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Viodi View Newsletter – August 9th, 2006
Click here to learn more about Viodi’s Local Content Workshop
By Ken Pyle, [email protected], Managing Editor, Viodi View
- Over the Top – More than Just Video; It’s About Customer Connections
- The Video Business Case for Independent Telcos – The Report
- A Real Market Exists for Fixed WiMAX
- From VoIP to Net Neutrality to USF – A Regulatory Round-up (Club Viodi Members)
- SightSpeed: Read My Lips
- Local Content Workshop – North Dakota –IP Attorney Thomas Crowell to Speak
- Digital Hollywood – Building Blocks, San Jose
- The Auction
- Some Tidbits – NeuLion, OEN, Comcast/Time-Warner
- The Korner – The Cult of the Prius
The common theme in so many of the business self-help books seems to be the importance of developing really strong customer relationships; relationships that go beyond rational and become emotional. The independent telcos have great relationships with their customers, but as one of the speakers at last month’s OPASTCO’s Summer Convention suggested, those relationships are going to be increasingly tested by competitors that can offer new features and/or cheaper pricing. The challenge for independent telcos is to create bonds with their customers that transcend logic and play to pure emotion. To see an example of one company that has done this with a group of their customers, go to the Korner.
Over the Top – More Than Just Video, It’s About Customer Connections
The Internet certainly helps companies develop closer relationships with its customers and prospects. Part of the boom of the “over the top” video is the immediate and accurate feedback content owners get that heretofore has not been possible in other media (whether television, DVDs, movies, etc.). This article comments on some of the major announcements in the past week from the likes of Google, major Japanese Consumer Electronic makers and even an outfit pedaling a service that could be called DOD, Doctors On Demand.
The announcement of the Viacom’s deal with Google is an example of how “over the top” video is allowing a content owner to target content to the audience, while adding value by including advertisements that are in context with their programming.
A more obscure announcement, but one that shows the importance of the Internet to new types of content is the one by slp3D and their OR-Live service. This niche, Internet-delivered video channel provides Surgeries on Demand. It mixes on-demand and live broadcasts of surgeries with targeted video advertising. The six million plus hits it expects on its web site this year will be from more than just doctors, as patients have also found it to be a useful resource.
That people will be pulling video directly from the Internet was evidenced by the prominent article in the Wall Street Journal last week which showed the different ways to bring Internet content to a legacy television. In the same issue, there was an article about a group of Japanese Consumer Electronic Manufacturers that are creating Linux-based standards for the Japanese market to allow televisions directly to the web. These Consumer Electronics giants see this as necessary to compete with the set-top and network PC alternatives. Over the Top or TV over the Internet area seems to be exploding faster than the traditional (if that word can be used) IPTV (e.g. a controlled last mile pipe).
Is it Too Late for IPTV?
The idea that TV over the Internet may impact IPTV (IPTV being video through a controlled network) has been something I have been pondering with industry colleagues lately. And it has been a diverse group to whom I have been speaking – from telco people who believe they should have chosen Digital RF solutions to folks who used to work for IPTV vendors who believe the right solution is the hybrid RF/IP solution embraced by Verzion.
Many express their concern that the standards are not available for IPTV and that the market is too fragmented. The concern about the standards is huge, as it seems like that every time IPTV reaches a particular milestone, cable is already racing to a new one (e.g. HDTV). Based on this article in Fortune Magazine Online, I am not the only one question IPTV, as even telecom executives are questioning how they are going to make money from this endeavor.
The Video Business Case for Independent Telcos – The Report
Viodi’s report, Video Business Case provides results to a survey of independent telcos and their business case for video. Most of the telcos that responded to the survey have figured out a way to deploy video services. This survey provides insight from the independent telcos as well as several of their Engineering firms.
A Real Market Exists for Fixed WiMAX:
Alan Weissberger writes a very timely article on the outlook of fixed WiMAX. It is especially relevant given Sprint’s announcement that they are adopting the 802.16e mobile WiMAX standard to create a “4G” network. Click here to read his insight into this technology that could eventually provide customers with another broadband alternative.
From VoIP to Net Neutrality to USF – A Regulatory Round-up (Club Viodi Members)
Regulatory topics are normally not at the top of what makes it into the Viodi View, as they are reported on in other industry publications. First, there has been an interesting exchange of letters to the FCC from NTCA and Packet8 [both Viodi sponsors at various times] regarding Packet8’s submission of a traffic study in response to the FCC June decision that PSTN-connected VoIP providers contribute to USF. It will be interesting to see how the FCC rules in this case.
Arguing over how to fund USF is a waste of time, according to the report, “Universal Service” Telephone Subsidies: What does $7 Billion Buy? This report didn’t receive much coverage (only mention I found was in CED’s online newsletter) which is surprising considering it suggests some pretty big changes to USF. The study suggests that USF, in its current form, does not meet its objectives of ensuring affordable telephone service for everyone and that it is not very efficient in terms of bringing telephone service to rural areas. The study makes some valid points, however it misses some subtle points that are not seen when looking only at numbers. To see my analysis on this study, click here [Club Viodi Members Only].
Net Neutrality is quickly becoming the third-rail of telecommunications. An overlooked report from the Phoenix Center for Advanced Legal and Economic Public Policy Studies, a Washington D.C.-based legal/economics think-tank, suggests that imposition of Net Neutrality rules could negatively impact the rollout of broadband in rural areas more than it would in urban areas. This, of course, is contradictory to President Bush’s policy goal of ensuring that broadband is available to everyone by 2007.
To read my analysis on these articles and issue, click here [Club Viodi members only]
Last week, I had a chance to catch up with Scott Lomand, President of PC video conferencing software solution, SightSpeed. This product has a number of unique features including multi-caller, video conference calls and video-mail. You can get a better idea of the product by watching this brief video or clicking on this link and reading the full article.
Local Content Workshop – North Dakota – IP Attorney Thomas Crowell to Speak
It is always a great learning experience when Thomas Crowell joins us in a local Content Workshop. He will be speaking at next week’s Local Content Workshop that will be held in Carrington, ND. Crowell has literally written the book on IP; Intellectual Property, that is.
As with the previous ten workshops, we will have a mix of experience in the group. It is always great fun, regardless of where it is located. If you can’t make this workshop, we will have one in Minneapolis around October 11th. More details in the next issue – in the meantime, feel free to email us at localmn at viodi.com for more info.
Digital Hollywood – Building Blocks, San Jose
I will be jetting back to San Jose in time to catch the last day of Digital Hollywood’s Building Blocks conference in San Jose. I am honored to be moderating a panel on the topic of Telco Video on August 17th at this event. Find me, if you are going to this enjoyable and educational event.
To some extent, many of the things we are trying with the Viodi View are a reflection of what many of the independent telcos are doing with their communities. Many independent telcos are selling DVDs of their productions (as we are doing with www.viodi.tv). Many are also selling sponsorships to help underwrite their local content. We are trying something that, coincidentally, large advertisers just announced that they are going to do with television advertising. That is, we put together an auction site to sell sponsorship in the latest DVD we are producing.
Some Tidbits – NeuLion, OEN, Comcast/Time-Warner
For some other over the top news, Anil Srivatsa has moved from ImaginAsian TV to NeuLion. He brings the credibility of having the experience of growing from ImaginAsian TV from a one person start-up to an established cable television network.
Regarding new IPTV entrants, OEN has signed the NFL Networks to their list of cable networks that will be part of their FISION service offering in Houston. Their competition, Time-Warner, hasn’t carried NFL Networks (and, in fact, has been in a dispute with NFL Networks over carriage on the former Adelphia properties), so this could give them a bit of market exclusivity. This probably won’t last for long, however, as Comcast is taking control of the Houston system from Time-Warner and Comcast also carries NFL Networks.
The Korner – The Cult of the Prius
There is a new cult in Northern California’s Bay Area. It is the cult of the Toyota Prius. The people who drive these things have an emotional attachment that goes beyond rational. Somehow, Toyota has put Prius drivers in some sort of trance that turns grown men and women into Prius puppets. It certainly turns the most aggressive driver into a Marvin Milquetoast driver or at least a Mr. Fenster (see Gary Larson’s Far Side for this vague reference).
For those of you outside the bubble of the Bay Area, the Prius is a hybrid electric-gasoline car. Its claim to fame is its incredible EPA reported gas mileage of 51 Miles per Gallon on the highway and 60 Miles per Gallon in the city. There are some enticing government perquisites that sweeten the purchase of this vehicle, including single occupancy carpool access, free downtown San Jose parking and a Federal Tax Credit of up to $3,150. When you add all of these things up, it is hard to beat and, consequently, there is typically a three or four month purchase wait for the Prius.
The owners of these cars have been stereotyped as a bit self righteous. There is this feeling that they are condescending and look down upon those people with Sport Utility Vehicles (which is kind of ironic, since the drivers in SUVs sit higher than the Prius drivers). SUVs comprise a large share of the Bay Area vehicle population. Of course, a 4 Wheel drive SUV is necessary in the Bay Area, as once or twice a year we can actually see snow on the surrounding mountains, but I digress.
So, the big question is; Do Marvin Milquetoast people purchase Prius (should the plural be Preye or Priuses?) or do Prius turn normal people into Marvin Milquetoast-like characters? I don’t know if I can resolve that question, but I can provide some insight. I think it all revolves around the fabled 51/60 MPG. This kind of gas mileage is unbelievable, offers a huge potential cost savings and translates into a lot less pollution than a regular car.
It becomes a challenge for the Prius driver to reach this high standard. The Prius provides constant gas mileage feedback in the form of a LCD dashboard monitor. The first thing one does is change his driving habits to optimize his MPGs. This means doing things like accelerating slowly, so the car is in a 99.9 MPG, all-electric mode. It also means setting the Prius on cruise control for 47 MPH (the seemingly optimal gas savings speed), while cruising in the carpool lane and upsetting the SUV drivers. Heck, the San Jose Mercury’s columnist, Gary Richards, (a.k.a. Mr. Roadshow), even drives without shoes as he has found that this is the best way to eke a little better performance.
The Prius drivers are so focused on the gas mileage that they overlook the really quirky things and some poor design elements. For instance, when backing up, a beeper inside the car emits a sound to let the driver know he is backing up. Of course, where the beeper is needed is outside the car, as it is deathly silent in electric mode and is a danger to unaware pedestrians. The back window visibility is hindered by a bar, but most Prius drivers probably aren’t looking out their review mirror, as they are focused on the screen that tells them their gas mileage.
Which leads to the biggest complaint, the EPA ratings are so unrealistic, they are almost fraudulent. Instead of the 60 MPG, personal experience indicates 40 to 43 MPG is typical. Everyone knows that cars don’t get the rated MPG, but this is ridiculous. Talk to the typical Prius owner and they won’t complain about their gas mileage, as they will just tell you how good it is compared to other cars (granted it is good, but I have a friend who is getting 45 MPG with a diesel Beetle and he didn’t get the carpool sticker or the $3,150 subsidy).
So, Toyota has this group of devotees that gladly sing its praises. To some extent, it is becoming the iPOD of at least the Bay Area in terms of being “cool”. There are people so devoted to the Prius and the hybrid concept that, as they would say on MTV, they are “pimping their rides.” People have modified their Prius to extend their gas mileage to an alledged 100+ MPG by modifying it so it can recharge by plugging into standard AC power. There was even a video on YouTube showing a prototype of self-parallel parking Prius. Powered by the Prius and their hybrid technology, Toyota just passed Ford and looks to soon overtake GM as the largest automaker.
Despite all of their success, Toyota still is not taking full benefit of its cult-like status. For instance, they don’t even capture the buyer’s email. Toyota could be creating a Prius equivalent of a My Space for the Prius fanatics (Prius owners love to talk to each other about their technology marvels). They could be sponsoring the Toyota Grand Prius (thanks San Jose Mercury for that title), whereby the race wouldn’t be based on speed, but on how many miles one went on a tank of gasoline.
The lesson from the Prius is that once a company has a customer’s emotional heartstring, he will overlook a number of flaws.
[Full disclosure, the author has recently become a co-owner of one of these software packages on wheels. The Prius has turned him into an even bigger panty-waist driver than ever. He is constantly obsessing as to how to get that extra tenth mile per gallon. And yes, he will avail himself of the city government subsidized parking for Prius owners when he goes to downtown San Jose to speak at the Digital Hollywood, Building Blocks event on August 17th.]
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