|CC licensed by Noah Wesley.|
A shift from data transport via the internet to data transport via broadcasting networks will create 62 billion USD (in present value terms) extra in the US economy from 2014 to 2026. This is being claimed in the report The Economic value of Broadcast Innovation - Impact on the U.S. Treasure, by Business Analytix Inc., published last November. Do note that the 62 billion dollars are for the US alone. The world wide ancillary revenue share is much higher.
50 billion connected devices
So, how can this be? Every minute, hundreds of people buy a new or another "connected device," a gadget that is connected to the internet. There are currently around 5 billion such devices in the world. In 2015 there will be 15 billion connected devices, in 2020 there will be 50(!) billion of them, a tenfold increase from today, according to Intel. The number is far higher than the number of people on Earth as many people will have several devices, but more importantly due to machine to machine communication. More and more traffic is shifting from the internet via fibre and other terrestial distribution forms to portable devices via mobile internet. And let us not forget the surge in cloud services. More an more people and businesses now store their data in "the cloud," or on servers that can be accessed "everywhere" via the internet. The downside is that this leads to an explosion in bandwidth usage. There will due to the above mentioned reasons soon be a major traffic jam on the mobile internet. And who likes traffic jams? Only Shell, Texaco and BP. And maybe some street vendors.
Who likes internet traffic jams? Mobile network operators will use the opportunity to introduce new data traffic plans, giving those that pay premium a good service, letting the rest share the leftovers and be stuck in traffic. It's like beating the traffic jam on the motorway by flying a helicopter. Not many can afford to do it, those who can ensure healthy incomes to those who solve their problems.
Business Analytixs agrees with me and an increasing number of people within the industry:
The best way to meet the projected explosive growth in mobile data is to allow broadcasters to use point-to-multipoint "Broadcast Overlay" technology to provide the most efficient possible delivery of high bandwidth data to mobile users. Simply allocating more spectrum to commercial wireless operators would do very little to address projected massive capacity shortfalls and would do even less to address Federal budget deficits. Commercial mobile networks based on "cellular" one-to-one architectures are not designed to efficiently carry the portion of mobile data traffic that is likely to grow the fastest.
70-fold increase in data traffic
By 2026, data traffic via the mobile internet will have skyrocketed, increasing 70 times from the current level, according to the Business Analytic report. So even if MNOs get their hands on more spectrum as they are currently trying to (most of the spectrum from broadcasters), that would hardly help at all. That will only ensure that valuable means of distributing mobile data will end up in the hands of very few companies, essentially creating monopoly like conditions. Who would want that?
A linear increase in the supply of spectrum cannot solve a geometric increase in demand for mobile data. The projected growth in mobile data traffic is so great that re-allocation of television spectrum would provide only temporary and barely discernible relief.
Broadcasting spectrum must remain in the hands of broadcasters that operate independently of MNOs and ISPs. MNOs claim that governments would make billions of dollars on auctions of these frequencies. But a one time auction revenue cannot in any way, form or manner compete with assets that carry an infinite value. The value of annual fees paid by broadcasters will pass the one time fee in an auction within a few years. But the value is not only monetary. This also has to do with culture and language. About securing the right of societies to get news, sports, entertainment and cultural programming and content in their own language, from their own area, preserving their own culture and cultural background.
This isn't about stopping the advancement of the internet. This is about making sure that relevant content is carried across the optimal distribution method in order to reach everyone in a smart and cost efficient manner. Live television and radio content, which consumes enormous amounts of data, should not be transported via the internet. It is a total waste, unless you are outside the coverage area. Such content should go via broadcasting networks. Normal web surfing, on-demand programming and personalized sevices on the other hand should go via the internet.
Simply using the right architecture for the right traffic will do far more to alleviate mobile traffic jams than any amount of re-purposed spectrum.
The 62 billion USD extra can be generated thanks to the efficiency of transporting data via a broadcasting network that can reach an infinite number of people at the same time, as opposed to what is possible via the internet which serves one person at the time, something that creates jams and less than optimal services.
Broadcasting will also change
Of course, everything is not perfect when it comes to broadcasting either. Currently, traditional linear radio and TV is more or less the only kind of service being carried across broadcasting networks (except i.e. traffic services and teletext like services in certain countries). How about using the broadcasting networks to also carry other kinds of data that a lot of people want? Such as the 100 most popular Youtube videos. This can then be stored on your device and watched on-demand whenever you want it. I met with Youtube 14 months ago. They were not interested in making their top content available as TV channels. They have however changed strategy since then with the introduction of 100 online tv channels. It may only be a matter of time before they are transmitted via broadcasting networks as well, or before they transit their top content via such networks.
Broadcasting is perfect in a collective society, as we all do live in. "Everyone" will, after all, want to get news, sports and premieres of new shows or episodes first. Then add individuality, which is taken care of by the possibilities we get through the internet, and we have a win-win situation. MNOs will tell us that multicasting solutions will solve the capacity issue sometime in the future, but they have told us so the last 10 years. And it is not only about capacity, there are a number of other reasons why the internet won't solve it all.
I will finish by repeating myself from an earlier commentary. Greed may be good, but for live television and radio, solidarity is what we need.
The Economic value of Broadcast Innovation - Impact on the U.S. Treasure, by Business Analytix Inc. comes highly recommended for those of you that want to understand the future of media.