux-based mobile phones. There I asked some folks, “How long will it be before the carriers realize that the cell system needs to be a data system and not a phone system?” They looked shocked at the question, before smiles broke across their faces. “It can’t happen soon enough” was one response.

    What we have now for data on the cell system is just another form of dial-up. What we have on home phone and cable systems is a third-tier service behind TV and telephony. It’s backwards and wrong.

    In time the users themselves will rejigger the thing. When demand gets the power to supply, big things will happen.

  3. gregorylent’s avatar

    have you ever in your career found any company that didn’t fight to protect doomed business models?

    god was pretty smart when he designed it so that people die off.

  4. Doc Searls’s avatar

    gregory,

    I can name one company that blew away old business models, and created disruption in an industry were even its own stasis prevailed: Novell, when its strategy was being led by Craig Burton, back in the 80s.

    Novell changed the networking business utterly when they redefined their business category as services rather than pipes and protocols. What Craig and Judith Burton did was amazing to behold, because it was so smart — and so rare that almost nobody understood it.

    Back when Novell was selling more ethernet network interface cards than anybody else — including market “leader” 3Com, Craig told me Novell was only filling orders, and didn’t wish to stake any of its future on the network interface card market.

    On the surface it made no sense not to push those cards. They sold for hundreds of dollars apiece, by the many millions. “Because in the long run it’s a zero-dollar business”, Craig told me. Ethernet was just going to be another hole in the side of a generic PC: one that cost almost nothing to put there.

    And so it did.

    What we call television and telephony aren’t even holes in the sides of PCs. They are just names we give to forms of data. There’s money in producing goods and services in both categories. But the bulk of it won’t be tied to the pipes, protocols or business models of today’s telcos and cablecos. And the sooner they realize that — and take advantage of it — the better.

Comments are now closed.