more on : Telco's Arrogant Stand on Content

[David Farber <dave () farber net>]

Begin forwarded message:

From: Dewayne Hendricks <dewayne () warpspeed com>
Date: January 2, 2006 5:25:14 PM EST
To: Dewayne-Net Technology List <dewayne-net () warpspeed com>
Subject: [Dewayne-Net] re: Telco's Arrogant Stand on Content
Reply-To: dewayne () warpspeed com

[Note:  This comment comes from reader Andrew Odlyzko.  DLH]

> From: odlyzko () dtc umn edu (Andrew Odlyzko)
> Date: January 2, 2006 8:34:30 AM PST
> To: dewayne () warpspeed com
> Subject: Re: [Dewayne-Net] Telco's Arrogant Stand on Content
>
> Dewayne,
>
> There is plenty of arrogance on both the telco and content provider
> sides.  But statements such as this one from Budde, and Whitacker's
>
>    "What [Google, Vonage, and others] would like to do is to use my
>    pipes free. But I ain't going to let them do that."
>
> make clear is that the key issue behind much of the posturing about
> open access and deregulation is the division of revenues from content
> sales between the content owners and the service providers.
>
> I don't know what Budde is referring to when he talks of telcos
> getting under 50 percent of revenues from content.  In general,
> service provider takes are far higher.  If you look at cable  
> companies,
> they spend around 25 percent of their revenues on content, and get
> to keep 75 percent or so for the maintenance of the networks,  
> profits, ...
> Satellite radio pays someplace between 5 and 10 percent of its  
> revenues
> for the music they play.  And NTT DoCoMo's i-mode pays only about
> 15 percent of its revenues for content.  (I don't know what the  
> revenue
> split is on cellphone music ringtone downloads.)  So it is natural
> that the content industry is salivating at the prospect of getting
> more competition in delivery, and boosting their takes.  Getting
> something like 50 percent would do wonders for their finances.
>
> But what both the content industry and the telcos forget is that
> there simply is not enough money in content to pay for all the
> telecommunications networks.  Connectivity, not content, is where
> the real money is, as has been clear for a long time,
>
>   <http://firstmonday.org/issues/issue6_2/odlyzko/>
>
> So yes, the content providers and Internet companies like Google and
> Yahoo! can build backbones, but they can't afford to provide universal
> local connectivity.
>
> Happy New Year,
> Andrew
>
> P.S.  There are lots of other comments one could make about this piece
> by Budde.  For example, his rosy prediction for tele-presence flies in
> the face of numerous failures in video telephony.  But that is another
> subject.

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