38 thoughts on “Cuban's Theory & The Internet Infrastructure Questions”

  1. om, give me a call and I can discuss some of the first 150 feet issues with you. We’ve been around the block on this issue for years now.


  2. i agree with mark cuban 100% – daily i scour venture/tech blogs looking for something to get me excited, and lately it has been blah mediocre. frustrated, i keep adding new RSS feeds in the hopes that i’ll find a new wave of leadership in online innovation. i’ve become so let down that i started watching television again after one year of no TV.

    i need more bandwidth, more interactivity among people (that doesn’t mean today’s social networks), more interactivity among apps, more virtual world innovation, more innovations for the developing world…and less incremental web 2.0 stuff.

    thanks for the reality check mark.

  3. Om,

    I think your points are as valid as Mark Cuban’s. In my past life, I worked in the gaming industry as a senior executive for the former high flying Sega. One of the many things that I learned is that most find a certain “sexiness” in working with high demand content, of which video clearly falls. Given this observation, I too have noticed an over obsession with the “last mile” being driven by the sexiness of video. Hence I not only agree with you and Mark Cuban, but I’d add that unless many in the venture community invest in the bricks of the internet (backbone), expect the movie theater to come crashing down.

    I think Mark Cuban implies that the bricks MUST be sexy in order to drive innovation forward inside the theater.

    My two cents – I hope that the analogy is clear.

  4. Yes Curtis, thank you for stating my points even more coherently.

    I think there is too much obsession with the front end and the industry needs to start thinking about what comes next. sure it may/maynot be sexy, but it will be necessary.

  5. Cuban’s comments are mostly about perception, with his comment about bandwidth mostly an uninformed throwaway. Yeah, this is less exciting than a decade ago (hence, Cuban says “dying”) while still growing. I’ll let the pundits discuss that, but I want to clarify the bandwidth issues.

    You’re right on target saying the 200K- 1 meg upstream is inadequate, and in fact cable upstream is often overloaded today. So upgrading the local loop – FIOS, DOCSIS 3.0, VDSL from the basement – are important. Tokyo is at 100 meg symmetric, Paris is getting there, Berlin 10 up and 50 down, and 80% of the U.S. will be at a tenth those speeds for a decade unless we do something.

    But when I look closely at everything except local connection I don’t find any major bottlenecks likely. Sure video is driving traffic growth, but real data show the growth as moderate and about at the same rate as the last five years. Meanwhile, the equipment to carry that data is coming down in price with Moore’s Law.

    Conclusion: About 5% of the $20-50 people pay for broadband goes for the bandwidth (on and off net.) That number has been going down, not up, at least through 2005-2006. It would take a remarkable and highly unlikely shift of video to the web to change that significantly – 30% or 40% of TV watching would have to leave cable, satellite, etc.

    Ergo – Backbone needs new gear on a regular basis, and loads of improvements are possible. But there’s nothing to fear there. Really.

    Cisco and the like may see a nice sales boost (10-15% growth rather than 5-10% growth), and the industry will need to constantly adjust as it has for a decade. The actual cost per customer of DSL or cable service will continue going down from the current $5-15 dollars per month per customer, because other costs, such as cheaper modems, are almost certainly coming down more than any plausible increase in video bandwidth costs.

    This would be a polite discussion of vague futures except that the telcos are spending literally millions to spread the falsehood that the “Internet will collapse” unless … They then use that as a argument for whatever policy they happen to want that week, typically blocking competitors. They are just doing what ordinary businesses do, shading the truth while lobbying.

    The burden for keeping the facts paramount belongs to those who serve the public interest, starting with the Chairman of the FCC, and adding academics and reporters. Let’s get this right.

    Your close reader
    Dave Burstein

  6. Jeez, can we stop declaring the end of explosive ideas on the internet until the next explosive idea comes along? I think I’ve been hearing this from Joe “I made a fortune in Web 1.0 and now I’m an expert at everything now” every year since 2000.

  7. Dave

    Thanks for your comment. Just to clarify, my piece is not talking about Internet is collapsing. That infact is not what i am talking about here.

    What we are taking about is the fact that while so much attention is being put on the front end, we need to think about the infrastructure too. I am sure you have noticed that there isn’t that much going on in the way of infrastructure start-ups.

    As you say, there is nothing to fear here, except apathy.

    Secondly, you give good examples of some cities that are looking at addressing the issue of increasing upstream bandwidth, but that is not the case, generally speaking.

    I think Roese is making good points about symmetric networks. In fact, if I remember correctly, you were one of the early champions of symmetric broadband and its broader implications.

    In your court, dear sir.

  8. last mile, infrastructure everything that requires obscene capital outlays are a dog. so what! get on with life guys.

    If there is enough pull from consumers, the infrastructure will come sure enough.

    We’re seeing a current boom in content application markets because the consumers get it for free! There’s no more to this than is in your face.

  9. I think Cuban is saying that always on TV, like what he invests in, is not able to be delivered due to the lack of current infrastructure, which I agree. In the meantime though, the current infrastructure is able to deliver time shifted TV.

  10. “But the bigger question Cuban is asking is whether the Internet’s infrastructure is sufficient to keep the innovation cycle moving forward. And the answer is no.”

    And the answer is yes, say Vint Cerf. Who to believe? Cerf who took a hand in creating the internet or Om Malik who just writes about it? Nothing personal Om, but I’m going with Cerf.

  11. Great post OM. To TDavid, having dealt with both Vint and Mark a little in a former life…

    My guess is that Mark has some innovative ideas around how to use infrastructure that the infrastructure won’t currently support.

    Vint must surely believe that what Mark is looking for will eventually happen and there’s nothing about the current Internet that will prevent that from happening. I doubt even Mark would disagree with that, but his innovation is currently stalled by the realities of “right now” nonetheless.

  12. Is it rude of me to suggest that perhaps billionaire Cuban is in a position to take action and do something about the problem he is complaining about? If there is a lack of venture capital or startups then he could do something about it. Or perhaps this is his way of pre-announcing such an effort? I hope so, because otherwise it just seems as annoying as any other ultra wealthy person’s whining.

  13. I hate it when people that say the internet is dead start making sense, but alas I have to agree. The next logical step has to be some heavy online apps with massive user participation. ie a virtual world or series of worlds. Someone’s gotta plop down some serious cash for that, but the return could be amazing.

    also “bombastic Cuban” would be a good name for a band.

  14. There was a very knowledgeable and informative post by Kshitij Kumar who was in the audience when Mark Cuban made these remarks.

    Kshitij’s post dissected Mark’s comments, and dug deeper into why some of the things Mark said are incorrect or correct.

    For instance, it’s not sufficient to make 100,000 ft comments about whether bandwidth is less or more in the core vs. the access – the folks who run those networks understand that a lot better than us.

    The post is here:

  15. I’m surprised there has not been any comments about all the bandwidth Google owns. They have purchased a huge amount of Dark Fiber and they own even more through leases.

    This huge allocation of bandwidth is certainly not only for search traffic. The 700 MHZ spectrum is the ultimate “Last Mile” as has been stated on this site before.

    And with Cuban’s love of “GooTube” as he calls it, I’m wondering if he’s keeping his cards close on this topic. He has to know about this. Maybe he’s hoping to spur competition in advance of Google’s future offerings.

  16. The reason there are so few startups in infrastructure is because there are so few customers and those customers are too big to do business with startups. Do you really think a Senior VP of Deployment at AT&T, Comcast, or Verizon is even going to give some guy with $14M in VC funding the time of day? If you can’t handle a multi-hundred million dollar contract, these guys have no time for you. So, your only hope as a startup is to catch the attention of Cisco, Motorola, Nortel, Alcatel or the like. Unfortunately, these guys have their own R&D teams and they are being squeezed by their customers (AT&T, Verizon, and Comcast) which limits their appetite for innovation through acquisition. What it all adds up to is you need a really fantastic product in a domain that hasn’t been commoditized and you better structure your company in such a way as to make it attractive to Cisco et al.

  17. Om,

    Pure application startups have a place, but the more useful startups are those that bring content, applications and infrastructure together.

    We see both kinds of startups are being started out there.

    Onee reason you see fewer pure infrastructure startups today is that the infrastructure challenges have evolved – it’s no longer just a larger pipe with more QoS. It’s also about having a lot more intelligence on top in order to use that bandwidth the right way, to use the QoS the right way, have the right policy management, etc…

    (shameless plug follows) 🙂

    My company – TellyTopia – falls into the second camp – we build applications that sit in the infrastructure, and leverage those large (or small) pipes out there, while being an intrinsic part of those networks. We’ve seen great traction with this approach.

  18. The reason there is no new start ups and the internet is boring is the FCC and the Bells. AT&T sues all that try to start something new, hence Free conference calls, They sue iphone users who change their simms, They are against net neutrality. who would invest in this market now when FCC Martin is pro big guy? Google is our last hope to have any saving grace. They will get my phone service when it is up and running.

  19. Om, the reason why there is underinvestment in last mile is because of the carriers. As they have consolidated, the number of buyers for any potential breakthrough technology falls. This means that if you’re a start-up targeting the area, if you don’t land AT&T or Verizon, you’re pretty toast. Addtionally, the carriers love to focus on and spend on the core of the network but the access edge is always the afterthought. I think you’ll see some interesting stuff come out of the VDSL2 technologies and that’s why I own a piece of Ikanos (leading VDSL2 chip supplier). Ikanos will look a lot like Sirf did when people figured out that GPS chips are going into most cell phones in my opinion…
    And of course there is always WiMAX! (?)

  20. Raw bandwidth is not the only answer to content distribution. Any pipe will ultimately fill up – but an intelligent architecture can provide a 10x improvement for the same bandwidth.

    However, if you Follow the Money, the big financial fruits in the Internet business have not been shared in proportion to the costs required to distribute content. There are little incentives to invest in infrastructure, and the big changes require complex cooperation between service providers.

    I suspect another trouble is brewing between content owners and content distributors – and Google is wise to start building (gasp!) a vertically integrated GoogleNet.

    Rewind 10 years. Roll tape:



  21. Cuban also believes Podcasting makes no sense. Mark’s a bit of a wanker. He was an unskilled redneck that was at the right place and at the right time when lot’s of money came his way during the dot.com boom. Since then, he’s acquired his share of unearned arrogance.

    Someone please collect all of Cuban’s technology predictions and opinions. What you’ll see is a pattern of ignorance.

  22. Uh, actually Micah, podcasting doesn’t make that much sense. Any huge podcasting businesses on the scene?
    So far, Mark has been “unskilled” twice. First with Broadcast.com and now with HDNet. HD being quite possibly one of the biggest fundamental technology changes in our world in the last 7 years (ex-Internet).

  23. Could someone please explain to me why, if symmetrical high-bandwidth is a prerequisite for a new class of internet applications, why aren’t we seeing these being launched in places like Japan, France and Germany, in cities that already have this deployed?


  24. Joel said something interesting about innovations that go beyond Web 2.0 and the need for greater interactivity, virtual applications, etc.

    Times Square in New York has a lot of that. You can interact with the giant screens, do polls, etc. Ad Age had some fascinating articles on that. London’s buses have LCD screens on their side and they are interactive. You could manage information about emergencies or critical situations on them. So if a terrorist bomb went off, people in the vicinity could come and help. How about the humble Yard Sign showing up on a LCD screen on the side of a bus–what is that going to do to get the word around about homes.

    I find this comment about shortage of bandwidth ironical. Just a few years back it was said that there is enough bandwidth to last 50 years. That the dark fiber can be lighted to meet increasing demand at very little incremental cost.

  25. Oh, my God, I can’t understand this obsession with bandwidth in the last mile in this day and age. At the time of the Internet, it was an issue. But now you have WiMAX. The carriers themselves are laying fiber-optics in the last mile.

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