Bill Gurley: Will the cable providers “break” the IP network?

Bill Gurley, of Benchmark Capital, provides some interesting insights on the future of the Internet and major issues of the next 10 years. It’s a good article, covering several different topics, but one thing that really stands out is the potential of the cable companies “breaking” the net as we know it. The cable providers dominate broadband in the US. Bill speculates that they might find it in their best interest to limit and control what users can do with their Internet connection:

One of the most strategically interesting issues of the next 10 years will be the cable companies’ desire to “break” the IP network in an effort to protect their video (and potentially voice) revenue streams.

…It is quite easy for a cable company to insert a half-second delay in its IP network. This delay will go unnoticed by standard Web users but would quite negatively impact the quality of after-market VoIP clients like Skype and Vonage. This would allow the cable company to “charge” for its own voice services. In other words, customers would pay extra to have their IP network back.

That’s pretty scary stuff. Cable companies “breaking” Skype and open-SIP VoIP to make their own VoIP products look better. I wouldn’t put it past them.

On the video front, the cable companies have similar opportunities to offer priorities to “sanctioned” IP video streams and intentionally reduce the quality of streams to which the cable provider has no financial interest.

…What’s more, over the past 12 months, Comcast has terminated the accounts of users who use more bandwidth than the company prefers. Lackluster support of the “open cable” initiative over the years offers further proof that cable companies want as much control over the user experience as possible.

The question is, will users let them get away with it. One wonders. Considering that most users think the Internet is web surfing and email, they just might.

I like Bill a lot. He is a smart guy and I encourage you to read the whole article.

1 comment for “Bill Gurley: Will the cable providers “break” the IP network?

  1. Hey David,
    I read the article a while ago. It makes some interesting predictions, and also gives another angle to comcast’s offer for disney. However I was wondering if a couple of emerging technologies were completely ignored in that analysis. WiMax and Power line internet, both can be potentialy challenging to Cable empire.
    Also, Bill predicted that Microsoft could be most under estimated company in the IP future. Although they have been investing in interactive television in the WebTV division, the work on DRM technologies does not seem to be a big advantage for them. Real and Apple have similar technologies, and if we are talking about next 10 yrs, there can be several more players.


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