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The Policy and Commentary Blog of The Heartland Institute
Updated: 12 min 36 sec ago

Online Video Competition’s Tipping Point Just Tipped

April 10, 2014, 8:49 AM

What do Amazon, Verizon, Apple, Google, Microsoft and Yahoo all have in common?

They’re all actively preparing to enter the over-the-top online video business with their own streaming service or proprietary online programming to compete with Netflix, Hulu, and facilities-based pay-TV providers like Comcast, Time Warner Cable, DirecTV, Dish, AT&T, Verizon, and others.

Why all this new competition now?

Several big recent changes have converged to create a tipping point for new broad scale, over-the-top (OTT) video competition.

The FCC made clear net neutrality does not apply to the Internet backbone market. Broadband providers are fiercely competing to offer plentiful wireless bandwidth for online video streaming. And several companies worth $1.5 trillion collectively have plans to compete as over-the-top online video streamers and programmers. Competition in this space is clearly intensifying.

First, in just the last three months, the U.S. regulatory environment has turned around 180 degrees in terms of facilitating market negotiations, economics and competition in the Internet backbone market. The removal of regulatory uncertainty has jumpstarted market negotiations between ISPs and multiple new competitive entrants seeking necessary quality of services guarantees for their planned OTT offerings.

Specifically, the D.C. Court of Appeals in its January Verizon v. FCC decision outlawed the FCC from regulating unregulated broadband ISPs as regulated common carriers. That means part of the FCC’s 2010 Open Internet order that implicitly set a zero price for downstream Internet backbone traffic (i.e. video streaming) was illegal.

Since then the FCC has decided to not appeal, and hence live with that ruling as law. In addition, FCC Chairman Wheeler and the agency at large have publicly affirmed the FCC would not include new Internet backbone regulation in the FCC’s redo of the partially overturned Open Internet order.

Competitively this is a big deal. The FCC’s old net neutrality rules fostered huge uneconomic arbitrage, where perversely the biggest corporate users of Internet bandwidth contributed the least to the infrastructure upgrade costs necessary to keep pace with exploding bandwidth consumption.

Now market forces can naturally balance costs with prices. And importantly new OTT entrants can negotiate the specialized quality assurance guarantees necessary for a viable competitive offering. That’s why Netflix and Comcast recently completed a multi-year, Internet backbone interconnection deal.

This is a big deal for growth as well. This change enables the creation of an entirely new business-to-business marketplace of specialized services to meet the various and different needs for specialized speed, capacity and quality for OTT video, telemedicine, industrial operations, connected cars, and the Internet of things.

Second, in just the last year, broadband competition has spurred a game-changing amount of new Internet infrastructure investment that has created a competitive tipping point for new OTT video and other specialized services.

America now leads the world in wireless 4G-LTE infrastructure investment. This means by year’s end, America’s four national wireless broadband ISPs will be offering speeds capable of supporting new OTT video streaming services, nearly ubiquitously. And Dish has aggregated enough spectrum nationally to offer a fifth ubiquitous, MVNO wireless broadband service to enable OTT video services.

On top of that world-leading LTE investment, Comcast, Time Warner Cable and the rest of the cable industry have been furiously adding more free WiFi hotspots to provide mobility to their wire line customers. Furthermore the FCC just freed-up another 100 MHz of unlicensed spectrum for WiFi to enable even more capacity for mobile video streaming.

The advent of broad scale mobile OTT competition should be of no surprise. This is just a continuation of the long back-and-forth competition between wireless and wire line infrastructures. In the 1980s cable TV largely replaced free broadcast TV. In the 1990s and the aughts Direct Broadcast Satellite took a third of cable share.

And now America’s wireless broadband infrastructure has reached the tipping point of increasingly delivering the video streaming throughputs necessary to enable mobile OTT video competition.

Third, new competitive entrants grasp the new competitive opportunity created by the more growth-friendly regulatory environment and the higher-bandwidth wireless infrastructure.

News reports indicate that at least six new OTT video competitors worth over $1.5 trillion – Amazon, Verizon, Apple, Google, Microsoft and Yahoo – are all individually readying new competitive assaults.

If it was only one or two companies planning this new big effort, one could be skeptical that a tipping point had been reached. But when at least six companies of this size are targeting the same opportunity at the same time in very similar ways, something big is afoot.

The broadband and pay-TV businesses are facing a tipping point of new game-changing OTT competition, because three necessary competitive prerequisites have been met.

The court/FCC removed a big regulatory overhang from the business-to-business Internet backbone space, opening up a whole new growth marketplace for mass specialized services in need of special quality of service guarantees. This in turn opens up new economic arrangements like AT&T’s Sponsored Data offering where businesses can pay for their consumers’ bandwidth usage to attract customers.

Competitive forces have goaded multiple ISPs to invest big in upgrading infrastructure to enable mass mobile OTT services.

Several companies that already serve most Americans, and that have among the deepest pockets of any businesses in America, are hungrily eying the OTT marketplace for growth and expansion.

This is more than just a competitive tipping point – it’s a perfect storm of pro-competition developments.

 

[Originally published at Daily Caller]

Categories: On the Blog

Fox News: NIPCC report ‘Poking Very Large Holes’ in Climate Alarmist ‘Consensus’

April 09, 2014, 10:31 PM

For the second night in a row, the new report from the Nongovernmental International Panel on Climate Change (NIPCC) was featured on “Special Report with Bret Baier” on the Fox News Channel. Baier’s show destroys its competition on cable news with about 1.7 million viewers each night.

FNC covered the press conference Heartland and NIPCC held Wednesday morning at the National Press Club in Washington, DC. It informed this fantastic report from Doug McKelway, who said the NIPCC report presents “a torrent of new data … poking very large holes in what the president has called the scientific consensus about global warming.”

Watch it below, and read the transcript below that, which I preserve for posterity. When a reporter on the most-watched nightly news show on cable states the following, it’s worth filing away: “Skeptics believe [alarmist] statements are demonstrably false. They point to observable data, not computer modeling, to prove their point.”

Baier: The earth may, or may not, be heating up. But there’s no debate that the fight over man-made climate change certainly is. Despite repeated proclamations that science comes down on one particular side, it turns out many scientists do not agree. Correspondent Doug McKelway reports tonight on the deepening divide over an issue that is part science and part politics.

[Clip: Barack Obama]: But the debate is settled. Climate Change is a fact.

McKelway: A torrent of new data is poking very large holes in what the president has called the scientific consensus about global warming.

Roger Pilon, Cato Institute: The dirty little secret is that we’re now at 17 years and 8 months of no global warming. Their models have failed, year in and year out.

McKelway: Backed by thousands of peer-reviewed papers, a study released today by the Nongovernmental International Panel on Climate Change contrasts starkly with the recently released UN report that finds severe impacts from global warming. The new report finds that warming from greenhouse gases will be so small as to be indiscernible from natural variability. The impact of modestly rising CO2 levels on plants, animals, and humans has been mostly positive. And the costs of trying to limit emissions vastly exceed the benefits. The report may only heighten debate over climate change, where both sides are armed with their own opinions and their own facts.

[Clip: Hillary Clinton]: Climate change is a national security problem, not just an environmental problem.

[Clip: John Kerry]: And all of the predictions of the scientists are not just being met, they are being exceeded.

McKelway: Skeptics believe those statements are demonstrably false. They point to observable data, not computer modeling, to prove their point.

Joseph Bast, president, Heartland Institute: Carbon dioxide has not caused weather to become more extreme. And it is not causing polar ice and sea ice to melt. It’s not causing sea-level rise to accelerate.

McKelway: All of which is leading Congressional doubters to further question EPA regulations.

[Clip: Sen. Lisa Murkowski (R-AK)]: The sheer number of proposed rule-makings coupled with cost of compliance with a vast array of regulations already on the books and, what at times are the unreasonable consequences of their enforcement is very, very frustrating.

McKelway: Climate Change skeptic Sen. Jim Inhofe of Oklahoma introduced leg just last week that would tackle the administration’s regulatory end-run around Congress. It would prevent the EPA from issuing any final rule until it conducts an economic analysis as required under the Clean Air Act.

Catch up with the latest media reports, op-eds, podcasts, and videos about the NIPCC reports at ClimateChangeReconsidered.org.

Categories: On the Blog