• United States

Is Apple creating the FCC’s worst fear?

Feb 06, 20064 mins

It’s election time in Washington, and you can almost smell the campaign contributions – and the political causes that generate them. In this light, both the Senate and the House want to take up telecom regulation again, playing on the FCC’s recent decision to free the RBOCs from sharing their high-speed DSL and fiber to the home. The RBOCs want to charge extra for the QoS needed for services such as premium video. The “we want everything for free crowd” wants (no surprise) QoS for free. It may be that Apple has already cast the deciding vote.

Video is a double-edged sword for the RBOCs. On the one hand, content revenue could dwarf the revenue generated by voice and the Internet, making video-ready broadband a big financial win. On the other hand, expensive high-speed links to the consumer get even more expensive if they have to support the QoS needed for streaming video. Higher cost means higher risk of a decent ROI – a risk the RBOCs have long told the FCC they won’t take if they have to share the upside with competitors who can simply wholesale RBOC access facilities if the content market succeeds.

The FCC and the courts have taken the RBOCs’ side for the past five years. The master regulatory strategy has been simple: Let the RBOCs and the cable companies fight it out to create competition. To equalize the regulations on both players, the FCC has made DSL pretty much wholesale-proof. But the FCC proposition is based on the assumption that streaming video, IPTV, is a good business. If it’s not, then protecting it with regulations won’t help. This is where Apple comes in, because Steve Jobs took a giant step toward making IPTV a non-issue when he announced the Video iPod.

What do you think? Discuss Nolle’s points on the iPod.

iPods have certainly swept the consumer market. People – particularly young ones – like to listen to their favorite music wherever they may be, so they carry the little boxes with them, filled with tunes. Apple’s vision is that these same consumers will carry video with them as well. Want to bet against that trend, given the iPod’s success? Well, IPTV is such a bet.

If consumers want portable, personalized, video experiences, will their as-I-want-it attitude carry over into their home-viewing patterns? The video on that iPod didn’t get there directly; it came through a PC. With all the new home-networking gizmos on the market, surely there are plenty of ways to distribute video from that same PC to home-viewing devices, even TVs. Hello iPod, goodbye broadcast.

Apple may be the poster child for personalized content, but it’s not the only player acknowledging or driving the trend. Last month a little Dallas film company released “Bubble,” the first film released to theaters, video on demand and DVD virtually simultaneously. Studios have long had this complicated multitiered release strategy to eke all the profit out of pictures, but more and more of the revenue is dependent on prompt release of stored versions of the show. To help accelerate this revenue and reduce piracy risks, the studios are looking at releasing their films to all channels at once. Can TV be far behind?

There will always be people who will go to watch the latest Hollywood spectacular on a giant theater screen, but how many will want to watch the latest network show on their TV in real-time broadcast mode if they can just download it on demand or buy a CD? The popularity of personal video recorders shows how hard it is for today’s busy consumer to plan TV time around broadcast schedules. And you can load stored video content into your video iPod, too. It’s a no-brainer.

Google says it won’t pay for video-quality QoS in high-speed access. Maybe the consumer won’t either, making the issue moot. The fact is that high-speed Internet access without special QoS can support downloading a movie or TV show. Will Google back that move, and will Apple? The FCC and the RBOCs may be creating their own competition, not staving it off.


Tom Nolle is founder and principal analyst at Andover Intel, a unique consulting and analysis firm that looks at evolving technologies and applications first from the perspective of the buyer and the buyers’ needs. Tom is a programmer, software architect, and manager of large software and network products by background, and he has been providing consulting services and technology analysis for decades. He’s a regular author of articles on networking, software development, and cloud computing, as well as emerging technologies like IoT, AI, and the metaverse.

More from this author