Image
Fast, affordable Internet access for all.
While I was talking with him on the phone Thursday night, he checked his Web site and about 175,000 people had bought his special through PayPal. He expected 200,000 total downloads by the weekend, which meant he would have grossed $1 million. After covering costs of about $250,000 for the live production and the Web site, that’s a $750,000 profit. And he owns the rights, and the long tail of buyers, in perpetuity. The transparency of the enterprise, including its cost in relation to how many people bought in, was the subject of media coverage all last week. ... “O.K., so NBC is this huge company and they have all these studios and these satellites to beam stuff out,” he said, “but on the Web, both NBC.com and LouisCK.com have the same amount of bandwidth. We are equals and there are things you can do with that. This has been a fun little experiment.”His "fun little experiment" demonstrates the threat posed by the Internet to the old business models of cable companies and content owners like Viacom and Disney. And this is why Comcast's purchase of NBC is worrisome. Comcast is still fighting for the authority to prioritize some sites over others - it wants to violate the historic principle of network neutrality that prevents a service provider from interfering with what sites a subscriber visits.
But that doesn't mean we can't use humor to illustrate the very serious impact of more consolidation in the mobile market! Check out four short commercials prepared by Free Press and vote on your favorite. Our favorites are below.
"AT&T and Verizon have slashed the frontline workforce, and there simply are not enough technicians available to restore service in a timely manner, nor enough customer service representatives to take customers' calls. Let me share some statistics. Since 2004, AT&T reduced its California landline frontline workforce by 40%, from about 29,900 workers to fewer than 18,000 today. The company will tell you that they need fewer wireline employees because customers have cut the cord going wireless or switched to another provider, but over this same period, AT&T access line loss has been just under nine percent nationally. I would be shocked if line loss in California corresponds to the 40 percent reduction in frontline employees. "Similarly, since 2006 Verizon California cut its frontline landline workforce by one-third, from more than 7,000 in 2005 to about 4,700 today. I venture that Verizon has not lost one third of its land lines in the state."Note that AT&T, Verizon, and other massive incumbents like Comcast have been wildly profitable over this term. The same trend holds in cellular wireless - as noted by the Wall Street Journal:
The U.S. wireless industry is booming as more consumers and businesses snap up smartphones, tablet computers and billions of wireless applications.
The crucial thing to understand is that high-speed Internet access to the home really is a crushingly-expensive natural monopoly service to install. The telephone companies haven’t found a way to make this work, because it’s so much more expensive to dig up the streets to install fiber than it is to upgrade cable electronics to DOCSIS 3.0. So they have backed off. The cable industry has made its investment, and is ready to reap its rewards of scale and high fixed costs - secure in the knowledge that no competition is coming after it, and having divided up the country neatly among its members. Meanwhile, the telcos are steadly losing fistfuls of money. As Morgan once said of railroads, “The American public seems to be unwilling to admit . . . that it has a choice between regulated legal agreements and unregulated extralegal agreements. We should have cast away more than 50 years ago the impossible doctrine of protection of the public by railway competition.” In the cable world, we are deep into unregulated extralegal agreements, and competition is not going to rescue us.The longer communities wait to build this important infrastructure, the harder it will be. It is hard to imagine national candidate speaking more stridently about the important of the open Internet than did Obama and even he bowed to the pressure of the private Internet access providers. While we should pressure the federal government to regulate in the public interest, we must take responsibility for our future at the local level with smart investments.