14 thoughts on “Will Incumbents Stifle Innovation?”

  1. There’s a limit to the ability to reduce the bitsize of content without losing quality.
    The traffic cap will be broken by market forces, competitors who don’t limit their users consumption, an improvement to infrastructure and bandwidth. Content will get bigger, rather than smaller, but capactities and declining costs will make it more accessible.

    If Comcast is indeed trying to save its own VOD service, it’s going about it the wrong way. If people don’t want it, they won’t buy it.

  2. Will incumbents stifle innovation? Of course they will, it’s what they do. Then they buy innovation to save their own skins.

  3. In my opinion the question should be.

    In which direction will/should innovation go.

    If it’s just compression, that will help a few. If it’s in services no matter bandwidth used, that is a total different beast. But might spur a new wave of small or big businesses.

    In general innovation will happen, the direction should be either left alone or be set by our leaders. I think that’s what makes it so confusing or provides a way for companies to weasel out of or set the direction of the discussion. Since innovation will happen they can always point to it, if it’s moving in the direction of greater good or only their own direction and to their save business model is a different question.
    It would require leadership to set the direction. But what is a leader and what distinguishes him/her from a manager?

  4. Couple of points here…

    1) We don’t know what type of arrangements Netflix might make in the future to assure QoS for its service. Netflix may toss Comcast some paltry amount per (active) user on the Comcast network in order to insure QoS. And if Netflix pays the extortion, er, QoS assurance fees, its services might not count against the 250GB cap. Value-add for Comcast, everyone gets paid, everyone gets happy, users stay on the Comcast network, otherwise…

    2) Verizon FiOS ain’t got no stinkin’ cap, so if you’re in a Comcast/Verizon duopoly, you suddenly have an incentive to switch off of cable to FiOS; suddenly that $100-150/month “triple play” cable customer turns into a $0 customer for Comcast. Do that a lot, and suddenly we’re talking real money, which leads to…

    3) Ultimately, Comcast upgrades its customers in very competitive (i.e. FiOS) markets to DOCSYS 3.0 and higher speeds to compete with FiOS. Suddenly, with all the bandwidth flowing freely, the 250GB cap goes away. Later, Comcast goes DOCSYS 3.0 across the board for support and cost (i.e. the old stuff needs to go) reasons.

    SO, net-net = Comcast 250GB cap is not a long-term strategy, but a short to mid-term bargaining chip…IMHO…

  5. I always thought that monopoly is when you do stuff that intentionally damages your competitors ability to compete. Comcast is going to have a field day in court when someone points out the fact that their “Caps” (which really are not necessary) are nothing more than a ploy to restrict competition.

  6. Geez, you’d think a telecom analyst would know the proper acronym for the Data Over Cable Service Interface Specification (DOCSIS) 😉

  7. I think COMCAST might be looking at revenue streams by limiting downloads as a way to begin charging for overages.

    Think of the business models of the phone companies and cell phone companies. You go over your “package”, you incur extra charges. Nothing diabolical, just a new way to create revenues from an incumbent user. Read my take –
    If this is successful, you’ll see others try to apply the old “message units” approach to increase monthly revenues based on “usage”. Instead of message units, it will be gigabytes.

  8. Only Comcast knows why they put up the 250G cap. See http://www.dslreports.com/shownews/Comcast-250GB-Cap-Goes-Live-October-1-97294 The reason Comcast puts forth is to solve traffic management. Considering the problems that P2P can deliver to a neighborhood of cable users all on a single older head end and associated router handling that traffic, Comcast needs to do something to keep its low usage customers happy about their Internet data rates. My guess is that if and when Comcast upgrades the head ends and last mile loops – to FTTH – like Verizon is doing with FiOS, most of the traffic shaping concepts will disappear as non-issues. So I tend to believe Comcast when it claims that traffic management, not protection of its VOD service, is the driving factor for the 250G cap. The 250G cap idea, planned for October 1, 2008, may disappear when the new network design described in Comcast’s Sept 19, 2008 FCC filing is implemented. Every parent of a teenager knows the P2P problem when the parent wonders why their Internet is slower that it should be and discovers (if the average parent understands P2P …) the teenager’s P2P is causing congestion at the home router. While I am a big believer in local loop competition and think this country is severely lagging in this area (maybe a new regulatory creation like LoopCo would solve the problem for all parties in particular the shareholders divesting themselves of the central offices and outside plant or loops), I have seen first hand what several P2P streams can do to a local neighborhood’s network speeds and sympathize for that reason with the Comcast engineers working to solve the problem. It seems that Comcast’s newly proposed network solution is more agnostic (or neutral) and may make the various constituencies satisfied (but not happy!).

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