I work for one of the big cable companies, and the internal culture seems to be "innovate, but slowly and carefully". Everybody is fully aware of the threat Netflix et al pose to the incumbents, but progress is slow. So many of our resources are spent just trying to minimise costs and maximise revenues, without really changing the game.
Comcast, for all their flaws, do seem to really care about innovation. I watched a video about the development of Xfinity X2, and their R&D department looks like it has insane resources.
It's a very interesting space to be in, on all sides.
To what end though? Their new X2 cable boxes are slower than ten year old ones, and are just catching up with the interfaces of Tivo and Roku from five years ago.
Who really wants "innovation" from their cable provider? Certainly not the unsatisfied customers that are leaving in droves.
What incentive does a cable provider have to progress and become a dumb pipe? The only value Comcast brings is owning the license to rent a wire that brings Internet signals to your house. After that, the content creators/curators can take care of the rest. Of course, being a dump pipe means less profitability, but it should have already been treated like a utility in the first place, like in Chattanooga, Tennessee.
It's a huge, profitable, conflict of interest to have your content provider also be the internet signal provider to your home, and I don't see them wanting to innovate that away. If anything, their R&D is probably in figuring out how to box out movie studios and other content providers like Netflix/Amazon Prime to make their own offerings more attractive.
> it should have already been treated like a utility in the first place
I worked for Comcast circa 2003, and it was the company's official policy that its broadband services were for "entertainment only", to skirt around regulatory issues and downtime liability. While it was a dubious claim even then, it's farcical to call broadband internet anything but a utility in 2014.
"Of course, being a dumb pipe means less profitability"
If you have a strong, legally enforced monopoly, I'm not seeing this.
Is walmart really less profitable than mom -n- pop main street? If they aren't, why did mom -n- pop main street all go out of business when walmart moved in? The future seems to be big dumb profitable pipes and much less profitable content sources.
I think the cable companies right now enjoy a public perception that they are not just providing a dumb pipe, but they are adding value with the DVRs and HD, so they don't seem like the gas or electric or water provider. If they come to be viewed as infrastructure, then there might be a push to make them into utilities and regulate their prices, since they have a monopoly.
Additionally, offering different tiers and mixes of products allows business to create more opportunities for profit margin, but simplifying their business to just X amount of download bandwidth and Y amount of upload bandwidth for a flat price will remove their ability to obfuscate the value of what people buy. And they will have to work harder to justify increasing prices, whereas now, they can just blame it on the media companies, etc.
Go to an upscale A/V audiophile class store and talk to a salesperson for awhile. They'll be a lot of green ink on CDs and thousand dollar speaker cable talk, but they'll also know at least some analog EE stuff, maybe not much, but more than their average customers. The sales guy almost certainly understands the features and UI and can teach you if you ask or put on a rather impressive demonstration and describe at length how to connect components together (with the hope of addon sales obviously). That is not a dumb pipe.
Then go to walmart and ask any drone about that surround sound amp on the shelf. Good luck getting more than "I donno man, all I do is match up the UPC on the box with the UPC on the price tag" Now that, is a dumb pipe.
We can do this all day with house paint, furniture, board games, firearms, camp gear, movies, video games, clothes, I think the only things where they're keeping up with the competition is the pharmacy, which is solely due to legal licensing stuff, and food, where the standard supermarket drone (I was one in high school) knows absolutely nothing about food or cooking.
Another fun analogy in the famous HN car analogy theme, is a non-dumb pipe car dealership would have salespeople who can answer any FAQ or weird question about a car. Oh thats how you pair your bluetooth phone to the radio. The spark plugs need changing every 50K miles. It runs just fine on 87 octane gas although the more expensive stuff will burn just as well. A dumb pipe of a car dealership would be you walk up to a car on the lot, flag down an employee, ask them if the car has four wheels, and they're all "I donno man, I just park them in the correct spot as fast as I can and thats all I know about them."
For things like detergent, motor oil, and some categories of food, Wal-mart offers zero differentiation and lower prices. i really can't think of one thing where I think "Oh, I have to go to Wal-mart for that." The only reason is efficiency, and hence price.
I don't understand your assertion. Bodega vs. Stop & Shop vs. Wal-Mart to buy Tide detergent. Wal-Mart adds nothing to the product, but delivers it more efficiently. That is the definition of a "dumb pipe." Can you explain how that's not a dumb pipe?
Using massive scale and buying power to influence the price of a produce is adding something to the product. Can your electric company do that? No, they only delivery the product at it's market value.
Also, a pipe doesn't care what travels through it; does Wal-Mart sell every retail product in existence?
"Also, a pipe doesn't care what travels through it; does Wal-Mart sell every retail product in existence?"
None of the employees you'll ever interact with, with the possible exception of the pharmacist and optician, will know anything at all about the boxes they put on the shelves. Thats a dumb pipe.
None of the consumers know or care about how smart the HVAC thermostat is, or how JIT the truck drivers drop off the next pallet of kitty litter 3 hours before the store runs out of stock.
Its not an applied technology question. Pipe manufacturing can be fairly technologically advanced, perhaps for aerospace work or car brake systems. Xray inspection of welds and fittings, seamless exotic metal alloys. Highly trained and experienced installers and quality assurance teams. Advanced 3-d cad to bend and place the pipe just so. None the less, its still fundamentally just a dumb pipe, stuff pours in one end of the pipe, then it comes out the other end of the pipe.
Lobbying? There are probably a lot of entrenched interests that don't want the ISP/TV provider monopoly to go away. I guess for TV, there are actually 3 to 4 options available for most people (Dish Network/DirectTV/Cable/Fiber). But for broadband, there is usually only 1 option, or 2 if you're lucky, and they also happen to be selling you content.
Nice to hear from a dissent perspective on this matter. Though it certainly begs the question; in what way is Comcast being innovative? Xfinity X2 seems to be imitating more than anything. I would not be so critical if it weren't for their obvious disinterest of innovation.
Comcast, for all their flaws, do seem to really care about innovation. I watched a video about the development of Xfinity X2, and their R&D department looks like it has insane resources.
It's a very interesting space to be in, on all sides.