A recent post by Cringley on the future of broadcast, cable, satellite, and Internet TV trods little new ground. Admittedly, it’s pretty much what he’s been saying for the past few years. His general thesis is good, but his argument deteriorates in the details.
…we’re approaching a point where Internet service will equal and then be lower than the marginal per-viewer cost of the broadcast TV model. This crossover will inevitably happen with the only question being when. That’s a function of bandwidth costs decreasing at 50 percent per year and processing power increasing at 50 percent per year. My calculations suggest the crossover will happen around 2015, which used to seem like a long time away but no longer does.
Cost per viewer is an important metric from the supply side, but Cringley fails to take into consideration demand – the value placed on the service by users. Even the most aggressive estimates, don’t have reasonable bandwidth for an acceptable television viewing experience reaching 80% of the homes by 2015. Though I’m mostly pleased with Roku’s performance to my 10-megabit connection at home, I spend enough time watching the buffer reload in the middle of a movie that I don’t consider it an acceptable replacement for video on demand. What happens when everyone has a Roku box or some similar device? Five years seems like an awfully short time to solve all our bandwidth issues.
As I’ve said before, five year predictions are great. If you’re right you can link to the prediction and shout from the rooftops how smart you are. If you’re wrong, no one will remember.
Cringley makes one of his bolder five year predictions. Local TV stations will be facing the same business challenges newspapers do today. Not likely. Not only because IPTV will not be in a position to compete, but because broadcast will remain the most cost effective means of delivering live video entertainment. The Yankees and the Red Sox will keep broadcast TV viable for a bit longer than 5 years.
What spurred me to write this post wasn’t the collection of minor flaws in Cringley’s reasoning about the emergence of IPTV. It was his advice to public television executives that set me off.
When Internet TV becomes dramatically, unequivocally, and inexorably cheaper than the other three distribution models, those other models will quickly go away. That’s why I argued in PBS meetings to forget about spending $1.8 billion to upgrade local stations for digital TV and instead sell or lease that spectrum for commercial data use and throw the resulting $3 billion (lease revenue plus the $1.8 billion savings) into rebuilding the network solely as an Internet service.
Aside from my original point that it’s far too early to ponder such a move. It’s also the wrong path for public television to take. PTV is not a for-profit enterprise. It’s mission is to serve those left unserved by the existing media marketplace. If PTV had any other mission, it would be hard pressed to justify the public funding that accounts for approximately 30% of its operating budget. PTV makes news and public affairs programming, children’s programming, and cultural programming available to those who can’t afford satellite or cable service. How is this population, still watching TV with rabbit ears, going to make the switch to IPTV? I don’t see the political will in America to wire the inner cities and rural areas of America for robust broadband services.
We can debate the best use of public funds to meet PTV’s mission, but we can’t forget the mission. Cringley should know better. PBS gave him his original platform.