It’s About the Bandwidth, Stupid

I was interested to read David Lewis’s posts on 4k (or Ultra High Definition – UHD) TV ( Briefly, UHD is a technology that expands the resolution of HD television from 1080 pixels to 4000. There are already  television sets on the market that display content at the new resolution, and Netflix in the US has already begun streaming UHD programming. Existing delivery systems, such as over-the-air broadcasting, cable, ADSL and DTH delivery are inadequate without so much compression that the viewer experience is compromised.4k TV may be a precursor to 8k TV or even 16k TV.

philip palmerThe fact is that there are now technologies offering consumers desired services that our existing infrastructures cannot deliver. The answer will not be to provide a degraded service to consumers, as fibre to the home can permit uncompressed delivery to consumers and businesses. In all likelihood, enhanced television will drive the extension of fibre to the premises much as the availability of American broadcasting channels drove the near universal adoption of cable a generation ago.

Until now, the legacy systems have been able to adapt to the digital revolution, and even copper wire has seen incredible gains in the delivery of bandwidth. It appears that the days of competing delivery technologies may be limited.

With the exception of high rise apartment buildings and office towers, it is unlikely that there will be more than one fibre pass along any right street or road. It is inconceivable that either shareholders or lenders will take the risk of duplicating fibre delivery. In effect, once fibre has been installed, and the becomes public aware of the video quality improvement made possible by fibre, one can expect competing legacy systems to die an inglorious death.

The policy implications of this are two-fold.

First, there will be no competition in the delivery of signals to the home. All delivery of signals to the home will be supplied by monopoly providers. As a result, there will be a need to ensure that regulation effectively safeguards consumer and business interests. In essence, whoever controls the final mile in the delivery of signals will be regulated as a public utility. Competition will be in content service offerings as opposed to transmission. This competition can only be sustained through wholesale access to fibre so that differentiated services and pricing can be offered to end-users.

Second, now that we can see that fibre is the only technology that can deliver content at a standard that will maximise the consumer experience, governments should focus on the extension of residential fibre just as government policies in past generations fostered the near universal electrical and television services. The existing federal government programs to extend 5Mbps service to rural and remote communities is simply unambitious in face to the demand that can be expected for premium quality video services: the need is not only for enhanced service to rural and remote communities, but universal enhanced services. Government can play a positive role in ensuring the attainment of that result.

While video entertainment services may be the driver of the adoption of fibre, I am sure that many new applications will ride in on the back of UHD TV, and this will drive innovation and economic growth in the next generation.

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