How is a television like a fax machine? They are both obsolete.
Remember a time when nobody had a fax machine? Then suddenly everybody had a fax machine. And now nobody again has a fax machine. What would have previously come by fax today is a PDF attachment to an e-mail or text or to one of a number of messaging services – wireless internet speed test. Well the same transformation is happening to traditional television and for generally similar reasons. And just as fax machines seemed to disappear in just a few years, I’ll be surprised if broadcast TV in the U.S. survives another decade.
Technology transformations are like murders: they require motive, method, and opportunity. In the case of the fax machine, everyone already had a phone line (that’s opportunity), my reader June Dilevsky’s father invented the modern digital fax machine for his startup that failed and so the startup was eventually acquired by Ricoh (that’s method), and the result was unattended business communication that was faster and cheaper than the Post Office while still creating a paper trail (that’s motive internet speed test online).
Every business got a fax machine when the cost of not having a fax machine came to exceed the cost of having one. Part of that was driven by the declining cost of fax machines, themselves, part was driven by peer pressure (What, you don’t have a fax machine???) and the rest was just the relentless acceleration of business.
I got my first home fax machine on January 28, 1986 — the day the Space Shuttle Challenger exploded. Given my relatively slow technology assimilation (my present notebook is a MacBook Pro from 2010) I can argue that date was the true beginning of the end for faxes.
The beginning of the end, you see, is also the end of the beginning.
There are unintended consequences of such revolutions. The fax machine boom, for example, led to huge growth in the number of telephone area codes as demand for fax lines ran phone companies completely out of local numbers. So we added new area codes and now some of those codes are disappearing again as we give up fax lines – free speed test, give up land lines in general (I don’t have one), and even the massive growth of mobile numbers hasn’t been quite able to take up the slack.
Now let’s apply the same principles to television. At first there was broadcast TV, which was itself an outgrowth of radio. TV was radio with pictures and became a big business starting at the end of the 1940s. By the 1970s we added Cable TV, which grew out of a failure of the broadcast model. Rural communities didn’t have high enough viewer density to support their own TV stations because the TV infrastructure and program pipeline cost about 10 times more than radio. So where I could work back in 1973 at WWST-AM radio in Wooster, Ohio with its mighty 1000 daytime watts (32 watts after sunset) and audience of at most 40,000 listeners, it probably took 400,000 potential viewers to support a broadcast TV station. Cable TV began as a big community TV antenna on some local hill and we paid a few dollars per month to the antenna operator to bring us the same signal we could have got for free had we lived a few miles closer to the big city or atop a hill.
It didn’t happen right away, but cable TV eventually enabled non-broadcast dedicated cable channels like CNN and home shopping that made possible the next phase of the TV revolution. Where I grew up with three broadcast TV channels, that analog TV cable could carry at least 25 and sometimes a many as 40 different channels that what is my internet speed— because their electrons didn’t fly through the air — were much less subject to regulation by the Federal Communications Commission (FCC). Swearing and nudity reached American TV screens by cable. So did religion and that other religion — binged sports. And in a chicken-and-egg problem they resolved in a whole new way, cable carriers found that the more they paid cable channels to join their systems, the more they could charge viewers to access those systems.
It became more important for their image on Wall Street for cable companies to add new subscribers (the companies came to be valued on a per-subscriber basis) than to make money from those subscribers. So content costs grew and grew, sending cable companies looking for new profit centers.
Along came the Internet. Becoming Internet Service Providers (ISPs) on top of offering TV channels gave cable operators a whole new way to make money. And this time they didn’t have to share any of their subscription fees with the providers of Internet content. Ultimately the Internet actually became the cable business as dozens more cable channels were added and video programming costs grew to consume all subscriber revenue. At that moment (this was in the early 2000s) cable TV carriers that offered Internet service had actually turned into ISPs that offered TV service. All their profit was on the Internet side. Or on the TV content side for those ISPs that actually produced shows. That’s why Comcast, America’s largest cable carrier and ISP, bought NBC/Universal so it would be effectively paying itself for content, as well as being paid for that content by Comcast’s cable TV rivals.
computer speed test Can you see the evolution of content and carriage that is happening here? It became obvious to me that cable TV carriers and even telephone companies were becoming schleppers of bits. And bits — unlike TV shows and movies — were a commodity, with no electron worth more than any other. In time the ISPs would become content agnostic and the content providers would eventually do business directly with consumers. I wrote this for the first time right here back in 2004 when I thought it would take at most a decade to happen.
That was 15 years ago and we’re only just now getting close to realizing that dream (or nightmare, depending on where you live in the video ecosystem). Netflix and its imitators took 20 years to subvert both the broadcast and cable TV models. But now the process is really starting to wind-up like an inward-turning spiral (or a flushing toilet).
Here is what will happen in the next five years for what we think of as television. Right now we are in a probably unsustainable growth of TV production. Netflix, Disney (Hulu), Apple, AT&T, Comcast and a dozen other companies are working on original content, adding $ 20 billion per year to a production industry that was already wealthy at $ 10 billion. Each of these over-the-top (OTT) networks will go direct to consumers and some will also have commercials. Most new OTT networks will fail, eventually returning the production ecosystem to something more normal after the current bubble pops. But their demand for more bandwidth will never decline.
What’s missing here are the traditional basic cable channels. What will happen with them? And what of the broadcast networks, themselves – how to test internet speed? That all depends on 5G.
5G wireless networking, as I’ve written here before, has pretty much nothing to do with mobile phones. It has to do with replacing every other kind of data network with 5G wireless. No more land lines, no more cable systems, no more wires. Going all-wireless almost completely eliminates customer-facing labor. No more guy with a tool belt to keep you waiting for service. No more truck rolls.
There will be 5G and there will be content, that’s all. Content can mean a phone call or a movie, a game, or anything else that involves electrons in motion. And given that we’ll all have voracious and completely different demands for high-resolution content, 5G will suck-up all available bandwidth and then some.
Legacy broadcast license holders like broadcast TV and radio stations will sell their airspace to 5G carriers and retire to Florida. They’ll get offers they can’t refuse.
Linear programming may only survive for sports and gambling, which might become more important than ever as a result.
Cable TV packages will fall apart with every network fighting for itself in an al la carte programming world. I’m not saying TV will get better, but it will become even more varied, which is probably good. And in a content market that is suddenly global, even the tiniest channel will have a chance to thrive if it can find and please its viewers. Just look at YouTube for that.
And like the nofax-fax-nofax transition, this endgame process will be mainly driven by economics against tradition and emotion. There’s nothing sacrosanct about a broadcast network paradigm that we’ve been riding for a century. This too shall pass.