The Progress & Freedom Foundation Blog

* I heard several people mention how "old convergence" was giving way to "new convergence." For example, Virginia Ruesterholz, President of Verizon Telecom, argued that convergence used to be about the "triple play" (of voice, video and data in one package) and that it was viewed largely as a way of saving money. But now it's about being able to move content over multiple platforms, regardless of where the consumer might be. Glenn A. Britt, President and CEO of Time Warner Cable agreed saying that the future is about providing service across all multiple platforms and allowing customers to tap into their content however they want, wherever they are.

* There was much discussion about what factors will help facilitate greater consumer connectivity and device convergence. Giel Rutten of NXP Seniconductors argued that three things were crucial: killer applications, interoperability and the right price points. Several panelists agreed. Mary Francia of Phillips argued that we are seeing more divergence rather than convergence in the current content marketplace because interoperability is not where is should be. Consumers are confused by lack of interoperability between devices. But Scott Smyers of Sony Electronics said that the content industry now understands the importance of playing ball with the CE industry and will find more ways to sell content. Interoperability will follow as companies cooperate and learn to live with new realities, he said. Smyers also argued no one company will have a dominant role in our modern media ecosystem precisely because consumer place such a premium on interoperability of multiple devices and types of content. If networks are not interoperable, consumers will rebel he said. But, ironically, he used the current-generation DVD as an example of the importance of cooperation and successful interoperability even though his company is currently in a major format war over next-generation DVD content!

* Several panelists I heard from during the day commented on what a good sign it was that so many major content creators and companies where in attendance at CES. Rishi Malhotra of HBO OnDemand said this proves that content companies are looking to cut deals and move content on multiple platforms. In other words, they are looking to adopt new business models. Adam Shaw of the NFL Network argued that content creators should not fear new platforms or business models because there's just as good of a chance that the new tools will help as hurt them. That is, while some customers or revenue streams might be lost, other new ones will be gained or created. He used the example of PVRs, which he said originally were only viewed as just a threat, but now are increasingly being viewed as an opportunity to broaden audiences. Albert Cheng of ABC-Disney agreed and said that interactive and online offerings are helping broaden Disney's customer / revenue base since it's opening up new windows for consumer consumption. He noted that ABC's move to release more of its content online has been a real success for the company so far.

* "Search and discovery" of content is still much easier on PCs than it is on televisions, some panelists argued. Ty Ahmad-Taylor, formerly of Comcast, argued that, for years, people have been trying to figure out how to bring the mouse-and-keyboard experience to television but failing. If the promise of complete personalization / user customization is too develop, we need better tools to allow viewers to search and discover the programming they really desire. Ryan O'Hara of the TV Guide Channel agreed but said that his company was already offering that tool! But others during the day wondered how sophisticated of an experience that TV consumers are really looking for. Cox Communications President Patrick J. Esser, for example, stressed the importance of keeping the media experience simple saying "consumers want zero hassles" when it comes to television.

* There were debates about what would be the next major revolution in the media / CE marketplace. Stephen DiFranco of AMD argued that the iPod is really the ONLY successful convergence device today on the marketplace today. And he said it was successful because it was an evolution of a previously known product concept (the "Walkman"), but that the iPod made the experience much better. He and others argued that companies often spend too much time trying to revolutionize rather than "evolution-ize" existing experiences and devices. J.D. Zeeman of IBM responded that technological revolutions are rarely planned and that's why they are so disruptive. Charles Ergen, the Chairman and CEO of EchoStar Communications argued that some new platform is likely to emerge on the video delivery front over the next 3-5 years that will shake up the current marketplace. Interestingly, Ergen was not very optimistic about his own industry's (DBS) chances of holding on to a lot of the customer base in the new environment. Igor Taber of Intel said that wireless broadband has to happen if the promise of a fully connected consumer is to be fulfilled, but the technology is just not there yet.

* Many panelists spoke of the need for greater simplicity in terms of how video content is packaged and marketed. Scott Smyers of Sony Electronic noted that there are still a lot of people not using broadband or who are satisfied with limited computing / CE devices and that many of them just don't want to deal with all this new stuff because they still feel it is too complicated. Stephen Condon (not sure who he was with) agreed that the industry needs to make things a lot easier, but noted that the younger generation's intimacy with new digital devices will solve a lot of these problems over time. (I certainly agree with that).

* Figuring out how to reward content creators without alienating content consumers was a major theme raised by several panelists. Stephen DiFranco of chip maker AMD argued that consumers don't like paying for content; they want other models (primarily advertising) to pay for the cost of content creation). Moreover, DiFranco and other panelists argued that consumers only want to buy the pieces of content they want (ex: tunes, not entire albums). Ryan O'Hara of TV Guide Network wondered whether major content developers would trust the Web when it came to distributing all their content since walled garden models were dying and giving way to more free-wheeling environments. Google-like ad models might not be enough to encourage people to put more content online, someone else said. Cox Communications President Patrick J. Esser argued that we still need to have secure economic models to reward content creators and said that this is why traditional TV distribution platforms will remain. Cable and satellite platforms, he argued, can guarantee a secure multicast environment, whereas the Net cannot. But others during the day rightly pointed out that a lot of mainstream media companies ARE putting there content online with increasing regularity and using a variety of business models to generate revenue from that content.

* Stephen DiFranco of AMD argued that quest for media personalization is proving elusive because most of our media and communications devices are not "self-aware" in that they cannot read our preferences properly. He said that devices need to be able to gauge user preferences and immediately cater to users' needs / desires. I think he's right in one sense, but as a random stranger in the crowd whispered to me in response: "It sounds a bit creepy to me." Indeed, it conjures up images of HAL in "2001: A Space Odyssey" if our media devices become too self-aware.

* Gary Shapiro, the head of the CEA, asked the panel of media industry heavyweights what one public policy change they'd like to see in 2007. Just about everybody used the term "level playing field" in their answers but they all defined the playing field differently! But Charlie Ergen of EchoStar said he wanted the freedom to merge with DirecTV at some point since everyone else is being allowed to merge. (You will recall that his previous effort to merge with DirecTV was rejected by the FCC). David Barrett, President and CEO of Hearst-Argyle Television wanted Congress or the FCC to relax media ownership rules that constrain broadcasters from merging with newspapers. Patrick Esser of Cox wanted retransmission consent rules changed and wanted Congress to avoid mandating Net neutrality.

* Charlie Ergen of EchoStar predicted that the day would come (and soon) where all satellite providers merged, all telcos merged and all cable guys merged. Competition in this world would be intense in the INTER-modal sense, but largely non-existent in an INTRA-modal sense.

(More tomorrow. There's a Net neutrality panel I plan on covering among others).