The NBN is bigger than the internet as we know it

The number of people who want slower internet in Australia is exactly zero. The speed we need data transfers to occur at is much fast than our politicians think. The reason for that is simple, we haven’t even invented the technology or industries which will be underpinned by the required connectivity. This is merely the start of the revolution, we are only 20 years into the digital age, and thinking we can even conceptualise how data will be used in the future, and how much of it we’ll need is at best ignorant and in all probability conceited.

Consider this, when oil was first discovered bubbling out of a creek in Pennsylvania in 1859, we had no idea how this material might be used. Maybe for lanterns or heating or maybe even in some machines could use it instead of steam? But the airline industry? That was impossible to conceive as a use case for oil, as was personal locomotion and the plastics industry. Today the airline industry employs over 12 million people directly, and is an important conduit to global commerce.

The NBN is a non-polluting oil well of the future. It should be the conduit to the data economy in Australia. Transfer of data is core to any economy wishing to participate in modernity. Yet, in Australia the NBN has become a political football which is literally risking the financial future of every Australian. I’m flummoxed to hear that the CEO Bill Morrow has claimed that the average Australian (what is average anyway?) wouldn’t require download speeds of greater than 25 Mbps! Either he is deluded, he lacks understanding of exponential technology or he’s towing a political line. Data isn’t about being a techie or young, it’s akin to running water or electricity – In fact, it will probably become a vital remote health care ingredient for our ageing society. Here’s a few things we ought consider, and then start screaming loudly about relating the future of our economy and the technological infrastructure we ought be provided with:

  1. The Governments job isn’t to make a profit out of infrastructure. They should realise that they will profit from new industries built atop of it. They seem to forget the tax we pay (30% min for business) is a quasi joint venture they are the beneficiaries of. They benefit from innovation on platforms, but only when they have the quality the future requires. Besides, it is our money they are already investing on our behalf. Profit centricity is a flawed approach.
  2. Rich Countries are built on rich infrastructure. In less developed nations, the common element is crumbling or barely existent infrastructure. Low quality roads, tangled electrical grids, insufficient education, marginal hospitals. We are squandering the shift as developing nations take their chance and ensure they use connectivity to redefine their economies. Just Google internet speeds by country and see where we rank and some of the surprising speeds of developing markets.
  3. We’ve opened the door to Curve Jumps. There’s a chance that 5G mobile networks will be faster than the jumbled mix of FTTP, FTTN and FTTC NBN Co is now building. The network may obsolete before it’s completed, or even worse, a national infrastructure play could end up being served by global technology conglomerates: Google, Facebook and Space X with their various internet service projects. It’s also possible that 5G mobile networks will circumvent the NBN in cost & speed. By trying to save money, the entire project is at risk.
  4. The future economy lives on the meta-structure. The amount of data we are creating is already doubling every 18 months and we are at the start of the start. All the important innovations of the future will depend on the robustness of technological infrastructure, and will create a new meta -structure of virtual business models which live at a meta level a above the concrete and steel. The trillion sensor economy of the IoT, Desktop manufacturing and 3D printing, Drone based logistics and Virtual Roadways in the sky. All these things require faster than we imagine internet access, unlimited imagination and an ‘over investment’ in the infrastructure.

If we want equal economic opportunity around our big land, then it requires a strong national network, where our regional areas have the opportunity to build a location independent future. Everything humans and governments have ever built that mattered involved taking leaps of faith and investing more than we need now, so we can all benefit tomorrow.

You can listen to my thoughts on the NBN here. And be sure to tune in to 3AW every Monday at 4.30pm as I take on a topic that matters for our future with Tom Elliot.

If you liked this post – you’ll dig my new book – The Lessons School Forgot – a manifesto to survive the tech revolution. 

Why Foxtel is Doomed

I am a Foxtel subscriber and every day I get that little bit closer to turning off my $100 per month payment. Not because it is too expensive, but because the value equation is getting worse, at a time when alternatives are becoming more attractive. Sure, their penetration in Australia might be growing, but we are on the precipice of disruptive change to Television, in a way that Foxtel must respond to if they want to survive. And their response needs to be before the impending disruption, or just like the music industry, they’ll be wondering what happened.

I’ll give a summary of the why, and then revert to the what they should do.

Why Foxtel is doomed

The primary reason is that their system is antiquated. The model they employ, is the same as the cable television model which emerged from the US in the late 1970’s. Yes it still exists, but it’s days are numbered. it has already happened to newspapers, it has happened to music, and TV is next. The belief that they can demand that consumers subscribe to content in a world of infinite content is foolish. The world is moving quickly from a pay to play – subscription model, to a ‘free and on demand’ model. The fact that Foxtel has access 35% of homes is irrelevant.  The real competition of Foxtel isn’t Free to Air TV, it’s the alternative web enabled screens in the home; laptops, desk tops, ipads, kindles and connected TV’s. Web enabled TV has already penetrated 17% of homes in Australia. With the dropping cost of screen & web technology, the future for Foxtel is bleak.

Foxtel is reducing what we get for the same price:

Only two years ago our $100 per month gave us the gold package. Every channel, 2 free new release movies per month, the IQ recording device and approx 30 on demand shows / movies. Without notice the same amount of money gave us ‘less’ incrementally. First they removed the 2 free movies – without notice. Then they slowly started reducing the number of on demand shows. As I write this it is down to a paltry 7 shows as of today. While everyone else is giving us more, Foxtel are giving less. Anyone would think Moore’s law works in the opposite direction the way they operate.

They don’t get on demand:

The great innovation on the web and entertainment deliver is on demand. Foxtel, still choose to schedule nearly everything that is available, save for a few movies and TV shows they are promoting (the 7 mentioned above). They expect us to work to their schedule. The world doesn’t world like that anymore. They need to wake up to this before most of their customers wake up to the fact that their are far cheaper and better alternatives available than Foxtel. (Including watching all USA TV on demand on Hulu via a proxy spinner.)

They don’t provide access content for purchase without subscription:

In their wisdom Foxtel has added a ‘movie library’ which is ‘on demand’. I thought – ‘Finally they are starting to get it.’ So when I attempted to watch an ‘old movie’ I was informed I had to; subscribe to get access. I thought I went into a time warp back to 1983 or something. It is not as though the movie was going to be free. I was happy to pay for it. But they also wanted me to pay for the right to have access. How stupid are these people, given that the tubes are already connected to me TV? Surely giving everyone access could and would increase revenue via people like me sitting down to watch an old movie. They have the system upside down. They have turned off their revenue tap. This is where they should be taking a lesson from iTunes. You can download whatever you like on demand for a rental fee. I’m really flummoxed by this. I think it is currently the worst media strategy in Australia by any company.

The NBN will hurt their business:

The imminent National Broad Band Network in Australia (NBN) is very bad news for Foxtel. It is basically putting the power of HD web live stream in every home. All that needs to happen is an on demand web enabled competitor to arrive and any one with half a clue will turn off their Foxtel. Not to mention the fact that Youtube HD will become a seriously viable TV option. (If you haven’t lately, you should check out the Youtube Movies, Youtube live Concerts and Documentary’s section – it’s growing daily as are brand content channels – no prizes for guessing their strategy is to win the screen in every lounge room).

Apple Television in coming:

It was reported that Steve Jobs last great disruption was coming to Television with the Apple TV. Not the Current Apple TV box, but  fully fledged in home Television screen connected to the web with levels of wizardry we can only imagine. One thing we don’t have to imagine is the depth of content that will be available from it’s existing iTunes store. All on demand, up to date and without subscription fees. When this comes – and it will, I am certain TV will never be the same again…. and Foxtel will be very model T Ford.

Connected TV is rapidly encroaching on Foxtel:

Foxtel is all about being connected to narrow cast content. Now that all TV’s sold are web enabled, we have access to everything we could imagine – Free. It’s a pretty compelling price point. The really important thing we must remember is that the price of technology is dropping. A connected Plasma 42″ TV is now as little as $500 to buy. With the user interface improving rapidly and many US streaming players arriving shortly (Hulu, Netflix, Startup XYZ) there is no space for the ‘monopoly like’ behaviour or pricing. For Newscorp it is newspapers all over again.

Users must pay for unwanted (unwatched) content:

The idea of having to buy packages is archaic. The idea of ‘Packages’ is a supply centric mantra from a time when the factory called the shots – much like travel agents did in the 1980′. But we now live in a user decides, mashup, self design commercial society. The idea that we can’t pay for the exact channels we choose (with volume discounts of course) is not design for users, just the owners. people don’t watch sport. They watch football, or boxing or surfing. people have specific needs, not generic ones. BBC viewers are different to Fox news viewers, so why treat them them same and ‘bundle them up? ‘ It’s an old method which is quite simply broken.

They’ve thrown their opportunity to be ‘platform oriented’:

Foxtel had their chance to own the distribution point of content on demand in Australian homes, and they let it go. They have tubes going into 35% of homes and every Foxtel discussion I have with anyone these days is around how poor the value equation is, and how they are poised to seek alternatives which they know are emerging. Their old world mentality is much like th music industry who were in love with their system, and not their customers. And this will be their downfall.

What Foxtel must do to survive:

Everything above and more.

But I honestly think it is too late. They may still exist, only via exclusive content like global sports properties. They’ve missed their chance and I have no doubt that disruptive internet technology will do to them the same thing it has done to many industry stalwarts. The most interesting fact is that, although I’m calling their game as over, the opportunity for startups in the space is still alive and kicking, which is ironic. It comes down to one basic fact, that companies who feed off legacy infrastructure almost always lose.