Over the Top (OTT) Video Problem is Urban Myth

I have been writing about bandwidth metering and exafloods for awhile.  Last week I read this article on Bloomberg.  It had been tweeted and shared a few times.  The article is about Time-Warner Cable considering putting usage caps on their broadband customer connections.  It has an interesting quote from CEO Glen Britt who said “Moving from a flat fee to consumption-based billing will likely allow consumers who use the Internet for just e-mail and basic searches to pay less.”

Here is a link to article in which News Corp CEO Chase Carey advocates for an additional charge to programmers for iPad streaming “I think the consumer is willing to pay fair value for a good experience…

I am not sure there is an over the top (OTT) video problem.  Blasphemy!  I just wrote it and I am now awaiting the hate mail.  I must be a crazy person because everyone knows there is a huge OTT video problem.  It is so obvious.  No brain power required.  Even a sixth grader using an iPad knows what pixelization is and that is clearly a symptom of OTT video congestion.  Correct?  We are all sufferers of the OTT curse on a daily basis.  Correct?  I am not so sure.  If there is such a huge OTT problem, why is the silence deafening when it comes to complaints?

At first I thought I was ignorant because I have been reading and hearing about the OTT problem for what seems like years.  There are all sorts of corporate white papers and research reports on the OTT problem.  Sell side research on Wall Street is full of OTT reports and references as the basis for buying all sorts of video, media and networking stock baskets.  If this is such a well known problem, why is no one complaining?  If it is such a threat to everyone’s business, where are the complaints?  If the internet is breaking due to OTT congestion, where are the complaints?

I used Google and Bing, but choose any search you want and just run a bunch searches on “OTT video,” “OTT video complaints, “over the top video” any term you like and you will find the problem is clearly identified and articulated by the analysts, but not so well be the service providers and users.  I know, it is strange, it is weird, but that does not preclude the existence of the problem.

I think the problem that OTT video is causing has very little to do with the network and all the networkers lining up to solve the OTT problem are going to find there is not much a of problem to solve.  My hypothesis is the problem is (1) access to content and (2) the chain of commerce.  Those are the real problems and I am not yet convinced that a bunch of network infrastructure companies are going to benefit as if this was some sort of DOCSIS 2.0 / xDSL / FTTH broadband build out redux from the last decade.

There are clearly long form/big data content stresses in the network, but I do not think that there is a lot of value to be had in thinking that this is a network problem.  I think those stresses are a data center (DC) problem with the two most important elements being the compute point and storage point.

When I read all the comments about bandwidth metering and up selling higher connection rates for high traffic consumers it tells me the network is not going to break, but rather service providers want to find ways to boost ARPU.  When I think about the all the content migrating from old form media to digital, I read storage and compute – not networking.  The evolution to digital media is really the shortening of the chain of commerce.  I wrote about that a few weeks ago, but if you want to start at the beginning you must start with Braudel.   If you do not want to read volume two, The Wheels of Commerce, then here are three quotes that frame what the internet and digital media revolution has produced, except Braudel wrote these quotes about long distance sea trade:

One’s impression then…is that there were always sectors in economic life where high profits could be made but that these sectors varied.  Every time one of these shifts occurred, under the pressure of economic developments, capital was quick to seek them out, to move into the new sector and prosper…” [see Braudel, The Wheels of Commerce, page 432].

Long-distance trade provides an interesting base for contrasting the evolution from a push to a pull economic model or what many call the digital disintermediation revolution.  “Long distance trade certainly made super profits [like the music industry in the 1970s and 1980s]: it was after all based on the price difference between two markets very far apart, with supply and demand in complete ignorance of each other and brought into contact only by the activities of middleman.  There could only have been a competitive market if there had been plenty of separate and independent middlemen.  If, in the fullness of time competition did appear, if super-profits vanished from one line, it was always possible to find them again on another route with different commodities.” [see Braudel, The Wheels of Commerce, page 405].  Braudel’s observation that super profits between supply and demand occurring over a great distance was the product of information ignorance, implies that the internet and emerging pull model will couple geographic markets and thus shorten the information gap.  Supply and demand will be closely linked and large variations of price will be limited as global consumers will have relevant, if not near real time, market data.

One’s impression then (since in view of paucity of evidence, impressions are all we have) is that there were always sectors in economic life where high profits could be made but that these sectors varied.  Every time one of these shifts occurred, under the pressure of economic developments, capital was quick to seek them out, to move into the new sector and prosper.  Note as a rule it had not precipitated such shifts,  This differential geography of profit is key to short-term fluctuations of capitalism, as it veered between the Levant, America, the East Indes, China the slave trade, etc., or between trade, banking, industry or land.” [see Braudel, The Wheels of Commerce, page 432].

It seems everyday there is another news article about how service providers are monetizing the pipe.  That hyperlink leads to a blog post about new pricing plans for VZ Wireless in which there is a surcharge for tethering.  I think if there was a real OTT problem, then we would be hearing the complaints.  The complaints I am reading and hearing are about people wanting to get paid.  That is a very different argument than the video killed the network song.

From an access point perspective, I think the evolution from the STB to some sort of hybrid femto cell / network access point with localized meshed wifi is far more interesting conversation than a Netflix problem.


* It is all about the network stupid, because it is all about compute. *

 ** Comments are always welcome in the comments section or in private.  Just hover over the Gravatar image and click for email. **

4 thoughts on “Over the Top (OTT) Video Problem is Urban Myth

  1. CONTENT IS THE KING… this statement is very true much beyond doubt. In the age of convergence, where diversified content – information and entertainment, you name it, on the diverse platforms. Welcome, the Over-the-top services or simply OTT, where it is gaming, Videos or movies on Demand, TV-Commerce or VOIP services. The logic is simple….irrespective of your device, TV or computer or gaming console or your mobile, you can enjoy viewing all of the above OTT services without any hassle, thanks to the open source network like internet.
    Though the percentage of population who got used to OTT services are still very less when compared to IPTV, as per Informa Media & Telecoms predicts of some 380 million globally to go for OTT services. The number seems promising. The future viewing is slowly turning towards OTT services.

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