The Internet is Not Television
|An extended letter to the editors of Wired Magazine in response to a May 2001 cover story which demonized the Internet simply because it doesn't make sense to those whose vision of the world is limited to television as we know it.||02-May-2001|
genesis of this essay as a letter to an editor of Wired Magazine in which I observed
that there were serious errors of fact in their cover story and that the errors
had consequences in reinforcing misunderstandings about what the Internet is. Unfortunately,
these myths feed into a "common sense" feeling that that the Internet is an extravagance
that must be contained. In fact, just the opposite is true. The reason that the
Internet has contributed so much to the economy is that it is not like the old way
of doing things. Unlike Television, the Internet gives all of us the opportunity
to add value.
You can find the original article online in
You may also want to look at an article in the
New York Times
that demonstrates an understanding of the difference between the Internet and the
services that are available on the Web.
Alas, "Services seen as
driving growth in broadband" is more typical. It posits that we have to keep
the "broadband business" healthy by buying services we don't necessarily want in
order to get the ability to create new services. This is completely backwards. The
PC industry did not arise because of the applications created by the manufacturers.
It arose because the rest of us had the opportunity to create applications.
Any plan that predicates the availability of Internet connectivity upon our
acceptance of services defined by the "broadband" providers, AKA Television
(and Telephony) guarantees that we cannot get improved connectivity. Such
an approach is, to put it most kindly, misguided since it requires that we fund
services that are at best unrelated to and at worst threatened by, the Internet.
The implication is that the Internet is not valuable-enough in its own right to
The Internet is actually much more valuable than television. Requiring that the
money go to more "television" isn't just misguided, it is a way to restrain the
growth of the Internet and to assure that we do not get the economic benefit of
A Letter to the Editor
I was offended by the article in the May 2001 issue of Wired magazine since it
repeats some very destructive myths. Worse, it was featured on the cover. I couldn't
let such a prominent collection of false statements pass without comment.
After I sent in some initial comments, the author, Charles Platt, challenged
me to identify the errors in his story. I felt obliged to respond. After going through
article paragraph by paragraph, the bottom line is simple. It confuses the Internet
with Television and then proceeds to castigate Internet users (who are, in fact,
paying their way) as freeloaders while feeling sorry for the Broadcasters and the
dilemma of what do to with the all the (free) bandwidth that the FCC has given them.
The article is unfortunate in that it plays into the hands of those who demonize
the Internet because their business models threatened. And the threat comes because
the Internet gives us the ability to make our own choices. And that is very threatening
to those who make their money by managing a scarce resource.
The resource is not scarce, they can't force us to pay their fees.
It is important to understand the Internet. One of the primary causes
of the dotCom bubble was a lack of understanding on the part of investors. It wasn't
that people didn't believe that businesses must earn money; it was the willingness
to suspend disbelief and accept outrageous claims. The Internet seemed liked magic
and everything was possible. While the Internet retains the ability to surprise
us what is possible, it is important to understand how traditional businesses are
challenged. The challenge might be in opportunities that provide a competitive edge.
But meeting the challenge requires rethinking the fundamental assumptions of an
Television and telephony were remarkable feats of engineering. New companies
that provide television and telephone services had to experiment until they found
viable business models. But both of these businesses are based on charging (subscribers
or advertisers) for the value, rather than the cost, of a service. The problem is
that the providers prejudge what services they will provide and set the prices.
The Internet challenges this by giving each of us the ability to create our own
services. You can think of the Internet as a grocery story. Instead of relying on
a chef to make our meals and charge a restaurant price, we can buy the ingredients
ourselves. Not only is this less expensive, we are free to create what we want.
The Internet gives us the "connectivity". We can use this to create phone calls,
to view a web site, to exchange email, or watch a video stream. In fact, we can
do this all at the same time. We are used to seeing each of services as prepackaged
offerings provided by providers such as phone companies. While it is natural to
apply this thinking to the Internet, it is very wrong. The "Internet" itself is
just a transport for the services. We can define the services ourselves or
choose to buy them. When we do buy a service like "Email", we are buying
it from another person or company at the edge of the Internet, not inside.
Once we understand the distinction between the Internet and the services like
the web, it is easy to see the problem with this article. The most exciting services
will be new ones that take advantage of the Internet.
Television, as a choice of a limited number of nationwide networks doesn't make
sense on the Internet since there is no reason to create such a limited set of choices.
The question is not whether but when the Internet will allow causal viewing of high
quality video — higher quality than current television.
Efforts to make the Internet act like television are questionable. Television
is, in fact, very good television. When the Internet has the capacity to carry high
quality video streams, there will be few barriers to creating new business. Trying
to force the Internet to act like television prematurely gives us nice demonstrations
and some snippets of video. These are interesting attempts but not, by themselves,
very important to the growth of the Internet.
In fact, trying to force a television model on the Internet does serious damage.
It puts those who are most threatened by the net in a position to limit its
growth. And it encourages more questionable investments. It also leads to bad
public policy. Strangely the article demonizes the Internet users by calling
them freeloaders without any justification. Yet, when it blithely notes that the
TV broadcasters are getting a free ride with current FCC policies yet sees nothing
wrong. This could've been the focus of a great article. How could the editors and
the author miss such an opportunity when it is presented so clearly in the stark
contrast between the net users who are actually paying their way and the broadcasters
who are at a loss to take advantage of the FCC's largess.
The Annotated Article
|The Future Will Be Fast
But Not Free
|You want broadband. You'll get it. You'll pay for
it. You'll like it.
||What does the term "Broadband" mean? It used by the cable
TV companies to confuse the Internet and their TV offerings. This is a poor
framing for an article about the Internet.
|By Charles Platt
|For more than a decade, the Net successfully denied economic
reality. It began, of course, as a Defense Department research network in
1969, funded entirely by the government. Even after the first commercial
ISPs set up shop in the mid-'90s, the Net ignored the rules of business.
Most netizens paid about the same flat rate for a valuable resource, no
matter how much of it they consumed. They received the same quality of service,
no matter how far from the nearest backbone they happened to live. And wherever
they browsed, from Usenet to The New York Times, from the Library
of Congress to Napster, they paid virtually nothing for almost anything.
||What basis is there or saying that the Internet has defied
economic reality? If anything, the recent rapid decrease in telecommunications
prices indicates that it is the traditional telecommunications industry
that has escaped reality until it was forced to catch up. And it was economic
reality of the Internet that forced the issue. And it is untrue that the
"netizens" paid the same flat-rate for a valuable resource. Prices vary
greatly according to the type of services purchased. Just because that the
number of bits isn't usually the unit of measurement nor does the charge
vary by distance, doesn't mean the costs don't reflect the value of the
resource. Pure connectivity is a low priced commodity like salt.
Don't confuse the cost of the Internet traffic with the charges for the
services offered by others via the network. If I buy a book from Amazon
I pay for it. But I don't pay my ISP more because I buy a book than if I
read a magazine online. This distinction between connectivity on "content"
is fundamental to the economic reality of the Internet.
If anything, the Internet has provided one of the best opportunities
for economics systems to operate. It increases the efficiency of the marketplace
and thus it is the Internet that is most in tune with economic reality.
Confusing the Internet with services like Usenet and The New York
Times misses the entire point of the Internet! While the Internet makes
it easier to create a service like Napster, how is it any different than
the old days when we'd copy a record onto a tape?
Since I do pay for books on Amazon and I pay for my connectivity, it
is very offensive to accuse the network users of not paying for anything.
|According to traditional capitalist thinking, of course,
this made no economic sense. If a product is free, businesses won't want
to produce it. If a resource isn't metered, it will be abused. Yet this
flat-rate environment survived and even flourished as millions of people
||This is utterly false. Does this mean that one cannot have
"all you can eat" restaurants; that one must pay for a subway ride by the
mile? Does this mean that every water fountain must be metered? Flat-rate
pricing makes a lot of sense when the measuring is not viable. It may be
that measure is expensive. At this point billing is a major, if not the
largest, expense for a phone company. But the deeper problem is that there
are no good metrics for charging. The providers' costs vary greatly and
have no direct bearing on the user's activities. Since the flat-rate charges
cover the costs of the network and charging would increases the costs, flat-rate
is very rationale.
What justification is there for saying that if a resource isn't metered
it will be abused? It's like saying that if we allow people freedom
of speech they will abuse it.
|Net theory held that these peculiarities weren't peculiar
at all. Technophilosophers argued that the combined effects of Moore's law
and shared content had fundamentally altered the economic equation. "Bandwidth
is going to be virtually free in the next era in the same way that transistors
are in this era," George Gilder predicted. Stewart Brand, who first suggested
that "information wants to be free," held that online content was already
too cheap to meter. And John Perry Barlow suggested that traditional copyright
law had become obsolete, thus exempting all digitized text, images, and
music from age-old concepts of ownership. "Intellectual property law cannot
be patched, retrofitted, or expanded to contain digitized expression," he
wrote. "We will need to develop an entirely new set of methods as befits
this entirely new set of circumstances."
||The particular quotes don't necessarily represent the thinking
of anyone but the author of each quote and are typically offered as starting
points for discussion. It is fine to disagree with them but throwing in
terms like "Technophilosophers" seems to be an ad hominem attack. Better
to address the specific points. While I may not agree with all the quotes
there are significant elements of truth worth exploring.
|These notions were supported by technological realities.
Digital files could be reproduced ad infinitum, at no additional cost, and
then distributed near and far for a fraction of the cost of shipping magazines
or CDs. Napster exploded into existence - a thriving realization of both
Brand and Barlow's vision. As for Gilder's law that bandwidth would be free,
weren't computers getting cheaper - or at least more powerful for the same
price? Shouldn't the same thing happen to the hardware that enabled Net
||"Notions"? A loaded word. But confusing Napster with the
Internet represents a deep misunderstanding of the difference between the
Internet and the applications.
Also why are we assuming that Napster is evil? Does these mean that
the record distributors are entitled to all the money the get by maintaining
their exclusive channel of distribution? Seems strange that a magazine
is supportive of the record companies since the magazines have to compete
in a marketplace that doesn't grant them exclusivity. Why do the record
companies have a lock on the distribution of music?
|As it turns out, there are some good, practical reasons
|The most important reason is not the profits-really-do-matter
epiphany that shook the dotcom world this past year. Nor is it the recent
victories of the recording industry over Napster in the ongoing debate about
copyright's future, or the slew of free Web services that soon after went
belly up (or stopped being free). No, the immediate reason centers on a
simple, straightforward technological fact: A vast fiber-optic network with
countless switching nodes doesn't enjoy the same options for cost reduction
as transistors. Although the data-carrying capacity of fiber has increased,
it still has to be laid and maintained, and there's that old but persistent
little snag of bridging the last mile to reach tens of millions of consumers.
As for bandwidth, its cost shows no sign of diminishing to zero. On the
contrary, higher bandwidth has meant higher monthly fees, and that trend
shows every sign of continuing.
||What is this arguing against? Who said profits don't matter.
Why is the current record distribution system sacred? Isn't Napster just
a symptom of their loss of control? Just like the Internet is challenging
the ability to charge for a narrow bit stream just because it is a "phone
And the fiber-optic network most certainly does follow Moore's law.
In fact, it is catching up after being "protected" by regulations. The
price/performance is improving much faster than Moore's law. The big
exception is the local loop where the "content" companies (telephone
and television) are able to maintain their exclusive control and they
have a stake in preventing the increase in connectivity. If the local
loop had the same price/performance improvement as the rest of the Internet,
we would have gigabit capacity now for pennies. This is not "free" any
more than a Pentium is free. But compared with the price/performance
of computers of the 1980's, it is indeed free. In both cases we have
a virtuous cycle in which we discover new applications and keep pushing
against the limits. Instead of the improvement going to "free", we benefit
from taking advantage of the new possibilities.
|In short, it is time for a reality check. The landscape
of the Net has changed; that cyberfrontier of the past has become a teeming
city of people, transactions, and businesses. And many of the tenets of
early Net thinking now seem like a shared hallucination.
||Perhaps clueless investors need a reality check but the
"early Net thinking" is proving to have been right on the mark. If anything,
we are suffering because the thinking was too conservative and the current
net addresses and mechanisms need to be scaled up.
|Cheap Net access never did have much to do with new technology,
anyway. It was enabled by a hidden subsidy: the old copper wires that gave
digital data a free ride from your home to the nearest telephone exchange.
Everyone bitched about slow connections, but this bottleneck was really
a blessing in disguise. By preventing anyone from overloading the system,
it allowed low, flat-rate pricing.
||Cheap Net access had very much do to with new technology.
And, in the US, unmeasured phone calls have been given us a big advantage
over Europe where the PTTs continue to frustrate Internet usage. This has
given the United States a trillion dollar advantage.
Slow connections are purely an artifice of telecommunications policy.
The phone network is internally digital. The lowest speed is 56KBps. Analog
modems had to do very powerful processing order to achieve this speed in
one direction. If ISDN were Internet-friendly, getting a 128KBps connection
would not be a problem. Instead we've been forced to be more creative. First
the modem allowed us to use analog phone lines and now cable modems and
other strategies give us higher speed. But even these speeds are far less
than what is feasible.
If there are slow connections and the costs are being covered the obvious
thing is to improve the infrastructure and increase capacity. The question
is why has this not happened?
If flat-rate pricing is so terrible, why do phone companies have such
a policy for voice calls? And if I use copper that is already in the
ground and requires little maintenance what is the justification for
charging for usage after the installation costs have been covered? According
to the author's reasoning, if I should pay for the Internet based on
whether I use Usenet or The New York Times, then I should pay
a different charge for "important' phone calls vs those that are not
|All phone jacks were equal - and equally slow - because
incumbent local exchange carriers wanted them that way. The ILECs saw no
reason to offer upgrades that would undermine their overpriced T1s, and
they didn't have to do anything they didn't want to do, because federal
law protected them from competition - until the 1996 Telecommunications
Act came along. It changed everything.
||Yes, I agree, dial-up service is slow because the providers
have been spared a marketplace that would challenge their overprices services.
The 1996 yielded some changes but didn't change everything.
|Suddenly, competitive local exchange carriers acquired
the right to offer services like DSL, which had been developed years previously
but had never been deployed by the ILECs. This was around the same time
that cable TV companies finally realized the Net wasn't just for geeks anymore.
Via cable modems and DSL, broadband became a reality.
||DSL was developed so that the phone companies could compete
for Interactive TV business - a marketplace that has been stillborn. DSL
was repurposed for Internet access but has serious problems since it is
a physical specification that only works in very limited situations.
Remember that "Broadband" doesn't necessarily mean "Internet" access.
The Cable companies' priority was finding additional sources of revenue
and the idea of charging $40/month for a service that costs much less
to produce was very appealing.
|By the end of 2000, about 5 million US households were
equipped to surf at speeds ranging from 200 Kbps (about four times as fast
as a 56K modem) to 2 Mbps (40 times faster). By the end of this year, that
number will almost double, according to Jupiter Research. Many frustrated
DSL customers argue that the rollout should be happening faster, but it
||Surfing? That is another offensive term. The net is about
much more than just cruising web pages as if they were channels on TV. The
Web is no longer novelty. In fact, my dishwasher backed up tonight and I
was able to go to a site in Sweden and find the manual for my ten-year-old
dishwasher? That's not cruising, that's doing something mundane but very
productive. And it is far more efficient than trying to find my paper copy
of the manual.
Was I abusing the net because I didn't pay the company for looking at
their manual? No more than I would have to pay if I called their customer
support on the phone. In fact, I saved them a lot of money by using
|Everyone knows that the broadband era will breed a new
generation of online services, but this is only half of the story. Like
any innovation, broadband will inflict major changes on its environment.
It will destroy, once and for all, the egalitarian vision of the Internet.
||What kind of nonsense is this? Why would broadband affect
an "egalitarian vision"? If anything, it should enhance it be giving people
much better connectivity and let everyone be a provider of information and
|Already, broadband has cracked the illusion that geographical
location is irrelevant. In cyberspace as in realspace, location, location,
and location are the most crucial factors determining quality of service.
If you live in the boondocks or on the wrong side of the tracks, cable modems
may not be an option at any price. If you're too far from your nearest central
office, DSL may be sluggish or inoperable, because its data speeds are limited
by the length of those old copper wires.
||What illusion? Service has already varied according to many
factors. For those without unmeasured phone service, the Internet has been
expensive to use. Performance varies according to line quality and other
factors. University students would benefit from networked dorms while those
off campus would not.
I too lament the difficulties in getting cable modem and DSL service
(lame as they may be) but this is nothing new. If one looks at the economics
then this is the start of an important discussion. Pulling multiple
fibers into a region costs little more than pulling one so why isn't
it done more often?
|"If you're in a top-tier metro area, your chances are
much better for having some kind of solution, whether it's a cable modem,
DSL, or fixed wireless," says Beth Gage, vice president of consulting for
TeleChoice, an independent telecom advisory company. So much for egalitarianism.
||If anything, telecommunications using the Internet would
make rural and other areas far more accessible because the economies of
scale work far better with Internet protocols than traditional telecommunications
since the connectivity becomes a fungible commodity.
This is threatening to telecom companies since they lose their ability
to charge high prices by keeping the capacity limited and then charging
high prices for each service. As the Internet capacity increases, people
will create the services themselves. They will pay for the full cost of
A phone call will be "free" only in the sense that there is no special
charge for telephony bits. But those who stand to lose by such a change
will try to characterize those who fend for themselves as freeloaders.
In fact, it is those who charge a high price for a service like caller-ID
who are the freeloaders. Telephone companies have to create special
software and policies so they can block caller ID and then charge to
make it available. That is freeloading!
|As for pricing, here, too, broadband will change the
picture radically. Flat-rate billing isn't commercially viable in an era
when some users consume 1,000 times as much data as others. If you're downloading
a million bits per second, the cost of those bits isn't trivial anymore;
and when entertainment companies start peddling video online, pay-per-view,
pay-per-byte, and pay-per-hour will be logical consequences.
||This nonsense. Companies have long paid for connectivity
by "pipe size" rather than the number of bits exchanged.
this reasoning I if I pay $30/month for telephone service, I should be paying
$3000/month for a video connection since it is 100 times as capable (to
be conservative). Moore's law is working very well and a megabits are hardly
Maybe at a few terabits per second things will get expensive. But not
necessarily, since I could create my own terabit service between buildings
and not have any incremental charge. By the article's reasoning, why
does a computer than runs more than a thousand times faster than my
first PC (and many times that of my first computer) cost far less?
|The biggest change will be in content itself. Net snobs
used to preach that the interactive medium would displace the mind-deadening
experience of watching TV, but in reality, the TV industry will simply incorporate
the features of the Net that appeal to it. Testifying before a House subcommittee
in September, AOL Time Warner CEO Gerald M. Levin suggested that Net distribution
could "enrich people's experience of television," and predicted video-on-demand.
||"Net snobs"? Another ad hominem attack thrown in lieu of
The whole concept of television doesn't make any sense. If I have the
capacity to casually share video streams what is the purpose of company
that exists only to choose which single stream everyone in a city is supposed
to watch and then charge them for the privilege? Very strange?
Of course individual providers of video and music will have the option
of charging for their services and content. How this will work in practice
will be interesting to see as we try various experiments. But these
concerns remind me of the 1960's when there was a fear that copiers
would destroy the book publishing industry.
|Of course, TV-like Web-video providers such as pop.com
and DEN have failed spectacularly; they could hardly hope to succeed so
long as they offered jerky images of atrocious quality in tiny windows.
||One more reminder that the Internet is not television. And
television is not the Internet. So why do people try so hard to confuse
Everyone knows that the broadband era will breed
a new generation of online services, but this is only half of the story.
broadband will destroy, once and for all, the old egalitarian vision
of the internet.
|Today, online video distributed at the formerly unimaginable
rate of 1 Mbps can actually look better than a VHS tape, and 1-Mbps connections
are proliferating as cable providers and ILECs lay fiber closer to homes.
This is the distribution system of the future: Video will become the primary
broadband application when consumers realize how good it can look. This
explains why AOL - always the most prescient service provider - wanted Time
Warner. AOL foresaw the HBO-ification of the Net.
||Why this fixation on video? Sure, it's cute, but there is
more to the world than television.
What indication is there of HBO-ification?
|Four steps are now necessary to complete the broadband
transition. First, the Net's infrastructure must be re-engineered so that
it can support 1 Mbps and higher in millions of simultaneous streams. Second,
new billing systems must be installed and adopted. Third, content must be
compressed for economic reasons, and copy-protected to reassure its owners.
Fourth, heavyweight content providers like record companies and movie studios
must make their archives available online.
||The net already supports higher speeds. It's the "First
mile" between the home and the backbone that is the problem.
What is this continuing fixation on a billing approach that has simply
not worked? Perhaps the market has really chosen the current billing system
because is it the one that works and usage-based billing doesn't? Or does
the author not trust the marketplace?
Compression? Another fixation? If the pipe sizes are increasing by a
factor of 10 per year (or faster), then why accept the compromises associated
with compression? Compression comes with at a price since it is lossy. MP3
is based on a very complex acoustic model and doesn't work in many cases
and MP3 compressed music suffers under further processing.
Compression is a useful tool but not fundamental.
Copy protection is nothing to do with the Internet itself. It is a factor
in determining what businesses are viable but just one. Newspapers have
no protection against copying so why does one assume that copy protection
is a necessity.
Record companies are content distributes but the bands create the content.
Owners of movie archives can decide how to manage their assets. This
has little to do with the Internet itself. Just the opposite, these
companies must come to terms with an Internet that is moving far faster
than they are.
|Upgrading the infrastructure is the biggest challenge,
requiring major investment in new technology.
||More important is having a marketplace structure that supports
such an upgrade. Technology will follow if there is advocacy. But if those
who depend on scarcity have the ability to determine the availability of
connectivity, there will be little advocacy to take full advantage technologies
that are already available. For example, why do the providers not add spare
fibers when building new infrastructure?
|Leaders in this area have not enjoyed an easy ride during
the past 12 months, but ultimately they will prevail. Millions of broadband
users have already voted with their wallets for high-speed access. Fast
information, not free information, will drive and shape the future of the
||This is another offensive statement. Who is saying that
"free information" is driving the net? Sure, I expect the most interesting
"information" will come from sharing with others but it is only free in
the sense that one benefits from participating in a society.
|Step One: Fix The Pipes
The Internet was designed for a few thousand people swapping
plain text at 300 bps, not for millions of users sucking down trillions
of bits of streaming video. DSL and cable modems have made a dent in the
problem. But if everyone attaches a fat pipe to the existing backbone, it
could become as overburdened as the California power grid.
|The Internet was designed for much higher speeds — Ethernet
was already in use — and for many people around the world. Perhaps some
of the design points suffered from a failure of imagination but the basic
"end to end" architecture has no such scale limits.
The Internet is also very very different from the power grid. And the
California problems have much more to do with policy issues than just
technical and scarcity issues.
|Fortunately, Internet infrastructure is upgradable and
scalable. Technical improvements to enable streaming video have been engineered
during the past few years by edge networks like Akamai, Speedera, Digital
Island, and iBeam.
||What does streaming video have to do with the Net infrastructure?
Akamai et al are simply patches outside the net infrastructure and are problematic
in that they posit a static asymmetric network and reward those with poor
performance by allowing them to charge for local hosting.
|Suppose a college student in Minnesota wants to send
a stream from her dorm webcam to her family in Vermont. If she simply dumps
video onto the Net through her local ISP, the stream will be broken into
packets that may be routed via Chicago, Washington, DC, or New York, depending
on how the Net is loaded from moment to moment. Theoretically, when the
packets arrive at each destination, a media player will reassemble them
in a seamless sequence; but in the real world, we know that it doesn't always
work that way. A typical online video image tends to jerk and freeze, and
you find yourself looking at that irritating Net Congestion message at the
bottom of your RealVideo window.
||This is grossly wrong!! All networks have this characteristic.
With scarce capacity the latency issues become more prominent and more buffering
is needed. For a unidirectional stream like television such buffering is
For more interactive streams there is no substitute for having sufficient
capacity. And having a virtuous cycle of innovation is the best way to get
The only reason that the current television and phone system work is
that they are very much overbuilt. It's like giving each truck it's own
exclusive lane between Boston and San Francisco. The fact that one can get
away with such overbuilding is an indication that current services are vastly
Treating artifacts of a problematic infrastructure as fundamental is
|Now suppose the data is sent via an edge network like
Akamai. The Cambridge, Massachusetts-based distribution system leases backbones
(from companies like Qwest) to ensure a steady, sequential flow between
the ISP where the content originates and the destination ISPs. The Akamai
backbones branch and terminate in more than 8,000 edge servers in 55 countries,
strategically located as close as possible to the majority of Net users.
If you're in a large city or suburb, your ISP most likely receives its streaming
video from an edge network, which can remove the worst of the hiccups.
||Again, why this fixation on video? And why a fixation on
a broadcast model that assumes we are all watching the same thing at the
Why not just let us each get a few megabits of connectivity and choose
what we want to view or choose to use it for other purposes. Doing so
is simple and viable. If one looks at a Gigabit cable TV service, why
not give us each our own stream rather than broadcasting the same stream
to everyone and thus creating an artificial limitation on choice.
|Edge networks have been successful. The big question
is whether they can stay that way.
||Caching, like compression, is simply a tool that is useful,
but it is far from magic and not vital when there is sufficient capacity.
|"The only reason broadband works today is that not many
people use it," says Steve Lerner, vice president for streaming media technology
at Speedera, a company in Santa Clara, California. "Delivering 4 Mbps to
every home is beyond the capability of the infrastructure in this country.
You will need equipment that will not exist for another 10 years," Lerner
explains, citing fiber and advanced routers.
||What justification is there for this claim? The only reason
few people have high capacity access is they can't get it. Why assume that
just because it isn't currently available that it can't be provided? One
can argue the cost of a particular solution. Those who claim it cannot be
provided shouldn't be setting policies since they are clearly not advocates
|To complicate matters, edge networks were major casualties
of the past year's market dive. Akamai stock lost close to 97 percent of
its value by mid-March, plunging from more than $300 a share to just over
$10. Akamai's competitors fared even worse: Digital Island of San Francisco,
which counts AOL, Sun, Cisco, and Microsoft among its partners and operates
more than 2,300 servers in 33 countries, saw its stock plummet from more
than $100 to less than $3, while its net annual loss increased from $5.3
million in 1997 to $329.9 million.
||Of course "edge networks" were a major causality. They are
just minor technologies that depend on the infrastructure being limited.
Those who didn't understand this simply made foolish investments.
If anything, this is a strong indicators that the Internet is not television
and that we need better connectivity.
|These numbers tell a classic ebiz story. Entrepreneurs
who envisioned a streaming-video future developed new distribution technology
in anticipation of the demand. But consumers proved strangely reluctant
to peer at tiny flickering images, driving dozens of content providers out
of business. Those that survived are scrambling for cash; their advertisers,
unmoved by small audiences, are unwilling to pony up much for ineffective
banner ads. And since edge networks depend on usage fees from content providers,
everyone's in a short-term bind.
||Again, so what? The net is not television. Those who thought
it was had a learning experience.
|In the future, this cash-flow problem should be resolved.
High-quality, full-screen Net video will not only enable pay-per-view or
pay-per-download movies, it will also introduce us to the pleasures of TV-style
Net commercials that will be far more potent than banner ads. Thus, broadband
will eventually generate revenue - but the system needs to bootstrap itself
to get there. Most of all, distribution costs must be reduced.
||OK, enough on video. It is a side issue.
|According to Akamai, its typical fee for carrying data
is a couple of cents per megabyte, which sounds cheap until you consider
that each user receives a separate datastream. Jonathan Seelig, Akamai's
cofounder and vice president of strategy and corporate development, cites
a 90-minute webcast of Steve Jobs in July 2000 as one of the company's biggest
projects so far. "We transmitted more than 4.3 Gbps at the peak, to 90,000
unique visitors," he says with some pride. "We delivered more than 6 terabytes.
We're the only company that has proved scalability to such massive proportions."
|Unfortunately, compared with the reach of magazines and
TV, an audience of 90,000 isn't "massive." More important, Akamai's version
of online distribution isn't cheap. If Jobs paid Akamai's usual rate, the
distribution of his webcast would have put him back at least $100,000, or
more than $1 per person. Worse still, any Internet content provider that
tries to increase its audience must pay extra for each new viewer. Broadcast
television doesn't work this way: Even if the audience for a TV show doubles,
the cost of broadcasting remains the same, because one signal, from one
source, travels one way, through a free medium (the air) to all users simultaneously.
||Free medium? Now we are talking about freeloading!!! If
it's free why can't I do my own broadcasts? Admittedly the radio spectrum
should be free but it is currently managed as a scarce resource with high
economic value. Broadcasts are getting the benefit of largess.
And if the air is so "free", why do so many people get cable access
and why are the advertising fees measured per household? Why do companies
pay billions to keep others from sharing this free medium?
|Edge network advocates like Digital Island's chief marketing
officer, Tim Wilson, acknowledge that broadcast TV has an advantage, but
they insist that as backbone capacities go up and the price of transmission
goes down, Internet distribution will rule, largely because ads can be customized
for narrow market segments.
||Ads? Well, in some business models. But the particular choices
of business models are speculative at this point.
But yes, capacity will increase and video streams will be available.
But most will likely be interpersonal.
|Until then, alternate distribution methods will be more
economical. Sunnyvale, California-based iBeam, which carries MTV videos
online and boasts alliances with Dell, Microsoft, and RealNetworks, has
a unique strategy of uploading its data to a satellite that transmits to
edge servers, avoiding terrestrial backbones altogether. DirecPC goes a
step further, beaming data directly to more than 100,000 subscribers in
the US via satellite instead of piping it through the Net. However, DirecPC's
rated speed of 400 Kbps is good only during off-peak hours when few users
share the limited resource. Moreover, the signal is one-way; you need a
dialup phone connection to carry your mouse clicks or email back to the
||TV is TV, stop trying to turn the Internet into TV just
because it's the only model some people have.
All broadband systems need upgrades before they
can fulfill their promise on a mass scale, and this will require steady
revenues. The good news is that the tools to monetize the datastream
|Utter unjustified nonsense.
|While DirecPC promises that a two-way satellite link
is on the way, StarBand has this up and running already. Launched in April
2000, StarBand charges $69.99 a month for Net access (and $99.99 for the
premium service, with 150 TV channels courtesy of the Dish Network). StarBand-ready
Compaqs are sold at RadioShack, or you can buy a special satellite modem
that plugs into the USB port of your PC. Downloads are said to be as fast
as 500 Kbps, while the uplink runs at 150 Kbps - although these rates may
drop by more than 60 percent during busy times.
||What does this have to do with the Internet? Doesn't seem
to scale well.
|Satellite Internet systems have a better chance of being
profitable in the short term because their distribution costs aren't as
closely tied to the number of users; plus, they're a boon to anyone who
lives beyond the reach of other broadband sources. Their disadvantage is
that they're too slow for high-quality video. Eventually they'll have to
be upgraded, just like edge networks.
||You invest, I certainly won't.
|The bottom line: All broadband distribution systems need
upgrades before they can fulfill their promise on a mass scale, and this
will require steady revenues. The good news for struggling broadband startups
is that the tools to monitor the transactions of this online economy are
||What promise? To be television?
|Step Two: Streaming Revenues
In December, Akamai announced MediaPlus, a software suite
designed to turn bits into money. "It can help to create a pay-per-view
environment," explains Seelig. "Or it can insert advertising into the
datastream, customized on a geographic basis. And it enables a content
provider to monetize the stream by syndicating it to other sites." Akamai
is ready for the day when video looks so good online, advertisers and
viewers will happily pay for it.
|Geneva Technology, a 4-year-old British company that
launched in the US in mid-2000, offers a similar service that runs on any
wholesale-distribution system, from edge networks to large ISPs. Idar Voldnes,
Geneva's president, explains that his software can process any event, such
as a phone call or even a mouse click, and arrange for someone to be billed
for it. "The first place we'll see this is in the mobile world," he says.
"Mobile commerce will never be entirely free."
|He sees the same thing happening on the desktop: "Free
services will last to some extent, but businesses can't survive without
revenue, and you'll have to start paying for content."
||So what is new here? There are many kinds of services and
business and models. This is a vacuous statement
|Speedera's Steve Lerner sees the shift away from free
Net services as being not just necessary, but desirable. "It's like, if
everybody turns on their air conditioners, the whole power grid goes down,"
he says. "You have to have a penalty for using too much." Still, the payment
process needn't be painful. "When you toast a bagel, it costs money, but
not enough for you to think about. That's the model the Internet has to
||So Lerner doesn't understand the net either. Why keep quoting
|A few old-guard Net idealists still insist that no one
wants to pay for online content, at any price, because information wants
to be free. Reacting to this, many writers, musicians, and other artists
complain that they can't make money selling content online. But the
artists ignore one simple fact: X-rated content isn't free but is perennially
popular on the Web - amounting to a $1.5 billion industry. If people want
something enough and the cost is tolerable, they will pay.
||Who are these "old-guard Net idealists"? The old guard I
know are very pragmatic and very savvy about economics.
But once again, the author is confusing the Internet with some applications
and is generalizing from a few arbitrary examples that he doesn't understand.
|It's a matter of finding the price point. Music might
not be as desirable as Web porn diva Danni Ashe, but it must have some value.
Suppose there was a site storing a million digitized CDs, allowing up to
50 downloads for $20 a month. Wouldn't most people opt for this convenience,
rather than endure the inconsistent quality and hassles of a Napster-style
peer-to-peer music-sharing network?
||OK, so the current music distribution system is seriously
flawed and innovation is very scary. But, just like confusing the Internet
with television, why assume that music is broadcast rather than shared and
why assume music is just about making money?
|The state of the Net today recalls the state of television
in the 1970s, when cable companies started persuading consumers to pay for
TV, even though it had always been free. Dish owners rebelled and indulged
in massive video piracy because they were overcharged; but the piracy problem
disappeared as prices dropped to a tolerable level. Today, almost everyone
accepts that cable and satellite services are worth paying for, since they
offer a wider range of higher-quality programming.
||Once again. The Internet is not Television. Television is
not the Internet.
|Many businesses are betting that a similar evolution
can occur online. Leading the move is a startup named iBlast, which will
use existing TV stations to circumvent the costs of broadband distribution.
Through a quirk in federal law, broadcasters all over America have been
given free digital spectrum. Originally, they were supposed to use this
for HDTV, but with amazing generosity, the FCC didn't force them to do this.
Instead, broadcasters can use their extra spectrum to send a digital version
of the low-quality picture format that was established as a standard back
in 1953. With data compression, this picture can be squeezed into less than
half a channel, leaving the rest of the new, free spectrum unused.
||Free? Sounds like theft!
|Broadcasters seemed unsure of how to use this surprising
gift from the federal government. Then a couple of enterprising opportunists
named Michael Lambert and Oliver Luckett came up with a shrewd idea. Lambert
had participated in creating the Fox network, where he served as president
of domestic television. Luckett had been a chief IP services architect at
Qwest, the fiber-optic communications giant. Together they proposed a new
nationwide TV network that would send movies, games, cartoons, and other
content to broadcasters, who would then transmit these programs using their
spare spectrum. Already, iBlast has partnerships with media heavyweights
like Cox, Gannett, Tribune Broadcasting, the Washington Post, and the New
||Yes, it is a gift. So why are the Internet users who are
paying the full costs called freeloaders and the TV people who are getting
a gift from the government (us) being treated with such reverence.
|Because the transmissions will be digital, new receiving
equipment is necessary - but you'll need it anyway as all TV broadcasts
go digital over the next decade. In the beginning, the service will be pay-per-view,
with 10 to 15 movies available each day. The iBlasters also talk about distributing
videogames and software. You'll buy a decoder key through the company's
Web site or toll-free number. After you download the content, your key will
unlock it for a limited time. "We think most content providers won't want
the consumer to accumulate libraries," says Luckett. "They'll make 20 movies
available during a week, then pull them out and move them elsewhere, and
give you 20 different movies next week."
||This is getting boring. These are all highly questionable
business models. Why so much focus on these particular ones?
|iBlast has run test broadcasts in Los Angeles, San Diego,
San Jose, Orlando, and Phoenix. Counting the 246 broadcasters that have
signed up so far, iBlast will be able to reach 93 percent of US households.
This gives it an immense advantage over Internet distribution - in the short
As terrestrial networks struggle to compete with
satellite systems and local broadcasters, two factors can tip the balance
in their favor: compression and copy protection. Get ready for the 500-meg
|Step Three: Compress and Control
As terrestrial networks struggle to compete with satellite
systems and local broadcasters, two factors can tip the balance in their
favor: compression and copy protection.
|Nonsense. As I've said, compression is just a technical
technique among many others. Nothing magic about it — just engineering and
It is a technical tradeoff. Lossy compression will become less interesting
as capacity increases and people start to expect more.
Remember VHS is just a compression technology that is very lossy.
||Omitting paragraphs that continue in the vein of treating
the Internet as television and related business assumptions. You can them
it in the original article.
|Almost all digital video is compressed before distribution.
If you look closely at a picture, every few seconds you may notice the background
dithering fractionally from side to side. Similarly, mouth and eye movements
of talking heads may have an unnatural, incremental quality. These blemishes
are introduced by MPEG-2, the world's most widely used system for squishing
data. Its compression ratio ranges from the high-end 8:1, to the common
20:1, all the way to 100:1, although the flaws at that scale make the picture
|Now this technology standard is being challenged by Microsoft,
which boasts that the compression scheme in its Media Player 8 packs down
video even smaller while creating fewer artifacts. According to Dave Fester,
general manager of Microsoft's digital media division, "At 750 Kbps, when
we demonstrated Media Player side by side with a DVD picture, half the audience
was fooled." Presumably, the other half wasn't fooled. Still, if Media Player
can convince even one person that its 750-Kbps stream is comparable to a
DVD, this is a major achievement. According to Fester, it means that a watchable-quality
two-hour movie can fit into 500 Mbytes.
|Rob Glaser, CEO of RealNetworks, claims that Microsoft
is merely playing catch-up to RealPlayer 8, but it doesn't matter who's
right. If a movie can be crammed into 500 megs, you can download it in about
an hour via a 1-Mbps cable modem, burn it onto a CD-ROM, and share it with
friends. Some people are doing this kind of thing already, using cruder
video images that are illegally circulated online.
|Such behavior triggers apoplectic outbursts from Hollywood's
copyright-infringement junkyard dog, Jack Valenti. However, Mr. MPAA and
his pack of litigators may be placated by Media Player, because it not only
offers better compression, but also includes a powerful copy-protection
system to assuage the anxieties of even the most paranoid movie mogul.
|According to Microsoft's Fester, a movie streamed in
Media Player format contains hidden codes restricting the number of times
or days you will be able to view it. And you can watch it only on the computer
at which you ordered the movie. If you make a copy for a friend, she'll
have to pay to unlock it on her computer.
|If this scheme convinces Hollywood that the Net can be
a safe, lucrative environment, broadband will reach its singularity: a point
where its quality ceases to be a joke and becomes a cash cow. Already, dozens
of startups are positioning themselves for this bonanza.
|Step Four: The Million-Movie Universe
No broadband content-distribution company has done its
homework more thoroughly than Intertainer, a Culver City, California,
startup that has partnerships with Warner Bros., New Line, 20th Century
Fox, DreamWorks SKG, Vivendi Universal, Sony Music, ESPN, PBS, and the
Discovery Channel. Founded in 1996 and privately held, Intertainer raised
seed money from Comcast, Intel, Microsoft, NBC, Sony, and Qwest, among
others. Who could ask for more?
|So, movies. We'll see what models work and what models don't.
Has little to do with the Internet itself. As usual, the movie industry
will be in catch up mode.
But the threat presented by the Internet is minor compared with the
real threat that will complete moot the studio system since digital
special effects will, over time, eliminate the whole use of people as
live claymation characters.
||Omitting paragraphs that seem to ignore the many failures
of "video on demand". The problem is that just saving a trip to the video
store doesn't justify a massive new infrstructure. More to the point, it
creates no new value. The Internet creates new value. This whole section
is particular clueless in completely ignoring the lessons of the utter and
complete lack of any consumer interest in these services. The users were
too busy using the Internet to care.
|Intertainer's high-end videos are streamed at 750 Kbps.
Cincinnati Bell and Verizon offer this level of access to some consumers,
while Qwest claims it's ready to provide a similar service in six cities.
Intertainer CEO Jonathan Taplin says the company streams more than 500 hours
of Hollywood hits, classics, TV shows, music videos, and concerts every
week. You pay $3.99 to rent a relatively new release (and less for other
movies), and can watch it as often as you like over a 24-hour period.
|The vexing issue is whether the Hollywood players will
cooperate sufficiently to attract consumers. Studios have refused to license
any title to Intertainer until 40 days after it has been distributed to
rental stores. "That's going to change," Taplin claims. Still, at this point
you'll see a movie on an airplane before you'll find it online.
|Warner reportedly is digitizing its film archives, and
has negotiated with Sony for a joint video-on-demand service to be delivered
over the AOL Time Warner network. Sony plans to have a new video-on-demand
project dubbed MovieFly running by May - yet such online initiatives have
been notoriously unfruitful. Warner Bros.' Entertaindom, launched in 1999,
never received much corporate backing and was virtually abandoned a year
|Blockbuster Video is the most recent example of a company
that has failed to follow through on promises of large-scale online distribution.
The company signed a distribution agreement with Enron, which has built
a nationwide fiber network running servers from nCube, the Foster City,
California, broadband infrastructure company. nCube's senior VP of product
management, Dan Sheeran, insisted in December 2000 that the Blockbuster
service would offer video-on-demand for about what you'd pay at Blockbuster's
5,000 stores. David Cox, a managing director of Enron broadband systems,
was equally adamant that the Blockbuster system would work, adding, "There
are other content providers we are actively courting."
|But by March, Blockbuster had announced a deal with only
two studios and was testing the service in just three fairly obscure markets.
Courtship is futile without consummation, and Blockbuster's tentative tests
in Portland, Seattle, and American Fork, Utah, fall far short of wholehearted
commitment. Also, while the company has pledged to offer Universal Studios
movies, it avoids mentioning how new these movies might be. At press time,
there was no indication that any first-run titles, from any movie studio,
will be distributed online by Blockbuster or any other service provider
- and the nCube alliance had fallen apart.
|So far, the most clever strategy to induce studio participation
comes from SightSound Technologies, a digital movie distribution company
in Mount Lebanon, Pennsylvania. SightSound claims to have rented out the
first online movie, in 1999, and has always refused to use streaming video.
"We have a download model, not a streaming model," says CEO Scott Sander,
suggesting that many people will be happier with this, since they can use
a relatively slow connection to download a movie overnight. "And, we encourage
Digitized movies will rescue edge networks from
their cash bind and speed the deployment of true high-speed Net access
across the nation. And that is just the beginning of the new broadband
|If this sounds heretical, Sander is counting on Microsoft
Media Player's copy protection. When you download one of his &n for $3.95,
and then make a copy for a friend, your friend must pay to unlock it - at
which point SightSound gets a second $3.95 payment without having to send
a second copy of the movie. In effect, he's hoping that the friends network
will do his distribution for him. Also, since SightSound doesn't stream
its signal, it doesn't need an impeccable connection, which eliminates the
expense of an edge network. "We're basically providing an upgrade to piracy,"
says Sander. "Instead of trading a shaky handheld video made with a camcorder
in the theater, people can trade the real thing. It looks better, and it's
legal." It also costs $3.95; but for the higher quality, this may be tolerable.
|Of course, if someone hacks Microsoft's encryption system,
the game's over. Sander says he's not worried, because "Microsoft not only
owns the source code, but the operating system, and is well able to hide
|Maybe so. But last year, rogue hackers circulated a compression
scheme that had allegedly been "liberated" from a previous release of Microsoft
Media Player. Named DivX in a satirical reference to a defunct DVD rental
system, the algorithm is being used for bootleg videos online. Its originators
have pledged to spread the source code among more developers than even the
MPAA can sue.
|Historically, copy protection has never been as secure
- or as necessary - as its advocates imagine. In the 1980s, a lot of software
was distributed on disks that were supposed to be copy-protected but were
easily duped using bit-nibbler utilities. Eventually, software publishers
were forced to abandon copy protection, although some of them predicted
that their capitulation would drive them out of business. More than a decade
later, their fears appear to have been groundless. Microsoft, for instance,
still manages to turn a profit.
|Movie studios issued equally dire warnings in 1977 when
they sought an injunction to ban the Sony Betamax, fearing that videotape
would bankrupt Hollywood. Today, Hollywood does quite well renting and selling
|The lesson should be obvious by now, but apparently it
must be relearned with each new digital medium. Copy protection does help
to entice content owners to offer their wares, but if the wares are overpriced,
the system will be hacked. Conversely, if the product is cheap enough, protection
becomes unnecessary, because most users will pay.
|From this perspective, distribution over the Net needn't
be a catastrophe. It could be a huge source of new revenue - provided that
a wide variety of content is available.
|Online, people expect more inventory, not less. If content
owners try to restrict access, they'll fail to excite much interest. This
is precisely what happened in disastrous test runs of video-on-demand. Compare
that discredited model with the ultimate broadband scenario: Using your
45-Mbps always-on VDSL connection, you surf to your favorite movie store,
where a server farm keeps a copy of almost every movie ever made, in every
language and every format, including wide-screen HDTV (1,920 x 1,080 pixels).
While browsing through clips, searching for an obscure 1980s Hong Kong action
movie, you stumble upon a Japanese samurai film you've never heard of. Naturally,
you buy them both. For $2.95 apiece, why not? In fact, the price is so low,
you won't even bother to burn the movies onto DVDs. If you want to watch
them again, you'll just pay for another download. As the data flows in,
you have time for some video-enhanced chat via the same VDSL connection.
After half an hour, when the movies have been saved onto your hard drive,
your media player starts squirting bytes through your PC's $50 transmitter
card, which sends its signal to the HDTV receiver in your living room. Or,
you can choose to watch the movie on your 23-inch PC monitor, in sync with
a friend in Hawaii. He'll maintain a text link in a separate window, swapping
comments about the movie with you while it's playing.
|This vision may sound as idealistic and naive as the
old egalitarian model of the Net. There's a crucial difference, however:
It embraces economic reality, instead of trying to deny it. In reality,
cable and satellite TV services have already proved that millions of people
will pay a reasonable price for a wide variety of quality programming. The
same can be true with broadband, where data storage and the number of potential
channels are nearly unlimited.
|Movies are the most desirable, most easily digitized
form of entertainment for broadband distribution. Rental or purchase fees
will rescue edge networks from their cash bind and hasten the deployment
of true high-speed access across the nation. But this will be just the beginning
of a new era. High-speed datastreams will enable new applications that even
old-style netizens could love, venturing far beyond the movie-download model.
|Ten years from now, when every PalmPilot can display
video, a webcam is built into every monitor, and full-screen clips are commonly
sent as email attachments, the broadband metamorphosis will be complete.
At that time, the egalitarian Net will be a distant memory - but no one
will care. Users won't reminisce about the equalizing effect of 28.8 modems
any more than car drivers yearn for a time when everyone had to drive equally
slowly, because dirt roads hadn't been paved with asphalt.
||Video video video? Grow up and turn off the TV once in a
while! And look at your computer and see a big big world out there not filtered
by the TV people.
|The free ride online is over; but the ride ahead will
more than compensate for anything we've lost.
|The Net is dead. Long live the Net.
|Senior writer Charles Platt (firstname.lastname@example.org)
Jupiter founder Josh Harris in Wired 8.11.
© 1993-2001 The Condé Nast Publications Inc. All rights reserved.
Copyright © 1994-2001 Wired Digital, Inc. All rights reserved.