Google's announcement that it will enter the 700 MHz spectrum auction in January has had a ripple effect in the fields of entertainment and education. From an entertainment perspective the two leading cable giants Comcast and Time Warner cable announcement yesterday that they would not be participating in the auction for wireless space with a reserve price of $4.6 million. It is literally amazing how the convergence of events - no pun intended - has created a showdown of epic proportions when the auction begins on January 24, 2008.
Why? Well for starters telecommunications giants AT&T and Verizon have favored a closed network approach while Google has successfully lobbied for an open network approach that will allow consumers to utilize any electronic device to access the Internet. Google and believe it or not Microsoft are part of a tech industry initiative to utilize white space - or open local television channels - as access points for the Internet once local television stations begin broadcasting in high definition as required by federal law in February 2009. Preliminary tests have been promising for white space technology, but a recent demonstration for the FCC did not totally convince the regulatory body. However, the white space model is simply the Google model in disguise because it advocates an open system that allows consumers without cable to access the web and utilize an advertiser driven model that mirrors broadcast television.
The telecommunications duopoly of AT&T and Verizon and the cable duopoly of Comcast and Time Warner Cable have been so busy running attack advertisements against one another that Google has managed to make an end-run around them by first introducing the Android system which will create an open mobile system that of course will run Google ads and YouTube video ads across mobile platforms. The decision by Google to succesfully lobby the FCC for limited openess to the winner of auction may actually help maintain a form of net neutrality or openess for consumers even if Google does not win. The cable companies blinked yesterday and got out of the race which radically exposes AT&T and Verizon. AT&T has been riding high with the iPhone and its merging of Bell South into the fold, and Verizon made an error by not taking the iPhone but has been successfully in implementing its FIOS network and breaking the cable monopoly.
For the first time the telecommunications companies face an adversary that is smarter, leaner, more creative, more popular, and more consumer oriented than they are. Did I mention that Google is loaded too? This is problematic for the telecommunications companies. Why? Because Google will not rest until it has an open Internet with an advertiser based model rather than the subscription based model that has failed miserably on the Internet and will impact cable subscriptions soon as consumers will migrate to many to the Internet and HD broadcast television as well as iPods and gaming devices for entertainment.
The question becomes this: is it cheaper for these companies to settle and split up the Internet and allow Google to utilize its Android platform and advertiser-based model or is it better to keep the status quo? Verizon recently announced that it would open up its network, but to paraphrase Ronald Reagan and Walt Moss in All Things Digital- one must verify before one can trust the Soviet Ministry as Moss refers to the telecommunications industry. AT&T would actually be smart to open up its network, so that its iPhone partner, Apple, is not left to fight a war against hackers who keep opening up the iPhone because of its exclusive deal with AT&T. Look for Apple to get out of this deal once, it can so that it can distribute the iPhone 3.0 version across platforms, especially if Google wins spectrum space in the auction. Apple is the wild card in this whole auction deal. Why? Three of its board members sit on Google's board including Google CEO, Eric Schmidt and Nobel winner and former VP Al Gore. This is probably why Google did not openly compete against the iPhone but instead created an open platform that a 3G or maybe even a 4G iPhone, by the time the AT&T deal is done, could thrive with the Mac operating system. Apple would be a logical partner for Google and Apple could also help Google by creating its own social networking platform of iPod and Mac users to compete against Facebook and arch-Google competitor, Microsoft.
Social networking demands loyalty and a voracious fan base and nobody this side of the Boston Red Sox Nation, Chicago Cub Fans, Yankee fans or Dodger fans are as loyal as Mac fans. If you want to see Facebook get nervous watch what happens if Mac uses a social network with Google ads to show programs on iTunes and to promote AppleTv which could use a boost. The television networks could use the help with the write strike creating losses by the day. Moreover, the longer the strike the more it may embolden writers to cut their own side deals with Google, Apple, Amazon and even Microsoft for digital content.
The networks have been so busy trying to make Apple and Google conform to their antiquated ways that they are facing a war from within that will never be over! Why does NBCU walk away from a $15 million because they want Apple to change the most succesful and profitable online media downloading business that Apple essentially created? Why does NBCU and music executives expect Apple to give them a piece of the iPod? HULU is unproven, and it may end up just like AOL video and a bunch of other pretenders who took on Apple's iTunes. NBCU should have developed HULU and made it profitable before cutting ties with Apple. Besides Apple customers with iPhones will still be able to view HULU for free, and so will AppleTv customers.
Now back to the unwinnable war being fought by networks with its backbone: the writers. Why is this war never going to end? Because even if the writers get most of what they want, they know that they can never trust the networks or studios when the next new technology appears. Writers as a group tend to be very smart people, and they are also independent minded too! I know because I have been a producer/director/ writer for 20 years and I have many friends in the business. Some are on strike right now, and they will be cutting side deals within the next year as HD television enters in earnest.
The spectrum auction is going to fundamentally change how we entertain and communicate. It will also fundamentally change how we educate our students at every level. iTunesU has already taken off in its first year and it is only going to grow, so look forward to iPods and iPhones that are book readers in the future to compete with the Sony ebook reader and the Kindle book reader by Amazon. If you think the entertainment war is fierce, wait until academia starts creating digital publishing houses that directly download books via Amazon, iTunes, ZuneMarketplace, Google and other sites to computers and portable devices. The howls that you are going to here is the researchers and writers who will be fighting with college presidents over publishing revenues when tenure is disappearing faster than clothes at a bordello! The other howl will be the publishers who have been charging premium prices for books to the point that books costs have added close to $1000 to the cost of tuition which has continuously risen higher than inflation and maybe even cable rates. LOL!
Google is holding the sword to radically change at least two fields of endeavor right away by simply signing the check in a battle it needs to win after having lost Facebook and Digg to Microsoft. Today's announcement by Verizon that it would be adopting the Android open software that was developed by Google is another sign that the Big 2 are serious since there is a legitimate fear that Carter Rules, which enabled us to buy our own home phones a few decades ago, may be coming to wireless phones too! Why? Because the Asians and the Europeans already have open wireless phones as standard, and they have been fighting Microsoft and Apple on opening up their software. For some reason the US has some of the best technology minds, but we have permitted the intellectual property attorneys, corporate lobbying, and an FCC that forgot that the airwaves belongs to the public and that includes the Internet. I mean we still do have a Constitution and that thing called The First Amendment? Yeah, it has taken a few shots to the gut lately, but its still on the books!
This was long for a first post, but it had to be said!
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