A La Carte Seems to Work, Despite Business Model Concerns

One of the more dangerous statements in the internet or telecom businesses is that something “cannot be done.” That was said about the business model and demand for gigabit internet. We now routinely do lots of things once believed to be impossible.

One has to translate. When a talented engineer says something is "impossible," it means the speaker honestly believes something cannot be done, because "we cannot, with our known technology, do so."

That might not be the same thing as saying "nobody else can do this."

I once heard a proposal made that a high-definition TV signal could be squeezed into 6 MHz of bandwidth. At that time, it was believed something like 20 MHz or more would be required.

The room literally exploded with verbal disbelief. As it turned out, the proposal was right, and HDTV now is delivered in 6 MHz.

On another occasion, I was quietly informed by some very senior Bell Laboratories engineers that an analog fiber optic access network "could not" deliver 40 cable TV signals, as cable industry engineers were saying was a minimum requirement for cable network fiber optic access systems. The reason for the belief was that lasers capable of doing so could not be produced.

As it turns out, it was entirely possible to produce lasers with characteristics that would allow delivery of 40 channels of analog TV on a single laser, at reasonable distances. When those engineers said "it could not be done," what they meant was that "we cannot do so."
The point is that lots of things we once believed were impossible are, in fact, quite possible. Among those impossibilities is the financial success of single a la carte TV networks, delivered direct to consumers.

Many argued that the business model would not work. As it turns out, that seems to be incorrect. So far, HBO Now, Starz, Showtime and CBS seem to be growing subscription volumes significantly. At some volume, the economics of “going direct” will work.  


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