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JOHN DVORAK'S SECOND OPINION
1200 channels and nothing is on
Commentary: Cable companies need to rethink their models
By John C. Dvorak
Last Update: 12:01 AM ET Sep 7, 2006

BERKELEY (MarketWatch) -- This week the French-based Holersoft announced the release of Free Internet TV. This is a simple and downloadable Windows application that allows you to watch more than 1,200 live television channels from 100 countries by streaming media.

While this isn't pure IPTV where these streams can be sent to the TV set in high definition, it does show you some of the potential of accessing TV stations on a global basis.
Last night I watched a Cuban station (with a mysterious English translation), a game show on Vietnam TV which seemed similar to :Deal or No Deal," various American local stations, a TV drama playing in Israel, a little Russian news and on and on.

And of course, there was really nothing on.

The potential for this sort of programming is great, especially for tourists wanting to stay connected with home. The entire access package is available for a 14-day free trial by visiting the Web site. http://www.holersoft.net/ .
It portends the future of television with users having access to worldwide programming 24/7. Right now this is only practical on the computer in smaller image sizes since only the most advanced Internet delivery systems can provide the needed bandwidth for true IPTV service for full-size TV images.

The magic number for such a service to work well is pegged at 30 megabits per second. Generally speaking, it's hard to get reliable 10 Mbps in the U.S. except in areas where a specialist fiber-to-the-home provider has moved in and many of those providers choke off the throughput to 3 Mbps.
It gets worse in many areas, including Europe, where your bits are metered and once you exceed some limit you are cut off altogether. Streaming TV chews up a lot of bits fast.
Meanwhile, in countries such as Korea, Germany, Japan and Sweden you will find the 30 or more Mbps available for a reasonable price and have to wonder why everyone doesn't offer it.

The biggest opportunity exists for the cable companies such as Comcast. They have the bugs worked out of the system and the coax cable used can easily deliver 30 Mbps. But Comcast, and the other cable folks, have a dilemma. IPTV conflicts with their business model.

A worldwide IPTV user poll indicates that most people who follow IPTV think that the cable companies have the most to lose. See the poll.

The cable companies know this too and if they opened the floodgates to IPTV nobody would subscribe to old-fashioned cable TV. And it's just a matter of time before that happens. Stalling helps, but you cannot stall forever.

Unless the cable companies have something that they can market exclusively, they are going to have to give up on the programming distribution business since they would not be able to compete with every small-time operator selling HBO at a discount over an IPTV network. And all the stations and networks comprising "basic cable" would be freely streaming every which way too.

If you want a taste of the stations and networks that are simply up for grabs and already streaming for free in an Internet TV format check out Channel Chooser. See Web site. Here's a few hundred more channels for your computer viewing pleasure.

If the cable companies wanted to get a head of the curve they'd offer a real 30Mbps service now for $99 month and switch their offerings to an IPTV model immediately. This would force the phone companies to employ xDSL technologies which could pump up to 50 Mpbs into the home; although some believe that the phone system is so decrepit that this will never happen.

If it did, then the cable companies could pump out 100 Mbps and bury the competition. That100 Mbps appears to be a do-able speed for the cable network as it now exists utilizing the new DOCIS-3 modems, according to engineering architect Milo Medin who was responsible for much of the network architecture in early cable modem implementations. A longer discussion of the speed limit is posted on my blog. (Click here to see blog entry.)

The cable companies should consider the Holersoft announcement as a shot over the bow and begin to rethink their business model, fast. End of Story

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