Two weeks ago, I posted here a white paper called “Prospects for IP Radio” that I wrote for NPR. Jon Schwartz, GM of Wyoming Public Media although living in Eugene, Oregon (hence the examples below), responded with some questions that I’ve attempted to answer. He’s given me permission to quote his email and my responses are embedded in it.
Friday, October 29, 2010
Thanks for this comprehensive overview Dennis. Just went back and read a little more closely as I am a fan of "Lute Athletics". You were quite clear about a number of tech matters and that's an achievement.
Wonder whether you might elaborate on what competitive factors are on your mind regarding a reversal of upward costs for data plans for emerging 4G service unlike 3G which has gone up not down with increased usage, and what examples in the industry outweigh the upward trend. Certainly increased demand has not lowered cable TV bills.
Unlike wireless services, cable is for most purposes a monopoly. For wireless services there is supply and demand model of price determination. For example of that, in broadcast advertising, it’s often said that if your inventory in a daypart is consistently sold out, your rates are too low. Spectrum is a regulated resource, but with the rapidly ascending popularity of smartphones, demand for those bits has increased faster than regulators can clear spectrum (42.5 MB per wireless line in Q1 2009 to 182.5 MB per line in Q1 2010 per Validas LLC). As the sole iPhone carrier, AT&T was in a particularly acute pinch which led the move new pay plans. Clearing spectrum is the top priority of not only the current FCC but also very likely for future FCCs as well. Ditto, of course, with the carriers. As spectrum is freed up and built out, and as 4G services populate it, we’ll see competitive factors engage. At least until the next demand explosion.
Also, there is a lot of space between the new metered pricing rates and unlimited data service. Competition *might* reduce pricing but that could include lowering the price per unit as opposed to elimination of demand pricing. Of course either way we have been dealing with elite pricing for data regardless of the method. Cell phone service billing PLUS unlimited data has been costing me a little over $70 a month and that level of billing makes the argument at least reasonable that such service will always remain an option for elites in government and corporate sectors given it by their employer, and elite private subscribers who can and choose to afford it. In that world, IP radio and TV cannot be considered "public".
True enough, but there are a couple of things to keep in mind. First, audio is always going to be at a substantial spectrum advantage to video, and video, not audio, will be the bigger driver of scarcity. As I said in that white paper, we are already seeing technology-driven responses such as MediaFLO that move streaming out of the cellular spectrum and into the former TV spectrum (the European DVB-H and U.S. ATSC-M/H standards are also candidates for this – more of this in the next white paper, “Prospects for Radio-Radio”). Go to the FCC’s “spectrum dashboard” and check out the 700-MHz spectrum already licensed to cellular carriers. For example, in Lane Co., Oregon, AT&T has two such licenses.
Second, whether it’s broadcast spectrum or cellular spectrum, listeners do pay for it now. For us it’s because they’ve voluntarily donated, or involuntarily donated (tax $), or we’ve rented their attention (underwriting $). It takes some mental gymnastics, but those same revenue sources could subsidize wireless services. SafeLink Wireless is now operating as a tax-supported service. That’s admittedly a stretch for public media, but I’d argue that the more important value to protect in the “public = free equation” is that we should be free-as-in-journalistically-unfettered, not necessariliy free-as-in-free-beer.
The other question you could elaborate on is coverage. I get good Verizon cell phone reception here in Eugene. But neighbors and friends in the same neighborhood or elsewhere in town complain about inability to get cell phone reception from the other providers in their home or office. They also complain about shadow areas throughout town while driving that result in dropped calls and no service. More towers from more providers? Zoning problems? What about suburban and rural service? These questions would be interesting to see from your perspective. [splitting your paragraph…]
Yes, cellular services are pretty poor many places. My son works in Manhattan and I work in Washington, both with iPhones. At any time of day for him, and during rush hours for me, communication is pretty pathetic – especially between us. On the other hand, in less congested hours I’ve driven at distances in the 45-75 mile range listening to Pandora through my sound system on that same iPhone with no dropouts at all. I’ll just say that it’s a work in progress, and the reliability problems we spot in pure-digital wireless are also shared by pure-digital HD2 and HD3 radio which generally have less coverage. I believe we’re a lot more likely to be able to one day drive I5 and I84 across Oregon or I25 and I80 across Wyoming with seamless IP radio coverage than we are to drive those same stretches with seamless HD Radio coverage.
Cellular systems today operate in a variety of bands from 700-2700 MHz. Much of the spectrum being cleared now is in the UHF TV band, lower than these frequencies so will have somewhat better penetration.
Also in these new bands will be new kinds of wireless services, what’s been billed as a sort of super Wi-Fi covering a whole campus or small town. Look for these to be interlinked just as regular Wi-Fi has in many community – often with “free-as-in-free-beer” services. These services will provide additional rate-moderating competition to 3G and 4G providers.
[…resuming your paragraph] Do you see IP radio remaining a niche albeit it a significant one or lean towards Vivian's view that mobile IP radio will replace current broadcast radio inevitably?
Oh gee, thought I’d duck this one. Actually, I think that neither one of these are likely – that is, IP radio will be more than a niche but less than a replacement. IP radio has advantages in terms of rural coverage (as long as you’re along an interstate highway) and listener choice in content (especially for satellite radio), but its big advantage is that it’s inherently two way, which provides an important advantage in advertising. Its big problem is scaling difficulty, but I tried to show in the white paper that there are ways to mitigate this for video and radio will go along for the ride. On the other hand, radio-radio has advantages of scale, established local branding, and adaptability proven over nine decades. The broadcasting industry will figure out how to make a back channel work (for example, see discussion on RadioDNS in the next white paper), and I’m also convinced we will eventually have hybrid HD-IP radios with seamless tuning between broadcast and IP favorites – a pretty trivial engineering effort.
Thanks again for this effort Dennis. I look forward to your future pieces.
Thank you for the close read and thoughtful questions, Jon. We’ll miss you in public radio. Oh, hold it, they’ll miss you in public radio – since we’re both retiring at the same time. ;-) --Dennis