01.10.07 TVR Hotline: Leaving Las Vegas

In tonight's Hotline:
CES wrap
FCC Chairman talks competition
Issue 23 coming Monday morning

Apologies for the plethora of typos in yesterday's mail. Have a tough time playing the role of copy editor, especially when I've written the stuff in the first place. Little loopy from the day's events at CES, too, which I'm happy to be leaving behind this afternoon.

If for no other reason than I learned some more tricks of the conference attendance trade, I found the trip worthwhile. Sure, I'd seen most of the devices before in some form or another. And there was nothing really surprising on the new product front. Plus, I'm not big on playing with phones to see how they work, so I spent little time "hands on" with devices this past week. But being immersed in all that gadgetry and seeing the larger pictures each company is painting with its mixes and matches helps one to make sense of the courses the group is charting.

The wireless trend I highlighted last evening is a fine example. Abundantly clear it was that while there is no dominant next standard, many are making great efforts to compartmentalize each into particular best uses, while those most proficient at herding radio waves are playing in each segment. Overarching those themes was the fact that wires, while not on their way out, are not now the default means to connect devices to each other. From the headset/phone connection to the set top box/flat panel display tether, there are now means with which to sever most cables running in the house. Some methods are more obvious and simple than others, but I would expect the educational experience of getting one type right - like the Bluetooth headset - will transfer to other scenarios, eventually leading to plug'n play simplicity in all set ups.

My final destination at the show, today's presentation by Federal Communications Commission (FCC) Chairman Kevin Martin, hit on the wireless issue extensively. Allowed to pass on questions to the boyish-looking regulator, I asked for his thoughts on municipal broadband and the carriers' challenges to public network development.

His thoughtful response had me thinking a bit differently on the subject. In his belief, the FCC should not like that local governments are actively competing with telecom carriers. After all, Ma Bell was a public network that the government dismantled and made private via the establishment of the original Regional Bell Operating Companies (RBOCs).

Rather, the belief is that private competition will result in the best service at the lowest overall cost to the consumer. However, where private carriers fail to develop networks, leaving a particular customer group far lagging in connectivity, the FCC believes public networks have a place, so useful they can be in fostering economic development.

Once all about competition from any source, my having spent another few hours thinking about the subject has left me with the more nuanced standing that I would hate to see public funds wasted on an effort that could, in theory, be met through private entities. Of course, I still have no greater love for Verizon, its efforts in blocking municipal broadband network development seemingly having been so schemey and underhanded.

Chairman Martin's take on Net neutrality was a bit more obtuse. The Net neutrality debate centers on the question of whether any one carrier should be able to decide what content subscribers are allowed to see, though tangent discussion include whether or not a carrier should be able to charge content providers extra for prioritized delivery.

Mr. Martin believes no network operator should be able to discriminate among content providers. But that means only that any offer made to one must be made to all others. What it doesn't mean is that the carrier can't charge content providers for delivery of their data. What's troublesome given those two viewpoints is that the FCC also believes that the carrier cannot block traffic to any data made available for free on the Net. Well, that's done easily enough by charging a high enough amount such that one, or perhaps no one, can pay. An auction to the highest bidder is not required, and the FCC seems to have given no guidance on what's a fair price.

In fact, the issue has yet truly to be explored in the market. Like this scenario: were Google to offer a Voice-over-Internet Protocol (VoIP) service fully competitive with that offered by Vonage or any other of the far less well-funded companies out there, Google would of course be the one feasibly able to pay the most to gain the highest priority. An unfair, competition-stifling advantage? Perhaps. And what value does the carrier place on its own VoIP traffic such that it can set a fair rank among the various players? Fun to watch the debate evolve, indeed.

And that pretty much wraps up the trip. I think I got enough stuff to pull together the second annual TVR Top Trends discussion for Issue 23, due out on Monday of next week. Much work to do on the next installment of the newsletter, I hope folks won't mind if - barring any major news to discuss tomorrow - I shift tomorrow's Hotline to tonight.

M.M.

Al Frank Asset Management, Inc.
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