Digital Video and Voice - Forget About It!

A Once & Future Killer App

One of the worst punishments man can suffer is isolation from others. The sound of another human voice is vital to the human experience.

In March 1876, Alexander Graham Bell and his assistant famously and successfully transformed spoken voice sound waves into electric analog signals to enable voice communication over distances. His "telephone" innovation, patented in that year, proved a social revolution.

The term "killer application," or "killer app" for short, means a "technological innovation that has a transformative impact on society." One would have to call Bell's telephone the quintessential killer app, and so it remains.

Telephone innovations progressed over the next one hundred years or so, until a truly dramatic innovation occurred with the adaptation of traditional analog wave transmission services to the digital realities of the internet world.

VOIP is dramatically innovative in at least two ways.

First, because VOIP is a digital application being provided over the public internet, it provides a competitive alternative to voice communication services provided by a telecom company over proprietary telephone company lines, opening up competitive options that never existed before, which lowers prices and increases service options.

Second, because VOIP is not an analog but a digital application, it opens up an array of accompanying add-on services - not available with traditional analog telephony, such as getting voice mails as "WAV" files right there along with your emails.

While VOIP turns any laptop into a "soft" telephone, its sound quality still depends on network-provided "quality of service" or "QOS" to prevent dropped packets that cause the voice signal to become choppy. VOIP is a killer app, but is still coming of age and is not widely adopted yet.

A Second Killer App

Transmission of video content over distances is another killer app of modern life. While the actual moment of the invention of television is a far less documented moment than Bell’s phone call to his assistant, few can argue that television has transformed our lives.

Extending television content services to consumers and households has differed from telephone services in several ways. First, the primary television network was wireless. Rather than telephone lines extended to households and businesses to connect telephones at the ends, the television network was comprised a broadcast network of towers and stations, and wireless receivers at the ends - television sets or "TVs" for short.

Second, from the beginning, TV sets were far more complex and expensive devices than telephones. And while telephones, at least until the past few decades, were leased by the telephone company, TVs have always been end devices that were purchased by users.

Third, voice content is user-created, while video content was "produced" by professionals and either broadcast "live" or stored on a storage medium and broadcast later.

The first major video innovation was to finance content with commercial sponsors, who were allowed to insert advertisements, which came to be known as "commercials," directly into the video programs. This ad-supported content provisioning model allowed content to be broadcast over-the-air for "free" to users who had invested in a TV set.

The advent of cable networks, originally intended to provide content services to areas that had poor over-the-air reception of the video signal, changed things dramatically.

Cable providers grew into large video distribution companies that generated significant revenue from selling bundled video content.

In addition, video became available with the invention of analog VHS video tape players and cassette, which could be purchased, but more often were rented. While digital innovation substituted DVDs for VHS tapes, the business model stayed the same until recently.

While professionally produced video over a cable service remains the norm, the rise of broadband internet has made available new services for accessing video content, including streaming video from companies like Netflix, peer-to-peer video content using technology from BitTorrent, and user-produced video content from YouTube.

The Triple Play

On the backs of their respective killer apps and slim to no competition in local and regional markets, telephone companies and cable MSOs grew into very large, very successful business ventures providing access and content services over their privately-owned networks. In many, if not most markets, telephone and cable companies offered core services under a monopoly franchise.

When the internet gained sufficient interest to look like it would be around for a while, first the cable companies, then the telephone companies moved in to provide internet access services that were a step ahead of dial-up internet access in terms of both speed and quality.

High-speed internet service, or "broadband" as it came to be known, was until recently loosely defined as "service above 200 Kbs in 'throughput' speed." Of course, the definition of broadband is in the eye of the beholder, and increasingly "broadband" is viewed both domestically and internationally as more in the range of 1.5 - 10 Mbs. In more advanced countries, even these speeds are viewed as relatively slow.

Cable companies were first to offer broadband service over their coaxial cable networks, starting in the mid-late 1990s. Telephone companies were late to the game, providing broadband service over their copper wires with a technology they termed "digital subscriber line" or "DSL." To win market share away from their cable competitors, telephone companies offered service that was a little slower, but much less expensive. The strategy worked and now cable and telephone companies together account for nearly all of the residential broadband service in the United States.

Broadband has proven a boon for telephone and cable companies for two reasons.

First, as their base level offerings come under more competition and revenues decline, broadband revenue has provided high-margin revenues for both telephone and cable companies.

Second, offering broadband to their customer base provided cable companies the ability to enter their telephone competitor's space with a competing voice product - VOIP.

Having gained some experience with broadband, cable companies recognized that they could provide digital VOIP and offer their customers not only video and broadband, but also voice, for a bundled set of services that came to be called the "Triple Play."

In response, the telephone companies soon began to partner with satellite dish networks in order to match the cable Triple Play bundle. Over time, telecom giant Verizon started offering a Triple Play bundle where its fiber-to-the-home (FTTH) network had been deployed, and as it became capable, ATT did the same under its U-verse label in select markets.

Broadband as the Enabler

When it comes to new digital innovations in video and voice, broadband is a required element to be able to receive such service.

The broadband internet offers consumers an alternate channel to gain access to new voice and video service options.

On the voice side, besides the cable company VOIP offer, numerous smaller providers are active. Perhaps the most innovative VOIP application is Skype, which began as a simple software application that could be downloaded to a PC or laptop to enable free VOIP, but both parties to a call had to use the application.

The original free Skype service that turned laptops into soft phones was soon joined by SkypeIn and SkypeOut VOIP service that allowed Skype users to make and receive calls to and from regular telephone users for a modest fee. These services have seen strong acceptance for international calls especially, given the high rates prevalent for such calls.

On the video side, progress is somewhat slower, as professionally produced cable TV content must be acquired under license before being transmitted over the internet. Netflix has begun to offer VoD movies, and BlockBuster has followed suit. YouTube videos are becoming ever more common on websites, and are especially in evidence during the 2008 political season.

As broadband penetration grows, expect both VOIP and VoD options to proliferate, making broadband an even more worthwhile service offer.

ATTRIBUTION REQUIREMENT - The reader is encouraged to link to this post and to share this material, with the understanding that they provide an attribution to MetroNetIQ and share any alterations with MetroNetIQ.

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.