IP Convergence: Beyond VoIP, Beyond Cost Savings

Coincidentally enough as I was reading Jeff Pulver’s Network2 Petition for Declaratory Ruling before the FCC, I received an email from Apple touting its new Apple TV.  And it reminded me of the checks and balances that exist between network-based services and hardware-based services. 

As Jeff describes it, Network2 “provides a free service intended to facilitate growth of a particular kind of Internet Video: original programming created specifically for Internet distribution that is episodic or continually updated and which meets Network2’s standards for technical quality and production value.” 

Apple describes Apple TV as follows – “Now all the hit movies, TV shows, music, and podcasts on iTunes—and your photos, too—can be enjoyed in your living room on your big-screen TV, transferred wirelessly from any Mac or PC in your home.”

While the content may differ between Network2 and Apple TV, aren’t they essentially offering the same service?  Aside from the professionalism of the content, the only other difference between the services is Network2 is network-based and Apple TV is hardware-based. 

But this distinction is starting to have real consequences that the industry and policy makers need to heed.  Why does Jeff have to be so concerned with regulation while Apple seemingly could care less?  (Actually, I am a little puzzled as to why Jeff filed this petition.  He cites a European Commission initiative to harmonize the treatment of all video services, but I am not sure I see that necessarily as a threat to his service and in any event, I do not see a threat here in the U.S.  But I guess this is an effective way to garner some press for Network2.)  Note as well each party’s interest in net neutrality.  Presumably net neutrality will be a very important issue for Network2.  Not so for Apple TV because it does not rely on real-time delivery. 

Does Apple have the superior business model?  Is Apple’s approach to video distribution better than Jeff’s because it is insulated from regulation and efforts by network operators to increase revenue?  Is Jeff’s model better because it is not subject to the demands of powerful content providers and plagued by DRM demands? 

For regulators the question to ask is whether their policies unnecessarily distort the competitive market and provide an artificial advantage to Apple TV.  For telecommunications carriers, the question to ask is whether their actions (such as seeking to charge premium prices for premium delivery) are encouraging hardware-based solutions to which they have limited competitive responses.