Things that are often obvious in hindsight don’t seem so clear at the time. For instance I didn’t understand why anyone would want to send around a PDF file when you had Microsoft Word. And it wasn’t obvious to me that mobile phones would completely displace land lines.
We are about to see something similar happen to the cable industry, which is at its oligopolist apex right now. I don’t know when or how long it will take to have an effect, but in the end I believe that the outcome will be significant.
MICROWAVE FIXED WIRELESS
For large condominium buildings in Chicago, it is now the norm, not the exception, to go with Microwave Fixed Wireless for internet in the building, rather than fiber. Here is one company (I just found them on the internet, don’t know anything about them) that attempts to describe the benefits:
Telephone and cable companies have been positioning fiber optics as the ultimate internet technology for some time, but the truth is that fiber has some inherent disadvantages that have been addressed by wireless microwave-based internet solutions. Experts across the globe are starting to acknowledge what the engineers at JAB Broadband have long been touting: microwave is a faster, lower latency, lower cost alternative to fiber and you don’t have to wait until someone decides to light up your building.
Not to be confused with the appliance you use for heating your leftovers, microwave wireless networks transmit and receive radio signals through the air enabling high-speed data transmission with very limited latency. Benefits include:
Limited infrastructure required on site
Faster speeds because data travels over a direct path (point-to-point)
Low logistical and operation costs
Expanded availability
Low latency
There are many companies in Chicago that provide this service for condominium buildings and businesses. You need to have a rooftop with line of sight access to a provider and you put a dish on the roof. This dish connects to the main network of the building and is distributed just like internet service that you’d receive from a standard fiber optics provider (such as a cable company). The traditional downside of microwave transmission was unreliability – if the line of sight was obscured by heavy rain, for instance, then you don’t receive any signal. This happens today with DirectTV if the weather is bad – you receive the “all or part of this program did not record” message when you pull it up on your DVR (or it is jumpy and impossible to watch if you are looking at “live” programming). Note that DirectTV has a much more complex problem to fix with its satellites than a condo building does in Chicago because their satellites are in orbit rather than nearby with simple line of sight needs, so these problems are conceptually similar but actually very different in terms of difficulty to solve.
The reliability issue has mostly been solved and barring catastrophic weather, your point to point wireless internet is as reliable as fiber brought into your building. Don’t forget that fiber, too, can be cut by local construction crews and other means and is also susceptible to failures of various sorts.
Once you cut over to Fixed Wireless (microwave transmission), you have effectively moved out of the cable orbit as far as internet service. Many facilities offer 10 meg, 50 meg, and even 100 meg connections for each condo unit, which means that the provider needs to bring that speed times the number of units with some overall reduction since everyone won’t be using the full internet all the time.
IMPACT ON CABLE… AND 4K
Once you have a super high speed connection, you need programming, and most people still get that through cable or satellite. However, there are many online services available, and they are getting stronger in terms of content. There is Hulu, Netflix, Chromecast, Roku, and myriad others. Some leagues, like baseball, will sell you a package available through the internet or Roku as well. This will only grow in the future since many other entities like Netflix and Amazon have a strong desire to battle the cable providers, as well.
The set top box, provided by your cable or satellite provider, is another anachronism of the past. The box allows you to store shows and connects cable to your TV. However, this can all be accomplished virtually, such as via this cloud-based set-top box called Nimble TV. Note that Nimble TV today works WITH the cable providers, but it wouldn’t be hard for someone else to use a similar concept without going to the cable providers at all.
What is a DVR doing, anyways? It is recording programming locally for you. So what? If there is one copy of every program that ever existed out there on the internet anyways, and if you have a 100MB connection, why store it locally? Just go out and bring me that program? This is why my DVD player is gathering dust and I probably will throw it in the trash – anything I want is probably out there on demand or on the internet so why bother with physical media.
Another thing your set top box and cable provider does is stand between you and higher resolution content. Cable has a myriad of customers – some on standard definition – and doesn’t want to lose them when they upgrade. Thus they upgrade slowly, and look closely at what it costs them to upgrade and what they can pass on to subscribers.
The internet, on the other hand, can agree on a new standard like 4K, and then it just needs to be recorded in 4k and it is streamed out on the internet to anyone with a high enough bandwidth connection (and a device to play it on). To the cable companies this is a double problem – they need to upgrade the internet service to allow them to play ultra HD (or 4k) and then they need to upcode the content as well, and they have to do ALL of this for a region before they can effectively roll it out. Thus you are waiting behind grandma who doesn’t care about 4k and is just fine with standard TV.
I was reading articles about 4k TV (now Netflix streams “House of Cards” in 4k) and the expert said it ruined him to go back to his HD TV, the same way that you’d cry if you had to go back to standard definition TV. The TV’s are here, but it is the content and the distribution that is in the way. Netflix and other internet streaming providers are already on this.
DirectTV does this too – my DVR is hooked up to my high speed internet and this is how they are delivering on demand shows to me. They are now the gateway and they are bypassing some of their own infrastructure to do this.
To get 4k you need a machine that can play it and a device to play it on – some of the new monitors are 4k (and reasonably cheap, under $1000) and you could hook up your MAC or other computer to it by Thunderbolt or HDMI cable and you can bypass the huge costs of the most modern TV’s. But none of this is going to be an option even in the relatively near future from your cable or satellite provider – you need to go around them via your high bandwidth connection and then use a device like a computer (or some TVs build it in) to utilize the 4k content.
CHERRY PICKING
As major buildings and more sophisticated business users detach from cable and go to fixed wireless, which can be set up and upgraded in a fraction of the time as cable, then you will start to see other effects. The “network model” means that everyone pays in and then they spread the costs across a huge base of users.
The other model is when the bigger and more sophisticated customers defect and leave behind the slow adopters and less wealthy customers. Whole buildings can offer 4k TV as a service perhaps and maybe buy a bundled series of programs (or enable on demand or custom packages) and then as the internet gets faster, go to even greater levels of resolution or capabilities. Meanwhile, the pokey cable company is for those that don’t or can’t upgrade, and their costs will go up while their best customers leave.
CONCLUSION
There are a lot of complicated threads being linked together here. Key points:
- Microwave Fixed Wireless will steal many major cable customers
- Microwave Fixed Wireless will offer substantially higher bandwidth which will enable additional services such as 4k TV
- Third party services are growing to enable users to get content w/out going through a set top box. They can use dongles or features built into the TV
- You may not even need a TV in the future depending on how monitors evolve and the capabilities of laptops / chromebooks / tablets / MACS. May be easier just to go through your device
- In all of these cable is stuck with a huge infrastructure, many older customers who do not want to upgrade, and they won’t be able to compete with high bandwidth solutions on features
Cross posted at LITGM
“barring catastrophic weather”: which is when, doubtless, some customers would be especially keen on access to the internet.
Microwave has been the most recent entry into the trading business from a market data/order routing standpoint. I know firms who have made the investment and have spoken positively about the results.
From a consumer focus, it much easier to gain line of sight if you are in a mid or high rise building. It would be much more difficult for single family homes to take advantage without some local relay tower (and the associated eyesore that comes with it)
All told, if it can be ironed out, this is a great achievement and perhaps one day we can subscribe to the channels/shows we desire rather than the universe of programming we do not.
“…and perhaps one day we can subscribe to the channels/shows we desire rather than the universe of programming we do not.” Outside of a driverless car, this is the one thing I hope to get before I die.
What Peter said applies more generally as you get farther from big cities. Also, the farther out you go the more weather seems likely to be an issue.
I believe that one opportunity would be locating and sorting all this programming. One thing my cable does well is show me all the channels I have and what’s going to be on them for the next week. I then tell my DVR what to record, including only New episodes. They’ve taken this over from the old TV Guide (which used to sell over 10 million copies a week). Someone will need to offer this to the internet programming customers. (I see this as a problem with overwhelming availability on the internet. Too many apps on iTunes, for example)
Does anyone reading this know, and if so, can you explain, how the upstream end of this works?
I understand tech pretty well but legal and regulatory issues are another matter.
My understanding is that in our area the cable and phone companies have a kind of duopoly on internet service which prevents new ideas like this from taking root.
To put it another way, where does the microwave provider get their internet connection? Can’t the cable companies strangle this idea by either refusing them connection or using their influence with upstream providers to refuse them a connection? I know from inquiries I’ve made that most (nearly all?) providers contractually prohibit re-distribution anyway.
Apart from that, I was under the impression that many cable companies have actual legal monopolies granted by local or state governments…
John – The duopoly is generally based on control of rights of way at the municipality level. In the fixed wireless game, you only need to get access to a high point, let’s say the roof of a local hospital or a water tower, and then a business class wired connection to backhaul it. Business connections are more expensive but are generally not subject to the same sorts of political gaming. Most business IT departments do not want to deal with a provider who will do that to a business because they never know when their own business might come under that sort of policy based denial.
TMLutas –
Most business IT departments do not want to deal with a provider who will do that to a business because they never know when their own business might come under that sort of policy based denial.
I haven’t been involved with negotiating that kind of thing lately, but I think you may be mistaken there unless things have changed. In my experience most businesses are concerned with fitness for purpose and re-distribution is not what they’re concerned with. They won’t be willing to pay for a re-distribution clause unless it is their business purpose to do so. Doing so would give away the intent to re-distribute, probably leading to denial, possibly merely to prohibitive pricing.
Here’s a direct quote from a reply to one inquiry I made: Contractually, you cannot resell the service.
I suspect that if the cable companies don’t see microwave or other wireless as any kind of threat they’ll play along. The minute it starts to actually look disruptive, they’ll pull the plug.
I haven’t been following it in a while, but didn’t something very similar happen with Netflix and Starz? As long as Starz and its customers felt Netflix was a minor thing all was well. When it got big they changed the rules, and not just the price:
Despite the fact that Starz subscribers have actually nudged higher since the original Netflix deal went live, and that there’s no tangible proof that it has actually caused any cord-shaving or cord-cutting, pay-TV operators have made no secret of their unhappiness that Starz’s content is available at a far lower price point via Netflix. A big new multi-year renewal deal would have raised all kinds of risks for Starz.
— http://www.businessinsider.com/inside-starzs-netflix-quandary-2011-9
YMMV. and time will tell.
I wish it were otherwise, of course…
Oh hum. Let’s revise the song to “8.551 Channels and nothing’s on.”
I spent last night entertaining myself alternately spinning vinyl records and listening to my local on-air FM jazz station.
Truly, current video content is so trivial and banal, it only appeals to the “Idiocracy” market.
Out here in the boonies, the nearest cable connection is a mile or so away. We get our internet connection through a local WiFi service that connects to TimeWarner, though it’s about to change to something new and faster, Cogent. I just looked up Cogent’s website, but I have no idea what any of the words mean. For instance, it’s a Tier 1 provider, whatever that is. Our provider says he’s switching in part because he’s tired of getting caught in slowdowns when NetFlix and TimeWarner quarrel over bandwidth share or whatever it is that squeezes down access from time to time. I’m afraid I rarely have much of an idea what he’s talking about.
I don’t know if our WiFi connection is Microwave Fixed Wireless. I do know that the local provider finds the high spot in the neighborhood and points each home’s receiver at it. Heavy rain is never a problem; the strange thing is that temperature inversions in a seemingly cloudless sky can give us fits. Or so the provider claims, if he’s not just shining us on. When the connection is slow or glitchy, it’s always either that or TimeWarner problems, according to him.
One thing I’ll say for the service is that it’s dirt cheap. When we first got here, practically our only option was HughesNet, for over $100/month and truly dreadful service and daily limits that made it impossible to keep our software updated, let alone watch any streaming video. The new WiFi is $200/year and 5-10 times as fast, with no daily or monthly limits.