Showing posts with label C4. Show all posts
Showing posts with label C4. Show all posts

Thursday, 23 April 2009

Networks & Network Providers

I took part in a panel discussion today about networks. Over seventy industry leaders from across the UK. Was FTTH (fibre to the home) a good investment? Would FTTC (fibre to the cabinet) be cheaper and just as good? How do network operators reduce their costs?

I was surrounded by people all intensely interested in networks. One person (a Welsh MP) pointed out that the EU defined broadband as anything above 150kb/s and some other organisation had defined it is anything above 256kb/s (from memory). The UK government had so far not defined what it means by “broadband” and therefore the ambition to get broadband into every home by 2012 probably achievable simply by defining UK broadband as anything above 32kb/s.

However….During the discussion it was easy to get caught up in the hype and technology and how you could get 40Mb to the home. Would the customer pay for it, and how much?

Consumers don’t by broadband because they want broadband – sure early adopters and techys might get into a “my broadband is bigger than your broadband” type of discussion, but, as the actress said to the bishop, it isn’t about size its what you do with it.

Consumers buy broadband as a means of getting to content. In fact going back to the basic telephone service people wanted to talk to other people. The networks provided the connection and the consumers the content.

Technology and assets give companies a barrier to competition. Their ability to control and use the technology allow them to dictate the way it is used and who uses it.

The record industry is a good example – recording studios and vinyl pressing plants were expensive and inexcusable technologies for new companies to invest in and entre the market. They were certainly not in the reach of the consumer. But as new technologies came along so it eroded this control/power. Pressing plants were sold off as what differentiated one label from another was not how well the record was made but what was on it.

Broadcasters had technology but also had the benefit of limited radio spectrum. The licensing regimes of the UK and Europe, meant that it was difficult for new entrants to make the investment and take the risk to bid for a license. This additional barrier (lower in radio broadcasting) kept them in control and complacent, beyond the natural life of their business models.

Anyway back to networks… These too are starting to lose their power as one network (fixed line or mobile) starts to look very much like the other. Why chose one over another: –

  1. Does it work?
  2. Is there a cheaper one that works just as good?
  3. Is it hassle to get/maintain?

What has changed for the network operators is that the desirable/compelling/valuable content that customers want to get to, is not user generated, point to point of voice and data.

So what do network operators (service providers) need to do? Do they want to simply survive or do they want to transform?

Railway operators never got into air transport. Yet they were wealthy organisations at the time and could have easily expanded. Enormous synergies in scheduling time tables, selling tickets, reservations, engineering operations, logistics of rolling stock/planes, and staff roles. But they were rail operators, stuck with the technology and not the transport market need they serviced.

Networks operators follow the same route, married to providing networks and not the fulfilment of the consumers’ demand for content access.

So how do I see the network providers evolving, as apposed to becoming a low cost commodity utility? One thought…

The telephone directory was a way of customers finding out information about what (or in this case who) was on the network. As the internet grows (around 5,000 pages/second in 2008) it is increasingly difficult for the consumer to find what they want. Google (fast as it is) is throwing up a mountain of information to sort through. How many pages am I going to visit before I find the information I was after?  You Tube. Very funny clips, but if I have to spend 50-minutes watch dross, to find a 3-minute gem, I’m going to start to rely on my friends sending me a link in an email. Much more efficient!

As content (quality, professional production) gets onto the internet, how does the consumer no it even exists, let alone where to find it.  Is there a role for the network provider to be trusted recommender or aggregator of content? Is that worth paying for? Collect information on what I like and sell it on, but let me see some benefit. And not just in the adverts

I think it is almost impossible to predict what the consequences will be if 40+Mb/s is delivered to the home but some indicators now are not good.

Of the population that can get broadband, the take-up is way less than 50%. So not the “must have” technology.

Of the people that do have broadband around 50% get less than 1Mb/s download speed. Assuming that they are putting up with this (as they continue to pay) if not delighted, then 4Mb/s would probably fit their current needs not 40Mbit. “What about HDTV?” I hear you cry. Does anyone want to stream live HDTV over the internet?

  • If it’s a film or recorded programme = download it
  • If its news = why HD
  • If its sports = why are you not watching in on a broadcast channel

Take the scenario that there are two adults and two teenagers, each simultaneously watching a streamed HDTV programme. 10,000 lines in an exchange area x 4 40,000 video streams. Will the backbone cope –

“Some will be watching the same programme?” Even if they are if two people watch the same if they start at different times they are different streams.

“Cache the content in the local exchange!” for how long? 3 hours of HDTV per person adds up to a lot of storage.

I’m sure 40Mbit to the home will come. It could enable social change (maybe even a revolution) with people working from home and a growth in cottage industries, a reduction in travel and CO2 emissions. Our kids are already used to interacting and socialising and would probably be easy to adapt and adopt this working environment. But will we look at the society that creates with pride?

Monday, 2 March 2009

Friday, 27 February 2009

The Future of Channel 4.

The Future of Channel 4.

Call me simple, but I just don’t get it.
Channel 4 in the UK is predicted to be insolvent/bankrupt or otherwise financial unable to continue within the next few years.
There has been some talk of merging it with one of the other UK broadcasters – the benefit would be synergies could be realised that reduced the cost.
Ch4 is owned by the government but is funded solely through advertising. It has a Public Service obligation that has meant it has not adopted the “me too” (Strictly Come Dancing –BBC begat Dancing On Ice) strategy of ITV or stick with tried and trusted popular formats (I’m a celebrity…) also a strategy of ITV.
Ch4 has a very credible record in producing innovative, challenging programming over its life. Not having to provide a return to shareholders should mean that more of its revenues can go into continuing this innovation. Merging with a commercial broadcaster ITV or Ch5 may give operational cost synergies but it will also add the cost of servicing shareholders.
When the Chairman of Ch4 says he favours privatisation over merger that doesn’t seem to make sense either – there are not operational cost synergies but the burden of servicing shareholders would arrive. This will inevitably be followed by the finance people that understand nothing about creativity (as demonstrated in ITV (Charles Alan) and simply drive cost out and stick to tried and trusted formats that eventually become stayed and boring.
Privatising Ch4 could mean that Luke Johnson (the Chairman) gets some kudos and a pay rise, for chairing a private company. This is the only driver I can see for suggesting it. I can’t see that if Ch4 is destined to become financially insolvent, as it is,why (unless there are costs that they already know can be cut) its future would be any more secure if privatised
While there might be some other genuine reason I am sceptical. Following the £600k p.a. pension payments to the failed head of RBS I am fed up with individuals benefiting from stripping the country’s assets and cultural heritage or screwing the tax payer.
Here is a thought…maybe not good for Ch4, but BT is struggling with BT Vision and could derive some synergies from acquiring Ch4. It would also be less challenging to maintaining the plurality of UK broadcasters.