An underlying problem with the position of net neutrality advocates is that they assume that every consumer must or will choose to have only one broadband pipe, which would mean that he/she had no access to any content not on that pipe. One can imagine several results of such a state that the public finds distasteful -- popular sports programs extracting large sums from pipe providers; pipe providers extracting large sums from less popular programs; and other consequences of monopoly, with the only uncertainty being what party collects the monopoly rents. Competition will consist of efforts to woo the customer from one pipe to another, but each customer would still have to elect between packages of content -- the telephone company package or the cable package, for example.

But why should each customer have only one pipe? Once the basic networks are built out -- cable; FTTP; WiMax; Satellite; broadband-over-power-lines -- the marginal cost of attaching a new subscriber will be small, so each provider will have huge incentives to offer deals to lure new connectees. So there will be no reason for a household not to have both cable and FTTP, and maybe some WiMax as well. A logical outcome would be for pipes and content providers to create packages that they think will appeal, so House #1 could get all sports from Provider A while House #2 got all opera from Provider B, and House #3 got both.

Why not? We are conditioned to think of telecom as a "natural monopoly" and multiple channels as wasteful, but they really aren't, any more than having multiple food stores serving the same catchment area is wasteful.

A case in point: I subscribe to XM radio, and there was considerable recent angst on the discussion list of the VOX (voice) channel because the Metropolitan Opera signed an exclusive deal with Sirius. So loyal XM VOX listeners agaonized over whether to defect or forego the premier opera venue in the nation. But that's not really the choice -- get both. $13/month -- the price of 4 morning visits to Starbucks. The double access is actually a small price to pay for the existence of multiple channels and competition.

I am too conditioned to the current structure and assumptions to get my head around the possible business models, but instead of thinking in terms of exclusive "triple plays" or "quadruple plays" and sole-source content providers, it would be interesting to think through the implications of having several providers of each service, each with its own specialization. Or one general provider plus a lot of specialized ones.

Let a hundred photons bloom.

posted by James DeLong @ 9:58 AM | Telecom

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