The cable TV juggernaut threatens the future of the Internet
In the late 90s I worked for a company in Mountain View that provided turnkey Internet services for cable operators. You might remember @home. I worked for a competitor.
Then, I think it was 2001, I championed and managed a fiber to the home project for the City of Palo Alto. They owned their utilities, so it seemed like a no-brainer in the tech savy Silicon Valley. 60 homes were wired up at a cost of about $2000 each, including a $1200 termination box in the home. People were lined up to get the service. All you can eat 1 gigabit up and down. The developers in town were all over it. Yet, after a couple of years, the city shut the project down. We learned just what Google has re-learned at much higher cost.
- I would love to have gigE to my home. What geek wouldn’t? But for the average household, there is little need. You can stream Netflix with only a few megs. Unless you are downloading movies 24/7 — and I am sure you pay for every one. Your neighbors are the ones doing all that bit torrent stuff, right?
- Unless there is programming support, providing more bandwidth is a perverse incentive for Internet providers. If increased bandwidth equals more usage, that means more backhaul and network costs, all for the same lousy monthly rate. Netflix pays cable operators to carry their programming and you pay Netflix. If the operators can get more money by increasing your bandwidth so you will watch more Netflix and they profit, they will. Meanwhile, just providing raw Internet access is a losing business.
- The cable operators have plenty of bandwidth. All modern systems have fiber to the node, which is then split up among all the customers attached to that node, both TV and Internet. They decide on how much to allocate to the Internet based on how much they can get for advertising on their cheezy TV channels vs how much you (and Netflix) are willing to pay for Internet. If those TV channels suddenly converted to on demand Internet, the cable operators would open the Internet pipes instantly. Which leads to the conundrum.
- The cable operators are only going to open up their Internet spigots when it is in their financial interest to do so. Net neutrality, as laudable as it is, provides a disincentive to operators to increase bandwidth. If the operators were able to monitize their bandwidth by creating “fast lanes” for commercial content, you would see an instant revolution in the industry. It is my opinion, and only mine, that cable operators deliberately under provision their systems to create irritating “buffering” during the most desirable shows as a way of lobbying for the end of net neutrality.
- Finally, it is my view that the entire system of Internet access is set up wrong. Common carrier network operators should never have a stake in programming. This is a historical artifact of the origin of the cable business and it is threatening the future of the Internet itself. I think the folks at Google discovered just what we did back in 2001. With its grip on programming, the cable operators are a massive juggernaut which is not in the least concerned with what we consider “Internet values.” When I joined the cable modem company in 1998, all the employees were Internet people. Within six months of getting our major funding, every one of the Internet people was replaced by someone from the cable industry. The chief engineer and I were the only survivors. I can only wish the Google folks the best of luck.
