Thursday, September 14, 2006

The Revolution has been Postponed, or "The Outer Limits" of Bandwidth

Apple's iTV is a harbinger of things to come. Wal-Mart should be worried about DVD sales, and the likes of Blockbuster and even NetFlix do not sit well with the future of entertainment distribution.

The take-home message from Apple is that the revolution is coming, but neither the iPod nor even the as-yet-unavailable iTV are the message. Distributing music and movies directly to your home requires bandwidth only now becoming available in adequate supply. Want to download the Godfather film series using dial-up, anyone?

Apple would like us to believe they're in charge; ditto. Microsoft will soon unveil the Zune MP3 player thinking now that the innovation phase is over they're in charge. Comcast and bretheren want to be in charge. "The medium is the message" (Marshall McLuhan). It's the bandwidth, baby. All the viable commericial toys exist because the bandwidth is there to deliver the real goods.

The current communications revolution began with the advent of the World Wide Web, upon which the progressing sub-revolution in entertainment distribution is founded. The fate of music CD and movie DVD distribution through brick-and-mortar giants such as Wal-Mart and Blockbuster seems clear. We all know it. This observation is trivial, but what isn't known is who will control the future direct electronic distribution of music and movies? Of that, no one really quite knows, but it won't be the "record" companies (the music CD soon to be as anachronistic as 78's,) or Hollywood's vertical marketing theaters.

The future depends on how much bandwidth will be available, to how many homes, how quickly, and how does the bandwidth get there.

No more profound question is before the entertainment industry.

Currently, more than half the home Internet access in the US is still dial-up. The other half is mostly DSL with cable following.

According to the Pew Internet & American Life Project, as of March 2006 about 42% of American adults have broadband access at home. Fifty percent of these high-speed connections are DSL, whereas about 41 percent are cable access and 8 percent have fixed wireless broadband. About half of the homes with Internet access in the USA are still dial-up. Don't forget them. The USA is not even in the top ten nations with respect to broadband penetration (the South Koreans and Danish do better; more on this later).

According to Comscore, the average bandwidth (download speed) in the US in 2004 for the various Internet access pipes is as follows:
The data I have on broadband bandwidth is dated but indicates trends. Bandwidth is up. Cable is faster. DSL access is now being offered, at a premium price, at 1,500 kbps and my own cable Internet connection is about 5,000 kbps.

Faster Internet pipes are coming as are more options. The current near-monopoly in cable Internet bandwidth may be challenged with new technologies such as Broadband Over Powerline (BPL), regional Wi-Fi, and Fiber to the Home.

The future of entertainment lies in who controls the download conduit. Is Steve Jobs the modern equivalent of Vic Perrin in the 1963 TV SciFi "Outer Limits" imploring:

"There is nothing wrong with your television set. Do not attempt to adjust the picture. We are controlling transmission. For the next generation we will control all that you see and hear. You are about to experience the awe and mystery which reaches from the inner mind to the Apple limits."

The fight over who will control the revolutionary entertainment pipeline to your TV has begun, and the message is, "It's the bandwidth, baby."

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