The great Internet lie

The recent dustup between Comcast and Fox got me to rethinking the whole issue of content delivery. Just how important are cable and satellite companies in getting entertainment to American viewers? Will program and content owners simply sign deals with Hulu, Google TV, Apple TV or Boxee to bypass cable and satellite? Can viewers really “cut the cord?” Uh, maybe not.

The battle between Comcast and Fox has been labeled as simply one over money. Fox wants more money for its programs, and Comcast wants to preserve its $129.75 per user revenue. By the way, that’s 10 percent higher than last year. An October story in "The Olympian" noted, “Cablevision says it pays $70 million a year for access to 12 Fox channels, including those in dispute, and that News Corp. is now asking for more than $150 million a year for the same programming ... Fox has said Cablevision is 'hypocritical' because it pays more for two of its sister company channels, MSG and MSG Plus, than it does for all 12 Fox channels. MSG and MSG Plus are owned by Madison Square Garden, which like Cablevision is controlled by the Dolan family.”

If the above claims are even half true, it’s no wonder these two giants went to battle. The resulting blackout has many Comcast viewers asking themselves, “Why don’t I just get Google TV, Boxee or any of a dozen other over-the-top (OTT) vendors to deliver my television programming?

There may be a (pardon the pun) huge fly in the ointment with that idea.

It can’t be done

The often loud-spoken Dallas Maverick’s owner Mark Cuban offers his own reasons that OTT will never work. In a January 2009 blog post, Cuban highlighted some legitimate technical reasons that cable companies need not fear that the majority of their viewers will “cut the cord” and move to OTT delivery.

He stated:

“For grins, let’s say you want to start a business for which you want to stream, live or on demand, any video. Any quality. You want the ability to reach merely 10k simultaneous viewers. Not a big number. In fact , it’s a tiny number. It’s certainly not competitive with any form of traditional TV, but it’s a starting point. So to stream 10k simultaneous streams, what are your choices?

Can you just do it from a PC in your dorm room? From your house on your cable or DSL line ? No. You will need an outside vendor in order to offer a mere 10k simultaneous streams. Which leads to the question of who can provide a service as simple as 10k streams? Who can do it with any level of reliability?

The natural response of course would be to say to use YouTube, right? Except that their terms of service prohibit commercial applications. You can pimp your content and do ad shares, but you can’t have control of your content and its presentation. Its branded YouTube. Its controlled by YouTube.

So what are your options? You have a single option. You have to use a Content Delivery Network (CDN). CDNs specialize in delivering content that needs to scale to large numbers, and 10k simultaneous users, particularly if it's sustained for any period of time, like a cable network would be, is considered a large number...

Any large scale event streamed to thousands or hundreds of thousands of simultaneous users is going to require hiring and paying a CDN like Akamai, Limelight or one of just a few others that can offer scaled streaming.

Therein lies the rub. There are only a few CDNs that can offer any level of scale for delivering video to an audience that is large by Internet standards, but very small by cable or satellite standards. There is not a single CDN that can deliver two or more video streams concurrently to more than 1mm simultaneous viewers. Not one. Anywhere. [My emphasis added.] There are probably three, maybe four, that on a perfect day might be able to deliver a single video stream to 500k simultaneous viewers.

On the flip side, there are at least eight large cable and satellite video distributors that can deliver 100 or more video streams, concurrently, to a million or more simultaneous viewers. [My emphasis added.]

The Great Internet Video Lie is that the Internet opens distribution to compete with the evil gate keepers, cable and satellite. In reality, if you have a desire to deliver a large number of streams, and you want to compete with another Internet video provider to offer a large number of streams, you are not in a very good position. You are at the mercy of three or four CDNs, the ultimate Internet video gatekeepers…

If you have dreams of competing with traditional TV network viewing numbers using the Internet, dream on. You can’t afford it. You have been sucker punched by the Great Internet Lie.”

So it appears while many Internet pundits are crowing from the mountain, “cut the cord,” you can’t cut the cord. The content owners know that. The cable and satellite companies know that. Broadcasters know that.

So why is the Internet chorus singing so loudly? Because they don’t understand the problem.