Award Winning Blog

Friday, January 15, 2010

Disintermediation on Steroids?

Technological and marketplace convergence, leading to an IP-centric infrastructure, has the potential to eliminate the middleman--disintermediation in the vernacular. We have begun to see this outcome at the margin as some cable television subscribers terminate their video subscription while retaining their broadband access. My nomadic students have little use of "appointment television," i.e., scheduled broadcasts of content. But they increasingly see little value in having the subscriber right of access to particular content. They have every expectation that the content source will make it available for streaming access, e.g., vbia Hulu, or that someone will illegally make the content readily available.

So who needs cable when consumers have little use for schedules or certain access? Comcast and others recognize the need to accommodate consumers' expectation that if they pay for access it better be available just about any time, via any device. Content distributors and sources balk at accommodating via any format, because of the risk of piracy.

Recently television broadcasters' spectrum has been targeted as a potential source for more mobile wireless bandwidth. In light of the fact that only 9% of the television viewing public relies on the free to air source the spectrum may be in play. If so, would local broadcasters suffer disintermediation, because the networks would not need them to reach consumers, or would local broadcasters strike deals with ISPs and establish their own web sources of content?

One should never underestimate the power of incumbency and efforts by incumbents to safeguard their intermediary status. The National Association of Broadcasters has provided local broadcasters with a public service announcement that emphasizes "free" and "local." Never mind that 91% of the audience rely on a multinational intermediary.


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