Transcript Implications of E(verything) Over IP

Implications of E(verything) over IP
Robert Pepper
Chief, Policy Development
Federal Communications Commission
<[email protected]>
TTI/Vanguard
April 2005
Summary:
Questions Arising from EoIP
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For producers and distributors
For law and policy
How to achieve traditional public policy goals
in the new environment?
How will consumers respond? What will they
want?
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Old Reality and Assumptions
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Distinct industry and regulatory structures based
upon distinct analog technologies
Old rules assumed non-competitive model
The technology told you something about the
content--defined boundaries
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Single network/single service
The world of six into four: A,B,C,N,S,T
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Old Reality and Assumptions
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Distinct industry and regulatory structures based
upon distinct analog technologies
Old rules assumed non-competitive model
The technology told you something about the
content--defined boundaries
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Single network/single service
The world of six into four: ABC,CBS,NBC,AT&T
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Revolution in Communications
Technology
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Technology: analog
digital
Network: circuit-switched
packet-switched
Packetization/digitization
convergence of
video, voice and data
Narrowband
broadband
From Silos to Convergence
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Digitization destroys compartmentalization
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Traditional boundaries between industry segments (e.g.,
telephony, cable TV, broadcasting, wireless) are blurring
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Technology Trend Drivers
Processor power—Moore’s Law
 Faster network technology
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New/better uses of copper—DSL
 Fiber optics
 Advanced wireless
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Cheap storage
 $25
DVD players v. $1.8 million “quad” VTRs
 70% annual improvement in local storage—120Gigs
for $60
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Dramatic improvement in compression
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Cheap Storage + Compression
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Storing one hour of MPEG-2 video
 Today:
$1.35/hour
 2008: 18¢/hour
 2010: 2¢/hour
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Storing one hour of MPEG-4 video
 Today:
20¢/hour
 2010: .3¢/hour
 2015: .02¢/hour? Free?
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Pre-recorded storage?
 5,000
movies on your hard drive?
Source: Bernstein Research
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Broadband Deployment and
Adoption
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First generation broadband (cable modems
and DSL) available to 85-90% US households
Low latency/low jitter
30+% of U.S. households subscribe to DSL or
cable Modems
55% of online U.S. households
Global comparisons
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Value proposition
High cost of dial-up
Voice over IP as driver
What’s the value proposition?
New platforms
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Broadband + Compression
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Video over broadband means
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Real time gaming
Note: drivers for broadband in Asia
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Streaming video
Video downloads
P2P video
Consumers become producers
P2P file sharing
Gaming
Video
VoIP
Entertainment as drive for broadband?
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Broadband + Compression +
Cheap Storage
Video transmission + compression +
cheap storage = TiVo
 Broadband + compression + cheap
storage = Netflix to your TiVo
 = consumer choice and control
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Trend: Personal Communications
(control moves to the edge)
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Telecom
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Internet
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Personal service v. household
Mobility
Personal media—user control/customization
Person-to-person communication—IM
Streaming video to MyPVR
The Five Stages of Television
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Limited choice or control
Increased consumer choice
Increased consumer control
Interactive TV/PVRs--choice and control
Customized, personalized, intelligent TV
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Demand for Digital Content:
Consumer Market for Bits
Communications Industry Revenue 2003 (billions)
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TV Broadcasting
Radio Broadcasting
Cable & Satellite television
Personal computer software (non-OS)**
Consumer Internet
Motion Pictures Box Office
Home Video
Interactive Entertainment
Newspaper Publishing
Magazine Publishing*
Book Publishing*
Recorded Music
TOTAL
Sources:
$42.1
$19.6
$83.5
$14.3
$30.7
$9.9
$33.1
$7.2
$63.6
$39.3
$27.4
$11.9
$382.6
Veronis Suhler, Communications Industry Report (PQ Media 2005)
*2002, Statistical Abstract of US, No. 1114 (2004 – 2005)
**2003, Statistical Abstract of US, Table 3.1.7, Software Publisher Revenues
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VoIP The Next Example?
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VoIP—What is it?
 A technology?
 Next
phase of competition?
 Example of convergence?
 Driver for broadband?
 A new phone company? Old phone company?
The other VoIP
Video
 From VoIP
E(verything)oIP
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Questions Arising from EoIP
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For producers and distributors
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Traditional financial models under pressure
 E.g., Advertising/subscription mix
Need to re-engineer the business model?
Need to re-engineer the firm?
Investment to compete
 Financial risk--Debt today, revenue tomorrow?
For law and policy
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Copyright
Security
Consumer protection
 From fraud/abuse (e.g., SPAM, identity theft, etc)
 From unwanted content
Definitions
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Questions Arising from EoIP
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How to achieve traditional public policy goals in the
new environment?
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What does “localism” mean in a networked, high-compression, local
storage world?
 Does local mean “community”?
 Geographic or affinity or both?
What does “diversity” mean in a networked, high-compression, local
storage world?
What are appropriate measures of competition?
 Competition for what?
How will consumers respond? What will they want?
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How will they use the new technologies?
Will they continue to exercise increased control?
The need for aggregators and editors?
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Thank You
For more information:
 www.fcc.gov
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