Tuesday, August 10, 2004

In appreciation of Telepocalypse

Martin Geddes writes about the end-to-end principle and telecom issues on his Telepocalypse blog. Other than say Andrew Odlyzko on the history of telecommunications, David Isenberg as the great popularizer of the Stupid Network, Bob Frankston, David Reed, Scott Bradner who one might term, the intellectual braintrust, or perhaps the folks who lurk on the end-to-end interest mailing list, diving deep in the bowels of TCP/IP, I don't know anyone who has more fully internalized the lessons of the end-to-end principle.

Unlike some of the others I've cited, his is a less academic but more pragmatic take - a practitionner's view from ground level, as it were. More to the point his writing is so lucid and the analysis so trenchant that I encourage everyone I know to simply 'follow him around', read everything he writes and revise their business plans, investments etc accordingly. Read all his opinion pieces and come back buzzing with insight at the opportunities and pitfalls in this wonderfull networked world we live in. Take for example this post about the intersection of the content industries with telecom: Internet didn't kill the video star

Money arrives in the video entertainment business in two buckets. The customers directly pay for content that satisfies their desire for televisual narcosis. And advertisers pay to insert marketing messages to suggestible semi-hypnotized viewers. That’s all.

Now, let’s look at the economics in more detail. You can only increase the amount people pay directly by extending the duration and intensity of their narcosis. The scope for improvement is baselined by the current depth of their TV trance. Before multi-channel cable and satellite, you couldn’t get a good fix on four or so terrestial channels. But given some non-stop movies, sport and cartoons, and you were off. Hence the cable and satellite TV companies made a bucket load satisfying an unmet need.

A TV channel is essentially a bundled product, in the classic marketing sense. TiVo enables you to create your own bundle. [...] But the incremental improvement from TiVo is relatively small. Why? Because if you didn’t like the bundle you were just watching, you can easily switch to another one. And they’re conveniently labelled for you to make an instant judgement on how likely you are to want that new bundle. The substitute product for TiVo is the raw remote control handset.

Think of it this way. Terrestial TV is like a nice cup of tea. Multi-channel TV is cocaine. Video-on-demand is methamphetamine. TiVo is just washing your meth down with a stiff espresso.

And the ensuing analysis is equally perceptive. A daily read for sure... I'll be writing more about the end-to-end principle in coming weeks but thought you should know where I get my source material from.

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