Saturday, 8 June 2013

A death knell for broadcast television

Google Fiber is a project  to build an experimental broadband Internet network. It is being used in the US in Kansas City, Missouri, North Kansas City, Missouri, Austin Texas and Provo, Utah. It is based totally on fibre optic communication. Many communities applied to be first recipient of the technology, over 1,100. Google deployed its network in Kansas its first community. 
Google Fiber, first announced in 2010, is a lot cheaper than other cable and Internet providers. For $120 a month, customers get normal cable TV, a massive digital video recorder, and broadband Internet that's up to 100 times faster than other providers. If customers just want Internet, they pay $70 a month. 
After July 2012 Google announced pricing for Google Fiber. It includes free broadband internet option, a 1 Gbps internet option, a 1 Gbps internet option for $70 per month and one which also includes television service for $120 per month. The television option includes Nexus 7 tablet that acts as a remote control. The free internet service includes 1 terabyte of Google Drive service and the television includes a 2 terabyte DVR Recorded in addition to the Google Drive service.
Google Fiber will provide an Internet connection speed of one gigabit per second for both download and upload. It is exactly 1024 megabits per second or 128 megabytes per second, 100 times faster than what Americans use.
For entertainment, it has NetFlix available to subscribers. Certain features of Google Fiber are reportedly missing at this early stage, such as YouTube integration or HBO, but overall Google Fiber offers such a convenient entertainment experience that it could revolutionise the industry. 
It's quite obvious that such technology will take much longer to come to India. What to talk of 1 gigabit we are struggling to consistently provide 2mbps to our consumers. Our broadband speed is defined at 512 Kbps and broadband penetration is a dismal 2%. In Rural areas penetration is next to nil. However, what we can learn from Google Fiber is that we must shift our focus from wireless broadband to land line broadband using optical fiber networks.
Google has its own office in India and has not yet thought about providing such high speed connectivity in the cities. For this it has to join with the ISPs who should also have some potential to give good bandwidth. The distribution should be faster to reach the deadline. Google is planning more such functions. Some sources say that its first network will come in Kerala because Kochi is the under-sea cable termination point. 
Another important factor is the demand for such high speed internet. With just 140 million internet users and 15 broadband users (> 256kbps), there is no substantial market for such a high value product.
The technology is changing every day and hence new advanced formats will takeover. But in India gradual movements towards 1 Gbps bandwidth will help a lot. Already Google is famous for its Android OS that works both on mobile and internet. 
Google has done a great job in focusing on bandwidth. If Bandwidth penetration is strong, it gives tremendous strength to the national economy. In fact with a good broadband speed, our own cable networks can deploy all IP technology to provide both pay TV and high speed internet services.
Right now Google Fiber in the US has to compete with Verizon, AT&T and other companies. Other companies are also investing in a lot of broadband. Everyone's been wondering about Google's long term plans for Google Fiber, the ultra-fast broadband and cable TV service it's currently offering in just a couple of cities. 
At a telecom industry event on 30 May 2013 in Kansas City, Milo Medin, Google's VP of access services, made it clear that Google Fiber isn't an R&D project. Rather, it's a service that Google expect will eventually turn a profit. "We expect to make money from Google Fiber," Medin said at the event, as reported by Cnet's Marguerite Reardon. "This is a great business to be in."
Milo Medin, Google's VP of access services
As for when the rest of the country will get the service, that's anyone's guess. The big obstacle is that broadband networks are expensive to build. Last December, Goldman Sachs estimated it would cost Google more than $140 billion to offer Google Fiber countrywide. Still, Google has taken a different approach than other service providers. Google is not taking government subsidies or tax breaks, Medin said. 
Instead, Google is partnering with city agencies to work around costly aspects of building networks, such as digging up streets and obtaining right-of-ways for deploying network equipment. 
For the cable TV service, Google Fiber uses set-top box and storage hardware that Google designed itself. Getting the television programming deal done was a difficult and time intensive process, Medin said at the event. "Looking back this was an insane decision to build a new network and TV platform at the same time," Medin said.
The early reviews of Google Fiber are in from Kansas City and one of the most attractive features of the service seems to be how it makes Netflix irresistible. The buffering annoyances that consumers take for granted vanish as Google Fiber feeds movies and shows instantly to eager Silicon Prairie dwellers. What's more, the recently launched Google Fiber TV app offers video on demand for iPad. This direction is fascinating because of the hottest trend in US consumer behavior: broadcast television audience collapse.
TV show audiences have been falling for a long time, but recently the decline has turned into a plunge. According to Goldman Sachs, ratings in the 18-49 year demo dropped by a hideous 17% last winter, the steepest drop ever. “American Idol” is losing nearly 25% of its audience in a year. Most of the big new shows have been disasters and old staples like “Survivor” and “Dancing with Stars” are in free fall.
Everyone has long known that the broadcast dinosaurs are in trouble but it is only now becoming clear just how rapidly they are losing their grip on consumers in the United States. This coincides with rapid growth of time spent on mobile apps: American iPhone owners now waste two hours per day on apps and annualized growth of daily engagement still tops 30%. But it also opens up completely new vistas for Netflix, Amazon, Google and Apple when it comes to video distribution.
 It now looks like American demand for video on demand is far bigger than was estimated just a year ago. The accelerating erosion of broadcast television frees up consumer time and hits ad revenue of CBS, Fox and their peers. This in turn will limit their ability to create big-budget shows that has been their last line of defense. That cycle is starting to turn just as challengers with serious money to burn are pushing into content creation.
It is only a matter of time before deep-pocketed Google and/or Amazon take the plunge and start shoveling big bucks into television production. Amazon is already previewing a dozen pilots it has produced, trying to gauge which ones to take into full production.
Google Fiber and its ilk may be the final straw that will break the back of broadcast television. Once high-speed video downloading becomes widely available, instant access to VOD services will make them even more appealing.
Google is well-positioned to turn Google Fiber into the core technology enabling instant VOD access; Netflix is pioneering the new production/distribution logic; Amazon is sneakily exploiting its Prime service to slip video consumption to its customer base. People are waiting for Apple to also take a plunge in video distribution and announce some plans. Will this be the end of conventional cable?


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