Increasing investment in the vast wasteland.

A couple of weeks ago I had a very interesting chat session with Steve Stroh. Steve is one of the people I find near uncanny when it comes to original thinking, someone that keeps an open mind, reads voraciously and draws his own conclusions – something that is too damn rare in this world, in my opinion.

Somehow, the subject came up of the importance of the “triple play” and how critical this was for people involved in the data transport business. As you all know, the triple play is one of those commonly held beliefs everybody now seems busy working on from the ILECs and cable industry right down to the individual WISPs I am associated with. When the subject came up Steve dropped a bombshell right in my lap by saying that the triple play is dead, in fact, it never was a viable strategy!

The conversation from there on out focused on how voice was soon to be a “free application” perhaps included with Windows (Netmeeting?) and that we might expect to see this happen at some point in the future. I had to agree with this logic but held my reservations as the key determining factor was really in the length of time we use to define the future. My feeling is that while this will be an eventuality the time frame it might happen in is measured in terms of several years as opposed to months. This distinction is critical as almost everything will become obsolete in due time but it is exactly that length of time that is the key factor.

As usual, a series of seemingly unrelated events and/or news stories collide in my life that caused me to rethink this discussion on my way back home from speaking at the Vo-WiFi Planet show.

David Isenberg gave an excellent keynote speech where he discussed (among many other topics) the strategic move by the ILECs to provide television programming over their infrastructure. His way of looking at this was to remind us of when in 1961 Federal Communications Commission Chairman Newton N. Minow labeled television “a vast wasteland." As a personal commentary, after watching a couple of hours of television at my wife's grandparent's house I found that while the number of stations has dramatically increased since 1961 the overall quality of content has not measurably improved.

In the last year or so I have seen several published studies that indicate that as consumers switch from dialup to broadband there is a measurable drop in the hours they spend watching television. In this world where many people choose their food by how long it takes to prepare over the quality, taste or even how healthy it is I can see where they would have to choose where to give up time if they wish to spend any amount of time enjoying the Internet.

This quotation is from a study conducted by Stanford University,

"We find that about 60 percent of those who use the Internet more than five hours a week are telling us it is coming out of their TV time. Even among those who spend only a few hours a week on the net, a quarter tell us it cuts into their TV viewing," said Erbring, who is a professor of mass communications spending a sabbatical at the Stanford Institute and teaching social research methods in the Department of Communication. "This trend is likely to have a major impact on the economics of the media industry and, as recent developments suggest, may lead to further integration of media and information delivery technologies."Nie said.

This quote is from a study commissioned by Yahoo and provided by Carat North America,

The results of the study were announced today at "Born to be Wired: Understanding the First Wired Generation," Yahoo!'s conference for marketers, which is designed to further explore and understand the media consumption patterns of teens and young adults, and how marketers can best communicate with this group.

"Born to Be Wired"

While teens and young adults consume many different types of media, the study revealed that the Internet surpasses them all in the amount of time spent, which in an average week is as follows: (1) 16.7 hours online (excluding email), (2) 13.6 hours watching TV, (3) 12 hours listening to the radio, (4) 7.7 hours talking on the phone, (5) Six hours reading books and magazines (personal, not scholastic).

Wait a minute, if most of the best information we have shows that people are migrating away from television once they are connected to broadband, why would anyone in their right mind believe that they are going to increase revenue by adding television service to their broadband service? It stands to reason that voice is also something that is not going to produce very much revenue if people would be able to get the same service for free from their broadband connection.

This is one more critical flaw in the way the ILECs seem to be moving forward. How can they even feel that voice will be a revenue stream when the reality is that more people are choosing to communicate through email or Instant messaging than using the phone.

According to this statement from TowerStream's website,

In just over a year, one out of every eight households in the Portland, Maine, region has signed up for Internet phone service supplied by Time Warner Inc.'s cable-television unit. For many, the phone jack in the wall that connects to the phone company's network is now just a useless hole. Time Warner is rolling out the same service to millions of consumers nationwide.

One in every eight households converted from POTS to Time Warner's VoIP service? I guess this would indicate that a certain amount of users feel free to abandon their old “tried and true” technology for a newer one. How many of these people will leave the Time Warner VoIP service when Skype comes into their own? What should we make of these rumors that Skype and Yahoo might be exploring a merger? How about this one speculating that Google will launch a VoIP service of their own? There is also the confirmed Google Video Search that will index and deliver video content on demand to the end user. What could any of these rumors hold for the future plans of the ILEC or the cable companies as these services mature?

In essence, the question really comes down to whether or not the executives that inhabit the corner offices truly understand that service they are selling. What kind of mindset bets their company's future on products or services that they know are already being rejected in ever-increasing numbers?

I would suggest that the simplest answer is people who are looking forward to an early retirement financed by a huge golden parachute. All in all, that might be considered pretty good thinking, if this is the actual intention.