Capital Musings

Politics, Business, and Innovation

Category: Business (page 2 of 11)

Comcast and Time Warner deal anti-competitive?

We are inclined to oppose the Comcast bid for Time Warner, based on the following:

  1. This deal will give Comcast control of 75% of the market. Do the math: four-firm market share and Herfindahl Indices resulting from this deal will be blatantly anti-competitive.
  2. Comcast is one of the worst internet providers out there. Don’t be fooled by the fact that there are 14 ISPs. Most of those ISPs are regional. In many markets, fixed line is an oligopoly and often a duopoly. Google Fiber is only in a handful of markets.
  3. There is no economically reasonable alternative to landline internet. Want to cut the landline cord and use your mobile device as a modem? Your alternative is $50 per month for only 6GB of data.

Cord cutting a misnomer?

Pieces about cord cutters circulate from time to time in our changing information landscape. That phrase is a bit of a misnomer as it suggests a sort of eschatology for the cable companies.

Where are consumers ultimately getting their entertainment from? They might be cutting the cable TV, but people are generally tethered to some sort of broadband internet network. Often in the form of fibre optic, cell tower, or…cable. Who owns this infrastructure? You’re often just leaving one pipe to go to another another pipe. And if you use wireless, a great deal of the spectrum is owned by the same companies that own the pipes.

The switch to wireless makes for an interesting mental exercise. In terms of data cost, on a per gigabyte basis, it’s often a better deal to stay land-locked. You could stream hours of video on Verizon FiOS; but if you streamed it on Verizon LTE, you’d pay hundreds, if not thousands of dollars. So what do you do instead? Your FiOS connection eventually terminates in the form of a Wi-Fi router instead of an ethernet cord or coaxial cable.

Furthermore, free public Wi-Fi isn’t really free. Starbucks will eventually pass on the cost of providing free Wi-Fi to higher prices for your iced latte; though arguably they can capture more of the consumer surplus because of economies of scale. But the point is someone is still paying for the cord.

We live in a wonderful time of device diversity. The one thing people forget though is that what you paid for cable to empower your 52″ TV is now just being redirected to pay for Internet access for your Trinity of Devices, i.e. Phone, Tablet, & Computer. (Interestingly, the experience of filming for Streaming Internet is no different from filming for traditional media.)

Though there is some innovation happening. Netflix, which commands a gigantic portion of Internet traffic, now publishes an ISP index. Google has introduced fibre to Kansas City and is adding fibre to Austin. This should pressure what have been the descendants of the Baby Bells, which were essentially given de facto regional monopolies even after Ma Bell’s breakup.

And the line between network owner and content owner has become the thinnest since the pre-cable era. Who owns NBC? Comcast. Who is one of the most influential content creators in the industry? Netflix, which used to merely be an aggregator of content that could be acquired at a low marginal cost.

Regardless, I’d prefer this age of audience fragmentation—not just fragmentation demographically or psychographically, but also fragmentation by device. As Kevin Spacey’s speech at the Edinburgh Television Festival noted, content is becoming available where you want it, when you want it, and on any device you want it on. And that is truly a win not just for the consumer, but for the creatives in the new multi-device era.

How to reclaim our information

I have finally gotten around to reading Who Owns the Future? by Jaron Lanier. It is one of the most compelling treatises about the information age in quite some time. The basic thesis is we need to start reclaiming our information by getting remunerated for it. While his “space elevator pitch” requires an extensive redesign of cyberspace-as-we-know-it, for now, I have decided that the fastest way to begin is to take two small steps:

1) Control your own information by putting it on your own servers.

2) Ameliorate the effects of “Siren Servers” such as Facebook and Twitter by using them to redirect traffic to your own servers.

If the network effect-derived powers of the Siren Servers mean you cannot leave, you might as well figure out a way to partially monetize your own information.

Therefore, henceforth, the urtexts for all my public musings, serious or trivial, less than or greater than 140 characters, shall be housed here at And the goal of all posts on Siren Servers should be to funnel traffic from the Siren Servers to your own servers. Good luck.

Facebook IPO S-1 Filing First Look

Main Points
  • EPS 43 cents in 2011
  • Mark Zuckerberg owns 28.4%
  • Morgan Stanley is lead left
  • 2011 Revenue was $3.71bn
  • Raising $5.00bn (we believe this is a placeholder)

Link to S-1 Filing:

Trending: Facebook IPO Filing Next Week

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