Observations of an Internet Middleman (Level3) (was: RIP Network Neutrality

McElearney, Kevin Kevin_McElearney at cable.comcast.com
Wed May 14 21:14:16 UTC 2014


Respectfully, this is a highly inaccurate "sound bite"

     - Kevin

215-313-1083

> On May 14, 2014, at 3:05 PM, "Owen DeLong" <owen at delong.com> wrote:
> 
> Yes, the more accurate statement would be aggressively seeking new
> ways to monetize the existing infrastructure without investing in upgrades
> or additional buildout any more than absolutely necessary.
> 
> Owen
> 
> On May 14, 2014, at 8:02 AM, Hugo Slabbert <hugo at slabnet.com> wrote:
> 
>>> 
>>> So they seek new sources of revenues, and/or attempt to thwart
>>>> competition any way they can.
>> No to the first. Yes to the second. If they were seeking new sources of
>>> revenue, they'd be massively expanding into un/der served markets and
>>> aggressively growing over the top services (which are fat margin).
>> 
>> Sure they are (seeking new sources of revenue).  They're not necessarily
>> creating new products or services, i.e. actually adding any value, but they
>> are finding ways to extract additional revenue from the same pipes, e.g.
>> through paid peering with content providers.
>> 
>> I'm not endorsing this; just pointing out that you two are actually in
>> agreement here.
>> 
>> --
>> Hugo
>> 
>> 
>>> On Wed, May 14, 2014 at 7:23 AM, <charles at thefnf.org> wrote:
>>> 
>>>> On 2014-05-14 02:04, Jean-Francois Mezei wrote:
>>>> 
>>>> On 14-05-13 22:50, Daniel Staal wrote:
>>>> 
>>>> They have the money.  They have the ability to get more money.  *They see
>>>>> no reason to spend money making customers happy.*  They can make more
>>>>> profit without it.
>>>> 
>>>> There is the issue of control over the market. But also the pressure
>>>> from shareholders for continued growth.
>>> 
>>> 
>>> Yes. That is true. Except that it's not.
>>> 
>>> How do service providers grow? Let's explore that:
>>> 
>>> What is growth for a transit provider?
>>> 
>>> More (new) access network(s) (connections).
>>> More bandwidth across backbone pipes.
>>> 
>>> 
>>> What is growth for access network?
>>> More subscribers.
>>> 
>>> Except that the incumbent carriers have shown they have no interest in
>>> providing decent bandwidth to anywhere but the most profitable rate
>>> centers. I'd say about 2/3 of the USA is served with quite terrible access.
>>> 
>>> 
>>> 
>>> 
>>>> The problem with the internet is that while it had promises of wild
>>>> growth in the 90s and 00s, once penetration reaches a certain level,
>>>> growth stabilizes.
>>> 
>>> Penetration is ABYSMAL sir. Huge swaths of underserved americans exist.
>>> 
>>> 
>>> 
>>>> When you combine this with threath to large incumbents's media and media
>>>> distribution endeavours by the likes of Netflix (and cat videos on
>>>> Youtube), large incumbents start thinking about how they will be able to
>>>> continue to grow revenus/profits when customers will shift spending to
>>>> vspecialty channels/cableTV to Netflix and customer growth will not
>>>> compensate.
>>> 
>>> Except they aren't. Even in the most profitable rate centers, they've
>>> declined to really invest in the networks. They aren't a real business. You
>>> have to remember that. They have regulatory capture, natural/defacto
>>> monopoly etc etc. They don't operate in the real world of
>>> risk/reward/profit/loss/uncertainty like any other real business has to.
>>> 
>>> 
>>> 
>>>> So they seek new sources of revenues, and/or attempt to thwart
>>>> competition any way they can.
>>> 
>>> No to the first. Yes to the second. If they were seeking new sources of
>>> revenue, they'd be massively expanding into un/der served markets and
>>> aggressively growing over the top services (which are fat margin). They did
>>> a bit of an advertising campaign of "smart home" offerings, but that seems
>>> to have never grown beyond a pilot.
>>> 
>>> 
>>> 
>>>> The current trend is to "if you can't fight them, jon them" where
>>>> cablecos start to include the Netflix app into their proprietary set-top
>>>> boxes. The idea is that you at least make the customer continue to use
>>>> your box and your remote control which makes it easier for them to
>>>> switch between netflix and legacy TV.
>>> True. I don't know why one of the cablecos hasn't licensed roku, added
>>> cable card and made that available as a "hip/cool" set top box offering and
>>> charge another 10.00 a month on top of the standard dvr rental.
>>> 
>>> 
>>> 
>>> Would be interesting to see if those cable companies that are agreeing
>>>> to add the Netflix app onto their proprietary STBs also  play peering
>>>> capacity games to degrade the service or not.
>>> 
>>> So how is the content delivered? Is it over the internet? Or is it over
>>> the cable plant, from cable headends?
> 


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