Today, TV advertisers cannot measure the ROI on their investment in the same way digital advertisers can. The current TV advertising model is not sustainable, and will require the industry to adapt to methods used by digital advertisers.

As described in an earlier blog post, the TV industry in undergoing major changes. The business models behind its three main sources of revenue, subscriptions, advertising and license fees, are being disrupted. Up to this point, the focus of my blogs has mainly been on the changes in the subscription models driven by infrastructure competition and streaming providers, such as Netflix. We’re now starting to see the beginnings of a future business model where infrastructure owners embrace OTT as pioneered by my previous company Waoo!.

The other major source of the TV industry’s income, highly related to the subscription model, is advertising. Some would argue that the essence of the business has not changed since Bulova aired one of the first ads in the US in 1941. As an executive responsible for hundreds of millions in marketing investments, I have always felt ambivalent about TV advertising. On one hand, I know that it works but on the other we cannot track the ROI as directly as we can with our investments in digital advertisement.

The TV advertising model is fundamentally different than the digital advertising model, where ROI can be calculated on data from the individual user. I strongly believe that the TV advertising model must move in the same direction. It is unsustainable for an industry of $70B in the US alone, and in the era of big data and analytics, not to be based on direct metrics but on solely on (really sophisticated) indirect measure.  The drive for this change will come from various sides and is already underway.

Ultimately, for the future TV advertising model to work just like digital, it would require advertisers to know who watches what and when. This can be resolved by getting data from the STB (ideally with a personal profile) with solutions such as those provided by Rentrak. Additionally, the ads would need to be inserted via dynamic ad insertion which is being implemented in major cable networks in the US.

Now, it is going to take time to implement these changes, and as seen in the correlated model for the TV subscription business, the future might not be clean cut, but rather a mix of models. In other words, in the future TV advertising will not be a copy of digital business model.

At IDenTV, we believe that just knowing exactly when an ad is running – real –time – is a significant step towards the future of TV advertising. Numerous benefits will come from efficiently making real time advertising data and analytics available. First and foremost, all companies relying on manual logs will instead rely on a more accurate automated reporting, and with this information advertisers can run their attribution models quicker than ever before, leading to faster decision making about re-allocation and resulting in improved ROI on their media investment. Also, advertisers can now synchronize their messages on mobiles with the message broadcasted on TV also leading to an improved ROI.

As the business model for TV subscriptions has begun a major transformation, the TV advertising model will also change dramatically. Advertisers will demand more data and documentation on ROI on the direct effect of the $70B investment in TV advertising.

I just came across an insightful presentation from LUMA regarding the Future of TV. It describes the market and dynamics of the two TV business models: Traditional and Digital.I agree with LUMA that over time, the two models will consolidate but some interesting additions to the analysis could be done on the each side of the value chain. For example with an analysis of the impact of net neutrality. I believe this is one of the most critical factors in determining how the two business models will merge. Will there be some regulatory support of bundling distribution of TV and internet access or will TV and internet be served via a dumb pipe? 

Another issue related to the integration of the two business models, is about how the traditional TV advertising business is becoming more digital with, for example, Dynamic Ad Insertion. An equally interesting step in the direction of moving traditional TV closer towards digital, which also would have been interesting to read about in the presentation, is the development of technology to establish a better link between airtime investments and actions - a sort of CPA for traditional TV advertising. 

In any case, the presentation is excellent and I encourage you to flip through it.

Will good drone coverage be a requirement when choosing your future home?

Again and again, I hear that friends and family prioritize good internet coverage when deciding where to live. Internet access is like a utility. It has to be superfast and work perfectly all the time. So, internet access is becoming a fundamental requirement in choosing where we live. Now, do you think, in the future, it will be the same with drone coverage as for internet access today?

One of the great things about living in Silicon Valley is the amazing people and opportunities for inspiration. Last week, for example, I attended an outstanding presentation by David Roberts from Singularity University, and among several interesting points and questions, he asked, who would want to live outside of drone coverage in the future? Consider, for example, drones being equipped with defibrillators or other lifesaving medical devices. A non-profit from Germany recently proposed its own flying defibrillator, and it's working with a technology company to actually bring it to the air.

This week, we got new insights about the perspectives and commercial usage potential of drones when Amazon published their FAA drone application. 

• Amazon is on its 9th generation prototype which can travel over 50mph
• They weigh up to 55 pounds and will be able to carry 86% if Amazon’s deliveries which weigh less than 5 pounds
• Amazon wants to test outdoor in New York, Nevada, Texas, Alaska, Virginia and North Dakota.

According to GigaOm, it will be at least five years before you should expect drone deliveries to your door step (but buying a house a long term investment :-)).

So, would you want to live outside of drone coverage?

Not only are the TV distributor end-user revenues under pressure, but seismic changes in advertising are magnifying the crisis for the traditional TV business model. TV distributors and broadcasters must work together to orchestrate a defense for the advertising revenues.

Overall, the $500B TV/Video market revenues stem from a combination of end-user and advertising revenues in a split 60/40. In the US, the consumer payments mainly go directly to the pay TV operator whereas in Europe, the user payment is split evenly between license fee, paid to public service TV, and Pay TV. Now, both the end-user and advertising revenues are severely under pressure. Most obviously, the end-user payments are challenged due the entry of streaming and OTT providers such as Netflix. 

The end-user revenue challenge for the TV business seems inevitable even though Comcast recently announced a small subscriber base increase. However, as users watch proportionally more TV on other devices and enjoy the pleasures of time-shifted TV, then the current advertising model also comes under pressure. This is already the case and a seismic change is building up as the viewing of linear TV has lost significant relative importance without the advertising revenues so far having been adjusted accordingly. New evidence, however, show that online video outlets finally start to chip away at TV's hold on advertisers. Starcom MediaVest, a big ad-buying firm, said it shifted more than $500 million out of TV over the past 12 months, three quarters of which went to online outlets.

Ultimately, the TV advertising business model will need to transform into a model similar to the online model. Today, viewership data is calculated as the average viewership for the commercial time within the program and the metrics C3/C7 refers to the ratings for average commercial minutes in live programming plus three/seven days of digital video recorder playback.

Recently, Comcast, in the US, has been rolling out the ability to dynamically insert updated ads into on-demand TV (Dynamic Ad Insertion also called DAI) and jointly with Nielsen, they have developed a new metric called On-Demand-Commercial-Rating (ODCR) which includes viewing of on-demand TV. This has been made possible through cooperation between Comcast Cable TV and NBC – also owned by Comcast. There are examples of similar developments around the globe and actually some of the first implementations surfaced in Europe with Virgin Media. Currently, Kabel Deutschland and RTL are running a similar project in Germany. 

The projects are important steps in the direction of transforming the TV business model. On the US market, distributors have traditionally been involved in advertising and with Comcast pushing ODCR and DAI implementation, European broadcast and distributor executives can learn from the US experience. In any case, on a country-by-country basis, TV distributors and broadcasters must work together to orchestrate a defense for the advertising revenues.

With the recent launch of Amazon’s Fire TV it is becoming apparent that a battle of business models among the market contenders is evolving. We are witnessing the development of a competition of business models with hundreds of billions of dollars at stake. Even when working with elements of the value chain, it is sometimes valuable to take a step back and look at the grand scheme – the macro level market structure and changes. Today, the main revenues in the TV market come from cable subscriptions, advertising and, mainly in Europe, license public funding. How will the future of this market look like? Will it be revolutionized or are we witnessing a quite evolution. The traditional players are lining-up. First you have the distributors; the companies actually delivering the TV signal and own the access. This originally included satellite and cable, but has now been accompanied by cobber/DSL, DVBT, FTTH and most recently mobile. These companies mainly get the revenues from charging for pay TV and in most cases internet access. This group of market participants experience an increasing degree of internal rivalry because the different access infrastructure types have different advantages to various segments. Most significantly, cable/satellite is coming from an all dominant position and is likely to lose market share in most of the World.  Secondly, you have the content curators, broadcaster, and networks. As opposed to the group of distributors, the curators have always been competing for our time and eyeballs. Their revenue mainly comes from advertising which accounts for between 40% and 60% of the total market depending on the continent, but also from fees paid by the distributors. Finally, we have the content owners who seem to be able to increase their revenues year over year with the sports category taking the lead. In the US alone it is expected that content cost will increase around 10% per year over the next years.

Besides the traditional players, we have over the past couple of years witnessed the entry of the OTT providers including market participants with very different backgrounds including representatives of all the three traditional players such as Sky with SkyNow, Viasat with Viaplay and the NBA with NBATV. But on top of this new players are entering the scene with giants like Google including YouTube, Apple, Amazon, Yahoo and of course Netflix having gained more than 40M paying subscribers in a few years. Additionally, we have a second category of new players entering the market: the device and TV set manufactures.

Now, the revenue market is mainly consistent of distributer’s subscriptions and curators advertising revenues plus license fee mainly in Europe. So the battle is not only a battle for the consumer but to a high degree a battle of how to serve the customers in the future. The very large players are, at macro level, going to the market with very different business models: Google is coming from a business of search/advertising, Amazon from e-commerce, Apple from a vertically integrated business model of devices to a market place and Comcast with a highly integrated model all the way from access infrastructure, to curation and content ownership.

How do you see this market evolving and what characterizes the likely winners and losers – let me hear you opinion?

The evolution of linking mobile and TV has come a long way since I led the launch of a mobile TV service seven years ago. Whether you are using your smartphone or tablet for viewing content, linking to or controlling the TV, or simply for inspiration, the mobile usage is taking a lead role in relation to the TV. The changes involving the mobile are recognized by new and existing players on the TV market. As such, Netflix states the following in their so-called Long Term View:

• Over the coming decades and across the world, Internet TV will replace linear TV. 
  
• Apps will replace channels, remote controls will disappear, and screens will proliferate.  
  
• As Internet TV grows from millions to billions, Netflix is leading the way.
  

Established players like Comcast are committed to supporting the arising customer needs in the new TV era. Earlier today, Comcast CFO, Michael Angelakis, stated “we want to be able to provide our customers, who obviously pay us a monthly fee, to access their video on whatever device, wherever they are in the home, out of home, whether on demand or linear” at the Morgan Stanley 2014 Technology, Media & Telecom Conference.

TV viewing controlled from a mobile got a significant boost by Google launching the Chromecast. The possibilities created by Chromecast will have a significant impact on the future of TV. Based on Apples Airplay, the company called ilook.tv, led by Peter Redford, a pioneer in the Silicon Valley technology industry, already today, is enabling near zero-cost television broadcasting via the mobile and monetization via channel subscription and TV commercials. So what are you waiting for, do you want to create your own TV channel mobile app?

This week, TiVo decided to acquire Digitalsmiths for $135M. Their search and discovery platform is used by 7 of the top 10 MVPDs in the US. A smart deal for both parties including the owners of Digitalsmiths that raised little more than $30 million in three rounds of funding. 

“The Digitalsmiths acquisition opens new opportunities to commercialize and deploy TiVo’s cloud based services and technologies to operators, in an extremely cost effective way that can be offered either independently or in conjunction with TiVo’s renowned user interface,” said Tom Rogers, CEO and President of TiVo.

The acquisition is clever because TiVo is increasingly targets becoming a solution provider for pay-TV operators as already demonstrated in Europe with the Virgin Media and ComHem deals.  Digitalsmiths’s solution is not only used by MVPDs but also Roku, Xbox, PlayStation, Kindle and multiple set-top boxes.

The announcement comes at a time when other Internet TV companies set the stage for more disruption of the traditional TV marked where Tivo has historically operated successfully. At CES’s we witnessed another couple of examples of this with Roku announcing the integration with Hisense and TCL TV sets.Also, the announcement of Netflix becoming the first to deliver 4K content marks this change. 

This is the question I’ve been asked, again and again, both internally and externally, most recently when I was interviewed earlier this week about the partnership between Netflix and Waoo! – the company I have led since it was founded in 2010.The partnership, which went live on October 31st, is one of the first of its kind, and honestly, it was difficult to convince skeptics that it made sense. Especially because the primary activity of Waoo! is to make IP and Internet TV – so why partner with Netflix?

To understand the background, Waoo! and its owners consider getting as many customers as possible and increasing penetration on its FTTH network of the highest priority. In other words, it is the logic of the dumb pipe which I have written and spoken about before. Regarding TV, it’s a fact that people love traditional TV. But they would also like to have a more personalized TV experience.  A personalized TV experience includes a mix of services such as live TV including sports, VOD, SVOD, Smart TV apps, and start-over services. All of these services are ideally working seamlessly across all the devices we have available including phones, tablets, PC’s, and TV’s of course. The one thing these services have in common is that they are expensive to develop and really difficult to make successful in the eyes of the customer. So when Waoo! was launched, my leadership team and I were faced with making decisions about what to develop ourselves and what to achieve through partnering. And clearly, the economics of developing a service similar to Netflix are prohibitively expensive for most companies including Waoo!.  Netflix alone will spend USD400M on technology development and USD3B on content in 2014. In the segment of commercial-free and unlimited viewing of movies and TV shows, in the longer term, there is, in my point of view, only space for a few international and global players. Several national players in the Nordics, still need to realize this, but I am certain they will, if their CFOs have a say.

In November 2012, Netflix announced entering the Nordics and based on the rationale mentioned above, Netflix became an obvious choice for Waoo! to partner with. The fact that Google Fiber, a venture which has many similarities to Waoo!, and later UK’s Virgin Media plus Sweden’s Com Hem announced that they also will integrate the Netflix service in their offerings, on a Tivo set top box, made the skeptics, who were not convinced by the strategic rationale, less critical to partnering with Netflix.  And looking ahead, as more and more companies like Waoo! will partner up with Netflix, the strategic concerns will disappear.  I expect, the first movers in a market to enter into partnerships with Netflix will not be the largest Pay TV provider but instead companies like Waoo!, who have a superior internet access infrastructure and ultimately subscribe to the idea of the dumb pipe.

There are other advantages to the partnership between Waoo! and Netflix and obviously, there are also some concerns that must be addressed. The cost of bringing the Netflix app on the set top box must be kept low and with Netflix having integrated the service on to more than a thousand devices, the process is highly professional, cost effective, and streamlined. And with Waoo! on the other hand having a strong partnership with a set top box provider Airties, it was possible to keep the cost to a minimum. Regarding more specific advantages of the partnership, and of the ones I can mention without breaching any confidentially, I can say that our marketing and conjoint analysis clearly showed, that it would significantly improve the competitiveness of our general TV offering vis-à-vis our local competitors. This is hardly a surprise as we are talking about a service to which one third of the US households are subscribing. Another advantage of bringing the Netflix app on the Waoo! set top box is that it creates a positive incentive for customers to pay for upgrading an older set-up box which doesn’t support the Netflix app. So, to get easy access to the Netflix content on the main TV screen, it’s an obvious choice for a customer to upgrade the set top box instead of investing in or having the hassle of connecting another box.

Summing it all up, many skeptics did not initially understand why Waoo! would partner with Netflix given the fact, that most of the company’s activities are centered around IP and Internet TV. However, by accepting the fact that customers want individualized TV and that only a few international providers can compete with Netflix, my leadership team and I found the decision quite easy and could base in on a simple financial calculation.

It’s been four successful years with Waoo! and an amazing journey with outstanding colleagues from a start-up to a sizable business with revenues of approximately USD90million. All goals set by the owners have been achieved, and I’m ready for a new challenge. I have agreed with the owners of Waoo! to continue as CEO until a replacement is found. As such, I will continue to push forward on our trajectory of success. My family has already relocated to the San Francisco Bay Area which is where I will seek new opportunities, when ready, now that the US Government has honored me with the award of a Green Card based on extraordinary abilities.

Chromecast, launched by Google last week, is a small dongle enabling you to watch content controlled from your mobile device on the TV. It connects to the HDMI port and is for the moment enabling applications such as Netflix, Pandora, YouTube, and Web pages via Google’s Chrome browser.

I consider this one of the most important launches in the Internet TV space for a while.  It is simple and inexpensive at $35. In an earlier blog post, I asked the questions if it is smart to be a dumb TV. Only a small proportion of the current Smart TV owners actually use their TV set to connect to the internet. And now, considering the launch of Chromecast, it seems more likely that consumers will rather buy a dumb TV and connect it to Chromecast than paying extra for buying a Smart TV.

From last week, it is not only Apple users, via Airplay, who are enabled to “transfer” content easily from mobile devices to the TV, all other users, including those of iOS, can use Chromecast. The launch will accelerate the change towards internet TV - away from the traditional pay TV, as all users easily can access the plethora of video content from the web on their TV set. The interest from other video application providers is documented by the interest in coming to Chromecast. Already yesterday, it was announced that Vimeo will add the feature! 

My guess is that there is a gap between promised broadband speed and reality almost everywhere. The effective speed is typically remarkably lower than the advertised speed. Limitations in technologies and investment plays one part in this problem, the difference in marketing practice plays another. As I am working with internet TV and fiber broadband, in my role as CEO of Waoo!, many friends, from all over the world, write to me about the unpleasant truth that only very few customers get what they pay for.

Earlier, I was invited to speak at an EU’s expert panel regarding the rollout of high speed internet and I had the opportunity to advocate for “declaration of content” on broadband services. At the conference, I asked the question why is it OK that buying broadband is like

buying a carton of milk and realizing that it is only half full when you open it? Now the EU has have compared actual broadband speeds to advertised headline speeds in all EU member states. The study seems to document the problem in Europe: The average delivery to European costumers by the ISPs is only 74 percent of the promised speed.

How does it looks in the rest of the world? How is your broadband speed? Do you experience problems and seem to get less than you have been promised?

BTW, as the CEO at a company that in 2011 introduced a broadband speed guarantee, I am pleased to note that the EU analysis shows that our customers on average get 5 percent higher actual download speed than the corresponding advertised speed. 

Less than a year ago, I welcomed Netflix’ announcement to launch in the Nordics. Two months later, the service was launched, pushing the competition into a race for streaming customers.

Because of Netflix, the local competition felt forced into launching their proprietary over-the-top offers. Furthermore, HBO launched their new service called HBO Nordic. Very few had any idea how fast the Netflix launch would impact the market – and what impact the streaming disruption would have on Cable TV revenues.

Seven month later, streaming is an everyday word used by TV viewers. According to a newly published survey by YouGov, 11% of households have reduced the pay TV spend by downgrading to a smaller package. Furthermore, one out of six considers cutting the cord completely.

As of today 400.000 customers, out of the 2,6 million households in Denmark, have signed up to the local  Netflix subscription and in addition to this, 4 % have a subscription to the American version. This is an amazing victory for Netflix. In only seven months, the Los Gatos based company has outpaced all other commercial streaming services.

This is just the beginning of a major transformation of the global TV industry.  Netflix looks like a winner. It seems likely that Cable TV companies will get squeezed between infrastructure focused broadband players, such Waoo! and Google Fiber, on the one side, and the pure OTT players such as Netflix, on the other side. Is the in-between-strategy of the integrated CableCo  the “TV Everywhere” strategy a winner? Well, the Cable TV companies are long time professionals in packaging content, smart pricing and negotiating with the broadcasters about advertising, so no one can answer that question. My belief is, the more focused the strategy, the better chance of success, and for now it seems difficult to get all the customers spend on TV and offering the best broadband at the same time.

An ongoing topic on this blog is new ways to discover TV content – mostly through 2nd screen apps. For such an app to be successful, I believe, it has to be simple and reliable. Preferably, it should not require changing much of the existing TV behavior. Therefore, it was interesting to read Chris Fralic’s idea of Twitter making a #TV app.
 
Essentially, imagine a smartphone display with the most popular TV programming instead of the “channel up” discovery known from the remote control.  And combine this with the excellent features of an app like Matcha.tv. This would enable you to discover what was trending among the people you follow and then to link directly to the content available via free sources or your subscriptions to Netflix, Hulu Plus and other. 

Would it have an impact on the industry? Imagine if Justin Biebers’ 38.407.694 followers - the Beliebers - at the same time found out that a TV show with their idol was available via the #TV app and all demanded access to the same OTT source at the same time....

The answer is YES!

Last week I had the privilege to address the London audience at the
annual FTTH Council conference as member of the global CEO Panel. 
I said: “Just call us a dumb pipe”.  Because there is nothing to be embarrassed about in this statement, not if you - like the participants at the conference - deliver the best in class Pipe.

My point in the panel debate was that many traditional ISPs see OTT,
streaming and new generation content as at threat to their business. I believe
FTTH based providers should see it as an opportunity. Why not embrace and
stimulate the new content providers? . They will drive the bandwidth demands and allow FTTH based providers to differentiate themselves. Just look how well Netflix rates FTTH providers in relation to other access providers in for example the US and Denmark.
 
On top of being a “dumb pipe”, today there is business to be made by offering, for example, traditional TV. But the market is rapidly changing and imagine when TV content is truly be set free by disruptive changes in internet technology and with the adoption of a new rights regime.Maybe in this perspective being a dumb pipe is actually a winning strategy?
 
FTTH provides the pipe through which the costumer chooses to have his personal, favorite content delivered. And this was my message to participants at the FTTH Council Conference. Just “call us dumb”; not in the meaning stupid, but in the meaning basic and essential. The successful ISP should focus on what is essential in the eyes of the customer: The access quality!

The pressure on the traditional Cable TV business model is mounting!

According to AdAge, YouTube is set to introduce paid subscriptions this spring.

It doesn’t mean that YouTube stops its main attraction: the free videos, but it does mean that they make another interesting move challenging the existing cable TV setup.

The revenues from the type of service, YouTube plans to offer, will flow into a completely different business model than an existing cable TV setup. For consumers, the YouTube and Internet TV business model is attractive because it relies on low prices (It is expected that YouTube will charge between 1 and 5 dollars per channel) combined with a-la-carte choice of channels and possible subscriptions to content libraries.

To put the potential challenge of this business case into a perspective:

Consider if the TV business model undergoes the same changes as the music industry, where paid music has moved from CDs to download to streaming. Today you can subscribe to Spotify and get one month worth of streaming for the same price as a CD or a few downloads on ITunes. The changes are enabled by internet technology and changes to the payment to the artist. According to a recent NYT article, the move from download to streaming means lowering royalties from cents to fractions of a cent for the artist.

The level of royalties in the music video streaming is illustrated by Psy’s viral video hit “Gangnam Style” which according to Google generated $8 million on YouTube and was watched 1.2 billion times. This actually means revenues is less than one cent per view.

So where does this all take us. Clearly the TV business will change and it will take time, but the consumer demand for lower prices and a-la-cart choice is strong and internet technology is rapidly evolving. So what do you say, when is TV is going Gangnam Style?

In an earlier blog post, I listed some of the most promising 2nd screen solutions based on research by Chuck Parker. The market is developing fast and Chuck Parker has now updated his analysis. He points to 5 differentiating features for the successful for 2nd screen app: Seamless (elegantly combining sources), Discovery (content sourcing), Simple (control and interact with your 1st screen), Stimulating (related experiences besides just watch a program), and Social (share and comment on programs with your network).  But even though all of these 5 features are important, I very much agree with Somrat Niyogi, the CEO of Miso, who recently stated that ‘declaring “we are the best because we have everything” is not valuable. Companies should pick a single value prop and deliver it really well.’

The couch potato wins …!  
So what feature do I recommend focusing on? Well, even as tech aficionados, we have to acknowledge – in the new world of the 2nd screen – that changing TV behavior takes time. Despite the many new possibilities most of us are still accustomed to a very simple and effective discovery interaction via the remote control. 

Consequently if you want your 2nd screen solution to be the winner, look to the couch potato– he’s in charge! To succeed you must make 2nd screen discovery just as Simple and Seamless as he is used to. Along those lines, TV Guide
has asked among one thousand of its own users and the answer is showing that 86 % found “useful” to be top priority
when valuating TV related mobile apps and web sides. So if Simple and Seamless is more important, what is less important? The TV Guide users send a very clear message regarding this: Don’t try to reinvent yet another Social interaction. Regarding the value of “connecting with others” only 47 % of the TV Guide respondents pointed to this feature as important. And excellent social interaction solutions already exists – just look at how TV viewers used Twitter during the Super Bowl last winter.

The talk in the Fiber Broadband community this past summer has been about Google Fiber. The launch from the internet giant has been expected with both excitement and some skepticism. How does Google plan to make fiber roll out a good investment? 
 
Ever since first announced in 2010 there have been speculations about the set up and business case. Now that the product and prices have been revealed and Google has concluded that residents in 89% of Kansas City, Kan. and central Kansas City, Mo. fiberhoods will be able to get brand new, next-generation fiber connected to their home, I think it is safe to say that Google Fiber is no charity case. It is hard and well executed business. 
 
Google has an appealing and simple offer allowing the customer to choose 1 Gig for $70 a month, with IPTV for $120, or pay $300 and get the fiber installed in your house – allowing you to have free 5 megabit internet for 7 years.

Free internet! What is the business case logic behind this? As opposed to more traditional broadband offerings, this offer is designed for loyalty and not for lock-down. And with the Google Fiber offer, I say, that Google is safe to expect long term paid penetration. The point being, that as you already are connected, then why not upgrade to the paid service when you feel the need for more bandwidth? And that need will come. 
 
This, I presume, is the logic behind the free internet offer. The construction fee has to be payed only once and it might even be a valuable investment in your house. Google has no reason to force more speed than needed on to the customers. The need for speed grows automatically. The possibility that those customers will upgrade and be truly loyal is substantial.

As mentioned in NBCNews.com Tech earlier this week, the recently released Eighth Broadband Progress report from FCC demonstrates that barely half of American households can stream Netflix due to slow internet connections. In fiberhoods where Google is rolling out fiber to the home and Waoo! Land in Denmark, this certainly does not apply. The more Cloud, internet TV and streaming the merrier. We welcome Netflix recent announcement to launch in the Nordics and look forward to even more customers realizing there is no point waiting for a future proof internet solution at home.

A few days ago, I was invited to speak at an EU’s expert panel regarding the rollout of High Speed Internet
connections in Europe. For a commercial and consumer oriented type like myself, it was surprising to hear that most of the discussions regarding how to secure high speed internet access rollout in Europe are mainly about the“level 1” issues. In other words, most of the discussions circle around ducts, digging, rights, regulation and funding. Even though this critically important, it is my experience that these subjects only represent a subset of issues in need to be resolved to get high speed internet to all Europeans. In a market like the Danish, where FTTH has been rolled out over the past 8 years, the discussion about the “level 1” issues goes on but other and equally important also demand our attention. Examples of these other issues include how to regulate access to
video content, as content is often times an important driver for take-up of high speed interconnections. Also, consumer transparency and marketing are important issues. Why is it, for example, that it is allowed in Denmark to market internet products with Mbps speeds which are not delivered?  In other markets it is not allowed to market something which is not delivered. Imagine, if supermarkets were allowed to sell 0,22 liters of milk and market it as if the carton had 1 liter.

In less than 2 years, after launching the brand Waoo!, we have managed to position our company as a clear
number 1 on internet services in Denmark. An independent survey made by the analysis company Loyalty Groups, which has not been paid by Waoo!, has just been released by Computerworld showing that Waoo! is the clear market leader based on all parameters including  value-for-money, customer-loyalty, internet speed, and quality. I am very proud to be part of this success and know that we have only just started and must continuously improve to stay ahead and keep satisfying customers.

(In Danish)
http://www.computerworld.dk/art/218056/her-er-danmarks-bedste-netudbyder-og-ringeste
 

Earlier this month, I met with Kyle Vogt, CEO and co-Founder of Justin.tv. Justin.tv was started by Justin Kan  livecasting and essentially broadcasting what he saw 24/7 via a camera attached to his baseball cap. The concept quickly received significant media attention and a new business was created in 2007. Later justin.tv has spun off twitch.tv  which is a vertical envisioned to be “the ESPN of gaming”and Socialcam focusing on mobile video sharing. Justin.tv has several ways of monetizing the broadcasting business including preroll adds, broadcast advertisers and  subscriptions. Kyle and his team have built a super cost effective and quality
network enabling an impressive 20 million unique viewers on monthly basis and  supporting up to 250.000 concurrent users. 

The basic idea of justin.tv is building on a key trend for the future. The trend is described by Cisco futurist
Dave Evans as “in ten years, anyone will broadcast anywhere to anybody on any device”. Justin.tv has the advantage of having access to their own global broadcast and viewer traffic patterns and I discussed with Kyle what new vertical sectors could be the next big thing. Would it be local sports or a church mass? I’m confident that more verticals will materialize, as it has been seen on the on demand side with for example the European Epic TV OTT service focusing on extreme sports. In any case, the video content market is undergoing rapid change.

Super high vision TV tested for London Olympics...and how much bandwidth is required? 184 Mbps!
http://t.co/X75x22HZ

CableCo's are essentially a combination of internet acceess and content aggregators. So what are you paying for when you buy CableTV.
http://t.co/m3JRKOSM