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Bandwidth – The next disruptive innovation relies on a faster Internet

by Jim Louderback | February 28, 2015February 28, 2015 9:00 am PDT

All sorts of crap have been thrown around about what’s causing media disruption, particularly now that TV and movies are being creatively destroyed by the Internet. But it’s a simple story at its core – the story of media disruption is the story of bandwidth.

And it’s about to get really interesting.

Let’s start at the beginning.

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Back in the early days of networking, our computers talked to other computers using phone lines and a nifty kludge called a MODEM (for modulator/demodulator) that converted digital ones and zeroes into a series of squeaks, squawks and acks that carried the signal along plain old analog phone lines.

Early modems transmitted at 110 and then 300 bits per second, less than 40 characters a second. At that speed, my typical column of around a thousand words would take about 30 seconds to transmit. Your typical newspaper might take all day.

But as modem technology advanced, speeds climbed to 1200, then 9600, then 28,800 and finally up to 56,000 bits per second. At 28k, there was enough bandwidth to transmit lots of words every minute, files and compressed images too. And since you could send a whole newspaper or magazine in just a few minutes, it was about this time that the print industry started to get disrupted. Anyone with a PC and a modem could start their own publication, and many did.

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So what did the print publications do?  They started giving away all their stories for free. I was in the middle of that when I ran content at Windows Sources and PC Week, and I certainly advocated creating and delivering free content. But that – as it turns out – was a mistake. We built some great web properties, but they weren’t nearly as profitable as our print counterparts. But the damage was done. The print industry as we knew it was doomed. It turns out we really weren’t about paper. We were about stringing words and sentences together in funny or insightful ways. The paper was just a vessel, just a cup to hold those words. You could pour them into a PC as well, and do away with all that messy ink and dead trees. And it turns out that’s what lots and lots of readers really wanted.

Napster Logo

Once we reached 56k it was time for the next media to be disrupted. With the advent of audio compression technology, suddenly you could transmit a song – any song – in just a few minutes. You could download an entire album in a few hours. And soon the music industry was under attack from Napster, Limewire, Kazaa and other services that made it simple to download music. But instead of giving away low-resolution tracks – a tactic my friend Matthew Hawn advocated while working at Sony in those early days – the industry went on attack. 12-year old girls and 71 year old grandfathers were being arrested and fined tens and even hundreds of thousands of dollars. The industry wasn’t going to give it away and be destroyed like print. Unfortunately by targeting end users they turned into one of the more hated industries around. And the launch of anonymous services like Bit torrent ensured that the music industry, just like print before it, would be inexorably changed by digital.

During the transformation of the music industry, bandwidth continued to grow – and that growth accelerated. Cable TV companies like Comcast and Charter started using its network infrastructure to bring broadband service to customers. The telephone companies got in the act with a digital product called DSL, although it maxed out at well under cable’s broadband bandwidth. Now we were talking bandwidth as high as a megabit per second. Audio flowed down those pipes like champagne at the Super Bowl. Print and music were well and truly disrupted. And now it was video’s turn.

At a megabit per second, you could stream low-resolution video. A movie DVD could be downloaded in an hour or so – less when you stomped the crap out of it with compression. And as broadband increased beyond a megabit, streaming video became easier and easier. At 5 megabits per second, even HD-quality video looked pretty good. The video/film disruption was well and truly underway.

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And that’s where we are today. Netflix, Amazon, Hulu and Roku are household words. Game of Thrones is watched by twice as many people as have HBO accounts. Even the most stouthearted TV networks are threatening to go direct to consumers. If you’re under 25, you probably spend more time on Twitch, YouTube and Netflix than on traditional TV. You can even stream ESPN without a cable subscription using Dish’s latest service, SlingTV.

But we’re not done. Heck, we’re only just getting started. Bandwidth speeds will continue to accelerate. President Obama’s latest proclamation that broadband needs to be classified as 25 megabits per second means that TV and movies have nowhere to turn. (As an aside, that was one of the biggest stories of the year in digital, and coupled with net neutrality should ensure that we continue to see great value from the ‘net.)

AT&T Fiber

But gigabit is coming for most of us – and many have it already. From Google Fiber to FIOS to little Vermont towns, the inexorable pace of bandwidth advances will definitely continue.

But after film and TV, we don’t really have any other old media to disrupt, do we?  It’s the end of the cowpath disruption. But that’s OK, and that’s why it’s about to get really interesting. Now we can start building NEW media, media that wouldn’t exist without 25 megabits, 100 megabits or a gigabit of bandwidth.

What will that media look like?  You see the beginnings of it all around you. I’ve been down on Oculus, but I firmly believe some sort of immersive virtual reality will be a huge part of our lives in the next five years. Early experiments by YouNow, Snapchat, WeVee, Vyclone and others are showing that personal streaming could be huge. Augmented reality is heating up with Microsoft’s new HoloLens and more.

But I’ll bet that many of the biggest new media categories have yet to be developed. And that’s why this has to be the most exciting time to be in the media business. Because those new media forms are coming, as the bandwidth to support them becomes widespread. So what’s it going to be?  I wish I knew. Who knows, maybe you’ll be the one to invent the next CBS. I’ll be watching!

Microsoft Hologram January 2015 - 04


Jim Louderback

Jim Louderback joined Revision3 as the CEO in July 2007, and guided the company to a 20-fold increase in viewers, a 12x increase in revenue, 39 new...

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