09/23/09 Baltimore, Maryland
Comcast and Verizon are dying a slow death.
Comcast, Verizon and other government-protected duopolies won’t be around for your grandchildren to enjoy — at least not in their current forms. You see, companies like these are selling outdated services. And they’re more than reluctant to change their business models.
Consider the home telephone. This beast is becoming scarcer by the day. In fact, mobile phone-only households are becoming the norm. Yet despite huge increases in wireless sales by traditional telecoms, it’s the wireline segment that keeps these blue chips in the black. More than half of Verizon and AT&T’s revenue comes directly from wireline sales.
For the old-school telecom giants, it’s all about infrastructure. They want to milk the cable and phone lines for all they’re worth. After all, it took decades — and millions upon millions of dollars — to create these vast systems that pump TV and telephone service into our homes.
But the communications landscape has changed. We don’t need separate wires to connect our homes to world. Now it all comes back to bandwidth.
The technology is ready. Wireless dominates the landscape, and the old-fashioned telecoms and cable providers can only desperately hang on to their antiquated services. Even the government — which normally favors any out-of-date and/or irrational business model — is coming around.
In the end, technology will win, and media convergence will open the door to new data service packages for customers that will provide phone, television, gaming and Internet service through lightening-fast, reliable wireless connections.
It will be the beginning of a new tech boom. Companies such as Limelight Networks Inc. (NASDAQ: LLNW), a content delivery network (CDN) provider that offers a variety of services, including live Internet video feeds, will thrive. In fact, Limelight’s lucrative contracts with heavy hitters like MSNBC have helped the company grow its revenue more than 500% over the past three years.
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Wireless cannot get near the bandwidth into the house compared to a wired system.
What Larry said.
The appetite for bandwidth is insatiable. For wireless to displace wired for “last mile” connectivity (the final leg of delivering connectivity from a communications provider to a customer), wireless has to offer more bandwidth for the buck than wired technology.
In sparsely-populated rural areas, wireless will probably be more cost effective. (In fact, we’d already HAVE high-speed wireless Internet access in rural areas if Congress hadn’t foolishly intruded into the marketplace by forcing the telecoms to deploy—at a loss—wired Internet infrastructure in rural areas and using their urban customer base to subsidize it.)
But in population-dense urban areas? Verizon hasn’t spent millions (if not billions) building their FIOS infrastructure because they expect wired technology to shrivel up and die within the next few years, for example.
And furthermore, the technology that carries Internet packets around the country and around the world is all wired (fiberoptic cables, including dozens and dozens of trans-Atlantic and trans-Pacific undersea cables).
Definitely what Larry said. At the radio frequencies wireless currently uses, even with the multiple antennae technology coming on with LTE (and ex-MIMO), you’re not going to get internet, television and phone services in one package for every household. There just isn’t the bandwidth.
Now up the carrier frequencies a few orders of magnitude then yes, you’ve got the bandwidth to do it. But those frequencies just happen to be in the optical range. There’s a technological reason urban connectivity is evolving to optical.