HD-TV over Wifi

This is an older link, but somehow I missed the news that MobiTV is playing around with providing HD-TV over wireless (WiMAX) networks and now has even partnered to create a video on demand over WiMAX solution. Judging by the total lack of specs, technical details, or anything that wasn't written by a marketing team, I'm suspicious of the short term and even the long term viability--HDTV is magnitudes more demanding on a network than Mobi's current cellular technology that delivers grainy video to a cell phone.

Although I could be wrong, I don't expect for wireless to be able to carry IP HD-TV anytime in the near--or even not so near--future. Each HDTV channel is a minimum of 8Mb/s and can go up significantly, depending on quality, compression, etc. WiMAX can theoretically go up to 40Mb/s per channel, but this is shared among all the subscribers on the radio and assuming great distance and line of sight (real-world scenarios will probably give 10Mb/s as a good baseline). With "burstable" Internet applications (web surfing and so forth), the shared bandwidth is not that much of an issue; streaming applications such as television are much more problematic because they require 8Mb/s non-stop for extended periods of time. Given these statistics, even in the best of scenarios it is unlikely that you can support more than 5-10 simultaneous HD streams off of a WiMAX radio at a time. The radio density required to support 8pm primetime would absurd, even with WiMAX, and is simply economically infeasible.

This does illustrate a fundamental weakness to wireless: shared, low bandwidth last mile connections. Cable works well as a shared infrastructure because it can carry lots of data; ADSL2 (used for AT&T's IPTV product) works because, although it provides a meager 20Mb/s link, it is a dedicated 20Mb/s point to point link. WiMAX's mediocre bandwidth combined with shared infrastructure simply cannot carry the amount of data necessary provide video applications. MobiTV either is ignoring the economics of their solution, have some wicked compression scheme, or are using a different definition of HDTV than the rest of the world. Given the suspicious lack of technical details and high emphasis on marketing buzzwords, I am guessing both economic ignorance and a not-quite-so high definition TV.

My pessimism aside, I truly hope that I am wrong and a viable solution is on the horizon. I like wireless simply because it lowers the economic barrier of market entry and increases competition--something that is badly needed in telecom. A viable IPTV over WiMAX solution would radically change the marketplace in a lot of very positive ways. Still, given the typical gap between marketing and reality in the wireless industry, I'll not be holding my breath waiting for this to come to fruition.

Possible future revenue model for NSP's

An interesting patent--although by no means novel--that I came across that has some interesting implications for the future of the Internet: dynamic ad insertion by transparent proxies. This is, of course, trivial to anyone who is remotely competent with squid, which is sometimes used to simply remove ads.

In a lot of ways, I'm vaguely surprised that ads are still generally left intact downstream from the content provider. Not that I'm condoning hijacking ads--the practice is/would be more than a bit unethical in my book, but so is a number of other practices common in telecom by the ILECS and cable MSOs. Simply put, there is a lot of potential revenue for last mile providers tired of content providers getting a free ride on their pipes. I do realize the potential litigation nightmare--advertising and content use is a tricky issue--but, judging by the lack of lawsuits against ad-blockers and such, this might actually be able to slip by.

Again, I'm not in any way condoning this--an Internet where the ISP replaces all of the ads on the site you are viewing with their own advertisements pretty much kills the advertising-supported model that is the backbone of the current Internet economy. I think, however, that it is perhaps just a matter of time before a company heads down this route and, with the FCC giving transit providers carte-blanche jurisdiction over content carried on their networks--the content providers would probably not get a lot of support from the current administration. Yet another reason why Net Neutrality is a must for a viable Internet economy.

IPTV and TV Battle

Peter's post here about the cash-heavy battle for the static market of TV subscribers brings up a couple of interesting points about the ongoing showdown in the video industry, although I don't agree with his pessimistic synopsis about the futility of throwing cash into the video market to fight over subscribers in a relatively static market that may potentially disentigrate on the submarine torpedo of Internet-based content.

I'm less inclined to think that the telco's are as stupid as we sometimes make them out to be. They have generally been a little bit slower on the technology side, but somehow, when the market is ripe, they show up onboard with the relevant technology and offerings. So why television? and why now? and why the rush and the expense?

One easy (and mostly accurate answer) is triple-play bundling packaging voice, video, and Internet together (and sometimes mobile) into one package. This is the new advertising gimmick of the industry and quite a brilliant one at that. Residential subscribers are a fickle bunch and triple-play packages have been a great tool for upselling a current subscriber base into a range of add-on services; doubling or even tripling the potential revenue for a given customer. Since (potentially) most, if not all of these services, can run over the same physical infrastructure, this also does a good job of more effeciently monetizing the expensive outlay of physical buildout.

The downside (or upside) of triple-play is that it is now almost a matter of survival in the telecom industry. In a world of triple-play, both the cable companies and the telephone companies are attacking each other's core markets; anyone not locking their customers into a triple-play package is leaving their customer base unprotected to competive market that can leverage the combined purchasing power of three to four services to undercut pricing on any given package. Given the commodity nature of the industry and the general mediocre customer satisfaction levels, price is a major factor, if not the major factor.

Of course, the battle is over a bit more than mere subscribers--the battle, after all, is for complete domination of the communications industry. In the end, the company with a near-monopoly on communications subscribers can leverage their subscriber to control content, absent, of course, some sensible Net Neutrality provisions. Over the next few years, as mergers, partnerships, and bankruptcies thin the already lean marketplace, Net Neutrality will become all the more important of an issue; from the AT&T merger conditions, 2009 will be the year to watch when their (meager) self-imposed Net Neutrality provisions expire.

Still, Peter's comments about the disentegrating marketplace do accurately describe a valid threat, and it is somewhat of a race to establish a significant market dominance that can control third party interlopers. Internet video is very much in its infancy, lacking enough substantial content that is compelling enough to replace CSI or Hero as weekly traditions in many an American platform: after all, how many people are ready to tune in on a weekly basis for an hour of "Coke and Mentos"? There are also significant problems with quality and the network providers are being very careful to choke the the amount of Internet bandwidth to kill the possiblity of realtime HD video content. The biggest obstacle to online video--and not a trivial one--is real monetization that can actually support a distribution network and content providers; current offerings can't even successfully create enough revenue to sustainably support the infrastructure cost of distribution, let alone content. There is a complete end-to-end business infrastructure for traditional television that cannot be replaced or co-opted overnight.

Still, all of these obstacles can change and are changing. Video technology is maturing and is now to a "watchable" level even at relatively modest bitrates; in a few years, HD quality is not unfeasible. And, made-for-Internet video content is maturing; while it is not yet good, it definitely surpasses the much of what is availble on television. Most importantly, the networks have had some success distributing both via direct-to-web ad supported models and pay-per-view via iTunes. Given time, Internet video will mature and be able to establish itself as a legitimate replacement for traditional television.

It is, in many ways, a race: if Internet video establishes itself in a very real sense before a single "victor" emerges, then the gamble has been lost and the telco's and cable companies will have to retreat to their current role of infrastructure. However, if a single or a couple of extremely dominent companies emerge (as will happen) before any real viable Internet video option emerges, then the telecommunication companies will become gatekeepers and premium content providers will have to pay dearly for access to their audience. It is precisely because they understand the nature of the game and the stock-holder hell awaiting the second place winner that the telecom companies are throwing big money after network upgrades and infrastructure overall. After all, a nice slice of a static market is still much better than no slice at all.

Why are the Telco's the industry whipping boys?

I have to admit, I am definitely guilty of our favorite pastime of telco bashing. Having worked extensively with BellSouth as part of an NSP (basically a BellSouth reseller, when all is said and done), I have often launched into many a tirade about the evils of the ILECs and their negative influence on the industry.

Still, I am often wondering these days whether the industry hatred of BellSouth, AT&T, Verizon, etc.. is perhaps a little misguided. Don't get me wrong--they are no angels. But, having had some recent exposure to the cable industry, I'm not sure that most of the independent service providers would be better if the ILECs take the much desired tumble, leaving only the cable companies as potential partners for physical infrastructure.

Most of the industry dislike is voiced by businesses whose livelihood is tied to an ILEC: CLECs, NSPs, VoIP providers, etc. I think, unfortunately, the familiarity breeds the contempt; the most aggressive telco-haters are generally the companies who need infrastructure partners since, in most cases, they lack the means to provide end to end infrastructure to even one of their customers, let alone thousands. So, they lease lines or interconnect with the ILECs, play marketing, branding, and semantic games, and, when all is said and done, simply game the system to provide the same basic services rebundled at a better value using the ILEC infrastructure. Down with AT&T? Down with Verizon? Who is ready to step up and take their place in the market? Who attempts to build real infrastructure? The only real nod here goes to the wireless guys and, when all is said and done, the technology is limited in its capacity.

We speak of deregulation increasing competition and, in some sense, it has. The market is much more open and vibrant than it was in '96 and '84. But, when all is said and done, I wonder if deregulation has failed in its basic objectives: there are still only a handful of companies that actually make the long-term investment to lay real infrastructure. The CLECs of yesteryear made billions of dollars off a favorable regulatory environment and billing loopholes; relying on a great UNE-P rates instead of actually getting their hands dirty. With a few notable exceptions, I don't think the amount of CLEC infrastructure could make a dent in a third world nation, let alone in the US.

No matter how many different companies compete on selling services over that infrastructure, the only thing that will increase competition in that space is more companies actually building real infrastructure. I think, perhaps, the FCC is not being as foolish as we'd like to think--they are generally being supportive of the people who can actually provide real competition and broadband penetration (ie telcos, cable companies, and wireless) and making the rest of the industry operate as the resellers they have become. After all, a 1000 NSPs won't provide increase broadband penetration in the least.

I'm not going to stop bashing the telcos: after all, they are fun to hate. Still, if the ILECs tumble, who really wins except the cable companies? Judging by how few people make a living partnering with the cable companies, I'm not sure that is the desired outcome.

Musings on Network Neutrality

Why is Network Neutrality essential?

I think it is perhaps prudent to start out the discussion by at least vaguely defining what Net Neutrality means. For purposes of this discussion, I tend to define Net Neutrality as an environment in which transport providers (carriers, ISPs, etc...) are content neutral: they do not give hinder or favor some types of traffic over another. It is important to note that Net Neutrality is often sometimes used to mistakenly refer to government regulations to force a content-neutral environment; the distinction is critical because regulations are just one approach to achieving and maintaining a neutral Internet.

The first and foremost reason for Net Neutrality is simple freedom of speech. In political terms, this is largely uncontroversial in the United States itself as a principle in terms of transit providers. There have been relatively few incidences of (major) ISPs censuring political or other content on the network layer. On the other hand, many of the content providers--some of the most vocal, and indeed, the very people who do depend on network neutrality--have failed to consistently honor this principle in terms of content that they host; notable examples include hosting companies, fearing legal and other repercussions, taking down sites along the lines of walmartsucks.com as well as the self-censorship of Yahoo, Google and others in order to gain access into foreign markets with regimes more oppressive than the United States. All of the regulations forcing transit providers to be hands-off does nothing if a large donation to a hosting company can sway them to shut off service to a political opponents blog or if, as does happen, private citizens are unable to find a forum to exercise their right to free speech because they don't have the legal resources of Coca-Cola.

The other major incentive to Net Neutrality, one that does squarely target transit providers, is that of an economically open marketplace. If you want to experience an Internet without Network Neutrality provisions, look no further than the apps in your cell phone which are often restricted or "locked" to services that generate revenue for the cell phone company. While this does result in a more coherent customer experience, it also results in both higher costs to the consumer ($5-$10 a month for applications that are generally available free for PC customers, in addition to data charges, monthly cell phone charges, etc...) as well as a stifling lack of innovation. Real innovation in Internet history has usually come from nowhere with small, nimble companies stumbling into the market place and upstaging the status-quo in a big way. The economic necessity of such innovation is evident in the economic impact Google's advertising engine, which has been key to the re-emergence of the dot.com economy in the past three years. A controlled, locked down Internet is not only boring and lifeless to end-users--it is economically boring, lifeless, and eventually whithers away to nothing. This is a lesson that has been learned the hard way again and again and one, I fear, that we are doomed to repeat. A quick look at the experience of the transition of AOL and Prodigy from glorified BBSs to ISPs should reinforce this point to the fearful and doubtful; or simply look at the Internet through an ISP portal, take away the Google link, and ask "what if THIS was the Internet in its entirety?".

Monopolies, by definition, stifle competition and consequently kill innovation that is the characteristic of a free and open active market. The economic nature of telecoms tends to create natural monopolies, as is the case with most infrastructure that is characteristic of utilities (indeed, the plethora of telecom options on a nationwide is reduced to one or two options at best on a local level in most cases). As the Internet for many people is and for the remainder of society is becoming THE forum for social, political, and economic interaction in society, it is vital both to our democratic institutions and our economic systems that these natural monopolies not become vertical monopolies, leveraging their control of the physical infrastructure to control the content of Internet traffic. Failure to prevent such future marginalizes the economic vitality of the Internet for all of us as well as undermines the political vitality of our democratic participation.

Problems with Network Neutrality?

Regardless of the industry, any sort of regulatory approach by the government is difficult at best. There are several problems inherent in regulation--forced changes in large, complex, chaotic systems always have unforeseen side effects (IE the Chaos theory) that are often negative; defining regulations is a nearly impossible task of describing a broad range of market behavior in specific legal terms that opens up new loopholes that become economic markets in and of themselves. A quick survey of blogs shows the difficulty of even clearly defining Network Neutrality in a journalistic sense; although I do think that a simple definition of no preference or hindering of traffic suffices and is easy enough to frame in legal terms. Still, the premise itself leaves big loopholes, as we will discuss.

The first major battle on Net Neutrality will be over video delivery. There are rumblings from the voice over IP world about occasional network provider induced problems as well. Still, voice over IP takes little to no traffic (several simultaneous calls can conceivably be carried over a dial up connection) compared to video, which even the low definition streams available on the Internet now can severely tax most broadband connections. These network infrastructure implications gives some measure of legitimacy for current and future arguments FOR a non-neutral network environment; coupled with the potential revenue involved, this will be the fight to watch over the next 5 years. Because of the immediacy of this particular facit of Network Neutrality, I will be focusing on it for the purposes of this section; other types of content have some of their own pecular caveats.


Technical Problems with Network Neutrality

The real problem with the concept of Network Neutrality comes from the technical details of data delivery. Network Neutrality aside, prioritizing network traffic is good networking practice and already employed by many independent ISPs, even the negative control of hindering peer to peer traffic. Fundamentally, it is good network practice to assure priority delivery to real time traffic such as video and voice over non-real time traffic such as file transfers, web browsing (although web 2.0 applications increasingly need some degree of prioritization), and so forth. Although some audio and video applications can be written to compensate--Real Player does this for example with buffering, and does a fairly admirable job of delivering content from CBS's Innertube)--this is simply not possible with real-time interactive applications such as Internet telephony and video conferencing.

To some extent, issues can be mitigated by prioritizing the connection between the end user and the ISP, using a router at the customer premises that supports QoS (Quality of Service). As a side note, there is some indication from AT&T's wording of their Network Neutrality concessions to the FCC that this is intergral to their IPTV delivery (more on this later). This does not do anything about congestion problems on the Internet at large, as this only affects a single piece of the connection and does not provide end-to-end reliability. Still, for our current generation of Internet content, this method of QoS does work, for the most part, most of the time. It also has the additional benefit of providing end-user control over their own connection.

Nevertheless, the viability of this method is at best short-lived. Current Internet television and video content is, simply put, a major regression in terms of signal quality compared to traditional television delivery systems. No one is really willing to watch the Matrix on You-Tube quality video--we may enjoy watching college students stuff Mentos in a coke bottle, but most of the videos are also 1-2 minutes in length because that's about as long as we can stand watching low-quality, pixelated, jerky, mis-synced videos that inherently remind us of Aunt Gertrude's vacation videos. At some point, the quality of the content in terms of viewability MUST increase to really become a replacement delivery method for television.

It is currently not even feasible to deliver SD television via the Internet; as we migrate to HD television, the network infrastructure implications are far from trivial and DO require extensive design considerations to be able to deliver a good customer experience, even from the providers own network. AT&T's U-Verse product is somewhat of an engineering feat in and of itself, and it doesn't have to compete with the congestion of best effort Internet traffic. A world where high-definition video content streams delivered over the Internet DOES require some prioritization in order to be viable; furthermore, delivering 5 million identical 10Mb/s streams to 5 million households (a reasonable scenario if everyone is watching their Tuesday night sitcoms over the Intenet) necessitates multi-cast delivery which mandates some level of integration between the content provider and the network service provider in order to really work in the immediate future.

Simply put, wide-scale high-definition video distribution does require some technical concessions that fundamentally violate Network Neutrality; given current (and immediate future) technology, I am simply unconvinced that there is a workable solution for using the Internet for significant video delivery that fits within the principle of Network Neutrality. We will discuss some solutions to this problem in part three of this series.

Legal Problems with Network Neutrality

The much greater problem with Network Neutrality, though, is that it is really a moot point--network providers already bypass any and all Network Neutrality arguments and will continue to bypass any and all regulations passed by FCC, Congress, or otherwise. As long as video traffic remains separate from the Internet traffic, it is somewhat of a pointless discussion. Hence, there are no bloggers crying foul against Comcast or Time-Warner on Network Neutrality grounds even though the video content available through their cable connection is generations better quality than the video content that their cable modem can handle; likewise, no one calls foul against BellSouth or AT&T because telephone calls placed over POTS are generally better quality than telephone calls placed over the Internet.

Even as the telcos are deploying their next generation networks that support triple play, their fundamental design simply technically and legally neatly sidesteps most of the Network Neutrality argument. In effect, they don't give preference to their own services; they go much further and create two separate networks, one with guaranteed delivery (for their own services) and a small capacity, best effort network for third party services (Internet).

AT&T
AT&T's U-Verse product is likewise sidestepping the whole issue by simply making a 25Mb/s ADSL2 connection a 5Mb/s U-Verse Internet connection; the other 20 Mb/s is used for their video delivery. They have absolutely no need to block, restrict, or degrade competing video traffic--simply put, they can always deliver a better video experience in their 20Mb/s portion than can be obtained from third parties in the 5Mb/s Internet portion. In effect, they are immune to legislation mandating an unrestricted Internet pipe (which may come sooner or later) and would only be affected IF the legislation went as far as to actually mandate use of the entire ADSL2 connection as "Internet"; I'm not sure of the feasibility of anti-monopolistic based legislation mandating MORE services to be offered by a corporation.

Verizon
Verizon's FTTH solution also sidesteps the problem, although they are even clearer than AT&T. They deliver the video portion of their triple-play solution using RF (what cable uses) over fiber rather than using IP. Any legislation dealing with IP traffic (ie Net Neutrality) would entirely miss them.

It is important to note that, by using the right CPE (customer premise equipment), the methods mentioned above in use by cable companies, AT&T, and Verizon can be used (and are) in use for other types of content--be it voice, video, or even web applications. It especially can be an effective strategy because it also creates a disincentive to provide quality Internet access--indeed, if the Internet access is universally bad for real time content (and, as long as it is universally bad, it still is acceptable from a Network Neutrality viewpoint), then it simply steers usage of real-time applications to the network provider's products and leaves the generic web-surfing relatively unhindered. Well designed CPE can make this transparant to the end-user while maintaining seperate networks for technical and legal reasons.

Although this is currently to some degree the status-quo and will be solidified over the next few years, this is not how it has to be. Stay tuned for part 3 in which we will start discussion on how to really ensure a free and open Internet.

How to achieve Net Neutrality: the regulation question?

This is perhaps will be the most controversial section. Regulation is a hard matter and it is a rare occasion in regulatory history that does not create a bigger mess than originally existed.

In many ways, I do agree with the FCC in their basic premise that the markets should be allowed to sort the issue out. Still, for the markets to be effective (Economics 101), there has to be sufficient competition; a monopoly destroys the ability of the markets to self-correct. In this case, the problem is not a lack of Network Neutrality regulations and guarantees, it is a problem of too little competition in the last mile market that allows a provider the power to leverage one monopoly to build vertical monopolies. The end solution, then, is not regulation, but fostering competition, which will do more for Net Neutrality than legislation could ever hope to do, for reasons discussed in section 2. For a rare change, I tend to agree with the FCC in theory on their general approach right now; nevertheless, whether because of stupidity, ineptness, corruption, or some mixture thereof, the substance of their direction somehow is consistently at odds with the professed theory behind their rulings.

The question as to increasing last-mile competition is perhaps best developed another time; still, I will venture a few brief ideas. It is especially on this point that I am interested in generating discussion. Unfortunately, I don't see wireless networks as particularly interesting in this regards simply for reasons tangential to the concepts involved in part 2 of this discussion: they can't carry large amounts of bandwidth and are therefor limited in applications.

The fundamental problem that I see--and a relatively quick-fix--is the FCC ruling not requiring the telcos to lease out fiber. The economics of fiber build out mean that it is very economically inefficient to build multiple, competing fiber networks in the same city. Even if 5 companies raise capital to build out a fiber network in a market, at most 1-2 would survive, leaving a lot of dark fiber and no competition in the area. In this sense, building the infrastructure creates a natural monopoly; the only solution is to socialize the infrastructure (ala Muni Wifi, but with fiber) and lease access or to allow it to remain privatized but with requirements to resell unbundled fiber loops. I have many reservations about even this path, as touched on here, but I don't really see an alternative, viable path to market competition. The only other approach is heavy, heavy regulation: if one is going to rely on the market to self-correct, one has to encourage a vibrant, active market with enough competition to start the process.

Please discuss below; if you have alternative viewpoints or would like to explore this further, make a note. I welcome guest bloggers regardless of standpoint as long as they don't just rely on dogma.