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

[owen at delong.com (Owen DeLong)]

Oh, please do explicate on how this is inaccurateâ?¦

Owen

On May 14, 2014, at 2:14 PM, McElearney, Kevin <Kevin_McElearney at cable.comcast.com> wrote:

> 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?
>>