Technology Futures

Bandwidth caps may finally get the light of day from broadband providers. The way we sell broadband is upside down from every other business. If you are an Internet service provider, you make the most money if your customer never uses your service. You make the least money if the customer uses your service a lot. This is why most of us have mediocre access to Internet-based services--selling broadband by the bucket is a lousy way to try to make a living if your customers expect you to refill the bucket a lot (and many customers do).

Most service providers will tell you that a small fraction of their customers use a large percentage of their available broadband capacity--5% of customers using 50% of bandwidth is not unusual.

Some of the cable companies may finally start publishing their bandwidth caps and providing differential service packages--basically, if you want to download a lot of movies, you have to pay more--not an unreasonable approach. It is much better than what appear to be "secret" bandwidth caps, where some customers may have their service cut off for "using too much" even when their service contract does not explicitly define what "too much" is.

In a modern, multi-service network, this whole problem goes away. By selling services rather than buckets of bits, customers know what they are buying and prices are set to match the actual bandwidth demands of a service. On a multi-service open network, you would subscribe to a video on demand service, priced according to the actual service (e.g. $3 to watch a movie) rather than to some indirect cost like bandwidth. It's a bit like taking a cab and being told you will be charged not according the distance you want to travel but some percentage of the wear and tear on the tires.

I had just finished up a meeting at a community interested in investing in telecom infrastructure, and before I left the building, I decided to take advantage of the local WiFi to send an email to someone who had been at the meeting but had already left; I wanted to confirm a follow up meeting.

Not two minutes after I sent the email, he stuck his head back in the meeting room and said, "Hey, I got your email." The message had gone straight to his Blackberry, and unbeknownst to me, he had been outside in the hallway talking to someone. We both had a good laugh about sending email to someone standing a few feet away.

The amazing thing is that in just fifteen years, we have the technology to do that, cheaply and easily. It's a good example of why communities need fiber AND wireless--wireless in the future will provide ubiquitous mobile access--mobile access that we already take for granted, as my experience yesterday illustrated.

You read the headline correctly: "Music sales plunge amid rising sales." Only the music industry, clinging desperately to Mr. Edison's gramaphone technology, could make a 14% growth spurt sound like doom and gloom.

The lead on a widely circulated story about music sales in 2007 is full of hand-wringing about the precipitous 9% decline for the "fast fading" music business.

The article disingenously mixes up declining sales on albums, illegal music sharing, and sales of single tracks, and news writers and editors should be ashamed for reprinting this stuff without actually reading it, because it is completely nonsensical.

If you read the entire article critically, what is very clear is that consumers are buying many more single songs and somewhat fewer albums. But overall, music sales are still increasing year to year--14% in 2007. Most businesses would kill to have a 14% per year annual growth rate. But the music industry stubbornly continues to blame their customers for simply buying only the good songs and ignoring the bad ones, which the real dynamic.

In the old days, the physical format needed to distribute music (vinyl records, CDs) made it efficient to sell a bunch of songs at one time. But most of us know that you often bought an entire album of nine or ten songs just to get the one or two good ones. Today, we don't have to buy the dreck just to get the good song. That's good for music lovers, and in fact, that option of buying only good music is producing double digit growth in the music business.

But the music industry is "fading fast."

This decade's format battle, largely ignored by everyone except the entertainment industry and unmarried nerds with lots of disposable income, has been the fight between the two HD disc formats--HD DVD and Blu-ray. In the past year, the movie studios have been releasing some movies in one format, the other, or both. Normal people have not been interested in buying movies in formats that could disappear in a year or two, so sales have been tepid.

But Warner Bros. has announced they are ditching the HD DVD format and releasing everything in Blu-ray only. This may be enough to force the issue and get the entertainment industry to agree on a single HD format. The good news is that the quality difference between the two formats, unlike VHS and Betamax, is virtually identical (Betamax was noticeably better, but lost because Sony was inflexible).

This is one more step towards increased demand for high capacity broadband as well. Once the format war is over and fence-sitting consumers are willing to make investments in HD TVs and storage devices, they will also want increased access to downloadable HD content. The 25 gigabyte capacity of recordable Blu-ray discs will also mean easier backups for home computers. The convergence on a single HD format means that more and more computers will come standard with a Blu-ray drive, or that will be available as an option.