Pipe Dreams, Pipelines and Cable's Hubris

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Cable operatives can take heart in — and even gloat over — their ability to stave off streaming media, at least so far. Of course, much of the credit goes to the inept and overly ambitious streaming-media impresarios with pipe dreams bigger than their pipelines.

Cable's unyielding restrictions on streaming via the cable modem have curtailed the introduction of such video, and cast a pall over IPTV (Internet-protocol television) in general. The limitations have been a successful protective tactic to slow the diversion of viewers away from the TV screen.

The streaming-via-cable barrier has been so efficient that streaming's poobahs have shifted their attention to the enterprise market, for training and business meetings. Ironically, that particular market should be one of urban cable's best opportunities, and the resistance to streaming — and IP video — may come back to haunt the cable industry.

But the true hubris of cable's approach to streaming video is not merely about defending its market. That's the TOTI (Tip Of the Iceberg), a term Starz Encore Group CEO John Sie once used to characterize earlier technology initiatives. The streaming issue is part of a vast mosaic of converging technical, regulatory and market factors that have triggered the media malaise that many of us feel: Watch out for that iceberg.

For example, what's really beneath MovieFly.com and Movies.com, the Hollywood studios' proposal for streamed on-demand movies? Will newly released films actually go directly to IP, or is the threat merely a negotiating tactic to use against cable and its video-on-demand plans?

The effort to restrain streaming may fit into cable's larger VOD plans. But the sad truth is that VOD does not seem to be scaling very well. Have you noticed that many of the VOD rollouts are in small markets or within limited nodes on larger systems? Certainly, you've read about the overload crashes on conventional VOD architecture in these pages.

IPTV may face similar hurdles, as already evidenced on "Victoria's Secret" fashion shows and such. But that market is just emerging and the technology to scale such peaks is being built.

In concocting this new formula for broadband restructuring, don't forget to include the gimpy Tauzin-Dingell legislation. On the most cynical level, the recent postponement of a vote until March gives grubby legislators at least three more months to hit up the adolescent Bells and their long-distance (and cable) rivals for campaign contributions in an election year.

Of course, the bill has little chance of surviving in the Senate anyway, where Commerce Committee Chairman Ernest "Fritz" Hollings does want to see his cherished 1996 Telecommunications Act sullied (or torpedoed) so quickly.

Yet the existence of the bill — aside from its provisions for entering the long-distance market — is a reminder of how avidly the Bells lust for a role in that local IP delivery business.

And the broadband process is moving in directions that the cable industry cannot control. During and overflowing Western Show session called "Everything-on-Demand" (a great title wasted on a session that merely groused about the role of personal video recorders in a VOD world), a cable executive described the PVR as merely another set-top box component — presumably one controlled by the cable operator.

Truth be told, PVR functionality is being built into TV sets. In its true "everything" motif (i.e. beyond today's TiVo and UltimateTV incarnations), it becomes a sizable digital storage and Internet proxy server, a part of the home gateway that may or may not be under cable's control.

At the Consumer Electronics Show next month, Thomson Consumer Electronics will unveil a digital subscriber line set-top box bundled with a package of IPTV content, presumably coming from a packager such as Intertainer Inc.

The CES will also be the launch-pad for the much-awaited Rearden Steel package of home services, based around a server and home network. Despite its industrial-age name and logo, Rearden Steel — and the creative digital studio that is part of this budding empire — is the non-cable brainchild of a team led by Steven Perlman, one of the triumvirate that created WebTV Networks Inc. and quickly sold it to Microsoft Corp. for $425 million.

Moreover, Microsoft — certainly a friendly investor, when it comes to cable — will show its non-partisan face at CES when it introduces its eHome package, its latest take on home networking. This too is built around a multiple media storage/server box which could be fed via cable, IP telephone lines, satellite or any other input.

Cable operators have already had a glimpse of cable friendly approaches through companies like Ucentric, which has been courting cable with similar home gateway concepts. And of course, the dreaded duopoly has its own visions of how to serve the cable home from their set-top architectures.

The admittedly slow arrival of such home-networking structures threatens to rearrange the relationship between viewers and their cable providers. Streaming, home networks and legislative hurdles are among the wild cards in this new process of delivering content to consumers.

It would be easy to look at the wimpy morass of the recent Streaming Media trade show in New York and assume that the technology is stillborn. The "crowds" at the Streaming conference made the Western Show look like the 59th Street bridge at rush hour. And many of the "introductions" there were warmed-over versions of products unveiled at the Comdex show four weeks earlier.

But this is not about boxes and network controllers. It is about access and the availability of viewer-friendly content. As such rug-top boxes as Microsoft's Xbox and Nintendo Corp.'s GameCube acquire more local storage — and as a new breed of digital devices enters the house — the pipeline's becomes more important. So does the ability to bypass an uncooperative pipeline operator.

And so does the unseen threat of unknown floes that could alter the direction of these digital dreams.

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