The world's most famous Internet company uses the annual conference of the company that practically invented the Software-as-a-Service industry to announce that Google's next business move is manufacturing telephones.

While everyone is running around with "software prohibited" buttons pinned to their sky-blue lanyards – get it, clouds in the sky? – one of the industry leaders in no-software applications is talking about making actual stuff.

Let that sink in.

There's certainly a message here. But not necessarily one that the boys – and I do mean boys, but more on that some other time – in Cloud Cukooland think they're hearing.

In other words, as more and more people attempt to do things "in the cloud," the Next Big Thing is making appliances that connect to it. Like, for example, telephones. Or e-readers.

Consider the Amazon Kindle. Remember Steve Jobs' remark when the Kindle was introduced, "The whole conception is flawed"?¹ Four years later, Amazon's success with the Kindle is beyond doubt. In 2010, the Kindle eclipsed "Harry Potter and the Deathly Hallows" as the Amazon's single best-selling product. And that year e-books outsold physical books for the first time.²  

Why is this? Simplicity.

Google has expressed itself very clearly on this point in the past:

"Google doesn‘t set out to create feature-rich products; our best designs include only the features that people need to accomplish their goals… Google teams think twice before sacrificing simplicity in pursuit of a less important feature. Our hope is to evolve products in new directions instead of just adding more features."³

And this is an argument that it's time to get back to basics. Certainly, Salesforce.com's own success grew from its simplicity. Salesforce.com did one thing, was simple to start using, and the initial investment – money, time and effort – was low.

Something like a telephone.

References:

1. Cnet Reviews: Fully Equipped, "Steve Jobs meets the Kindle," David Carnoy, Feb. 5, 2009. 
2. Amazon Q4 2010 report, Amazon 2009 Annual Report. 
3. www.google.com

The recent Skype outage highlights a fundamental problem, according to Lagerway. Pure-play VoIP providers ultimately don't control the underlying network that delivers their service.

"I've been in this business 15 years and over that time VoIP has been in beta 15 years. The main reason is that the network that people are riding on is unreliable," he says. Unless a provider owns the upstream broadband network, a 'best effort' service is all a provider can promise.

"If the upstream provider has decided they're going to be making some changes, you're going to be feeling those changes. If the upstream provider decides they want to filter out [other providers' VoIP] packets or handle them with less priority than  their own packets, you're going to experience that regardless of what kind of service you have.

"If they decide they're going to route packets to Istanbul, they can do that," he says, adding, "The long and short of it is that the incumbents have their long arm deeply inside the network."

Having said that, Lagerway does allow that Skype's proprietary peer-to-peer (P2P) architecture – a closely guarded "black box" -- leaves the system unnecessarily vulnerable in a way that conventional centralized services like Vonage don't.

"My main issue with Skype is that it's a closed system," says Lagerway, an outspoken evangelist for the open communications standard, SIP. "Having one guy [Janus Friis] create the entire peer-to-peer architecture, it's destined to fail – no one is smart enough.

Lagerway points to Skype's implementation – a self-organizing P2P network operating exclusively on users' PCs – as untenable for providing a service to millions of users. "To have such a dependency on so many people's PCs, that's pretty risky business. What happens if a whole lot of people decide to de-install?"

A better approach for a P2P network is an architecture that fails back to a centralized client-server network – the way TelTel's P2P VoIP network operates, for example.  "That's the way SIP operates," Lagerway explains. "It's a peer-to-peer network but it bootstraps the operation with a client-server network."

In the end, while no one can ever fully escape Murphy's Law, a more open approach could have helped Skype avert this particular disaster, Lagerway says.

"If this [Skype] had been an open standards projects, you would have had much more peer review. If they had used SIP, this particular outage would have been less likely. It could have possibly been averted," he explains. "Correcting it now is going to be costly."

****

For those of you who've been wondering what happened to the VoIP Princess, over the last five months I was overwhelmed with a family crisis. If you're interested, you can read about how I became an unpaid caseworker for the Pennsylvania Department of Public Welfare, here. 

The recent Skype outage highlights a fundamental problem, according to Lagerway. Pure-play VoIP providers ultimately don't control the underlying network that delivers their service.

"I've been in this business 15 years and over that time VoIP has been in beta 15 years. The main reason is that the network that people are riding on is unreliable," he says. Unless a provider owns the upstream broadband network, a 'best effort' service is all a provider can promise.

"If the upstream provider has decided they're going to be making some changes, you're going to be feeling those changes. If the upstream provider decides they want to filter out [other providers' VoIP] packets or handle them with less priority than  their own packets, you're going to experience that regardless of what kind of service you have.

"If they decide they're going to route packets to Istanbul, they can do that," he says, adding, "The long and short of it is that the incumbents have their long arm deeply inside the network."

Having said that, Lagerway does allow that Skype's proprietary peer-to-peer (P2P) architecture – a closely guarded "black box" -- leaves the system unnecessarily vulnerable in a way that conventional centralized services like Vonage don't.

"My main issue with Skype is that it's a closed system," says Lagerway, an outspoken evangelist for the open communications standard, SIP. "Having one guy [Janus Friis] create the entire peer-to-peer architecture, it's destined to fail – no one is smart enough.

Lagerway points to Skype's implementation – a self-organizing P2P network operating exclusively on users' PCs – as untenable for providing a service to millions of users. "To have such a dependency on so many people's PCs, that's pretty risky business. What happens if a whole lot of people decide to de-install?"

A better approach for a P2P network is an architecture that fails back to a centralized client-server network – the way TelTel's P2P VoIP network operates, for example.  "That's the way SIP operates," Lagerway explains. "It's a peer-to-peer network but it bootstraps the operation with a client-server network."

In the end, while no one can ever fully escape Murphy's Law, a more open approach could have helped Skype avert this particular disaster, Lagerway says.

"If this [Skype] had been an open standards projects, you would have had much more peer review. If they had used SIP, this particular outage would have been less likely. It could have possibly been averted," he explains. "Correcting it now is going to be costly."

****

For those of you who've been wondering what happened to the VoIP Princess, over the last five months I was overwhelmed with a family crisis. If you're interested, you can read about how I became an unpaid caseworker for the Pennsylvania Department of Public Welfare, here. 

The reality is that nobody stays in business selling something for less than it costs -- despite the self-indulgent fantasies of dot-com startups. And in the brave new always-connected world, devices (other than Apple products) to connect may be dirt cheap, but the infrastructure that makes it all work is anything but. AT&T isn't the first carrier to observe that more is less when it comes to iPhone profits. As smartphone subscribers eat up rich media and interactive content, operational costs grow faster than ARPU.

Selling the iPhone hurt Southeast Asian carrier SingTel's operating margin by about 4%, the company told Reuters a year ago. Scandinavian carrier TeliaSonera reported a 20% decline in Danish ARPU (average revenue per user) in the two years since introducing the iPhone -- from US$38.35 to US$30.39 - according to the same report.  

AT&T's move points to the future. Once upon a time, minutes were a relevant measure of telecommunications infrastructure cost. When minutes became irrelevant, that didn't mean that the infrastructure was free. Today bandwidth is the meaningful measure of infrastructure cost and average profitability per user (APPU) is more important than ARPU. The pricing model will change simply because businesses that can't sell their services at a profit won't be in business to offer high quality all-you-eat data plans.  

And that will have another impact. When network operators' returns match investment, the infrastructure business - the pipe - is going to be a lot more attractive. Which, no doubt, is part of the reasoning behind Google's 1-Gbps FTTH network "experiment" that the Internet giant announced last February. Certainly, Google stands to benefit from increased use of its Web-based applications, ad revenue from the new network, and control of the  underlying delivery  infrastructure.  

But the bottom line is that Google sees a business opportunity in becoming a traditional telecommunications company.  And why not? One of the greatest beneficiaries of VoIP disruption of voice communications business was Comcast Cable - now the 3rd largest US telephone company.  

For more analysis of AT&T's new pricing, read media sociologist Shelly Palmer's June 6 post, Understanding AT&T's New Limited Data Plan. 

In the last two years, Google has made several forays in the voice market. After buying VoIP startup GrandCentral in 2008, Google went on to buy the peer-to-peer softphone Gizmo5. Google did nothing with these investments; suspending new customer signups for both services at the end of 2009, with the explanation that Google was conducting extended beta tests before "re-launching" the services.

Google has undoubtedly studied the history of Internet companies in VoIP; and AOL's, eBay's, and Yahoo's VoIP missteps paint an uninspiring picture, as Tom Keating noted last year. 

There's a fundamental lesson: operating a telephone company has a very different imperative than operating an Internet company: subscribers have to get a dial tone when they pick up the phone - 100% of the time.

Meeting that imperative is what legacy telephone carriers are good at: performing a well-understood and clearly defined operation in real-time, with near-absolute reliability. How hard it is to achieve these goals simultaneously can be measured by how little Internet software pioneers Yahoo, AOL and eBay advanced the VoIP technology that they purchased.

Google certainly has the financial resources for building infrastructure and operations with "five nines" reliability. And Google has one advantage over legacy telecoms. It can start on Day One with the best technology - Google doesn't have to figure out how to upgrade millions of miles of copper wire.

While You Were Making VoIP Calls on Your TV at CES, Mobile TV Was Calling Your Phone - Jan 12, 2009

In the last two years, Google has made several forays in the voice market. After buying VoIP startup GrandCentral in 2008, Google went on to buy the peer-to-peer softphone Gizmo5. Google did nothing with these investments; suspending new customer signups for both services at the end of 2009, with the explanation that Google was conducting extended beta tests before "re-launching" the services.

Google has undoubtedly studied the history of Internet companies in VoIP; and AOL's, eBay's, and Yahoo's VoIP missteps paint an uninspiring picture, as Tom Keating noted last year. 

There's a fundamental lesson: operating a telephone company has a very different imperative than operating an Internet company: subscribers have to get a dial tone when they pick up the phone - 100% of the time.

Meeting that imperative is what legacy telephone carriers are good at: performing a well-understood and clearly defined operation in real-time, with near-absolute reliability. How hard it is to achieve these goals simultaneously can be measured by how little Internet software pioneers Yahoo, AOL and eBay advanced the VoIP technology that they purchased.

Google certainly has the financial resources for building infrastructure and operations with "five nines" reliability. And Google has one advantage over legacy telecoms. It can start on Day One with the best technology - Google doesn't have to figure out how to upgrade millions of miles of copper wire.

While You Were Making VoIP Calls on Your TV at CES, Mobile TV Was Calling Your Phone - Jan 12, 2009

Fox News, with its customary fair and balanced perspective, offers "FCC Goes For Nuclear Option - Seeks To Control Interent," and "Genachowski's 'Third Way' Is a Washington Internet Takeover."

Over at Whited Sepulchre we have: "The announcement last week by Federal Communications Commission Chairman Julius Genachowski that the agency planned to assert authority over the Internet raises all kinds of red flags...Every street in America should look like one of Chairman Mao's Cultural Revolution Rallies."

And at Freedom's Phoenix, "FCC Chairman Julius Genachowski's Mussolini-like Internet Power." It's right there next to "Obama's secret plan for the 4th reich? Part 1," and "The Military is Spraying Our Skies."

Despite the fact that everyone, from the Washington Post to career conspiranoid Alex Jones - Police State 4: The Rise Of FEMA - Don't Miss Out! Get Your Subscription Today! - is saying that Chairman Mao Tse Genachowski is enacting a diabolical master plan for crushing the free spirit of the Internet - not to mention Avatar downloads from BitTorrent - under the FCC's Wehrmacht, the FCC is not, repeat IS NOT, proposing to regulate ISPs like telephone companies.

How do I know this? Because unlike most of these reporters, apparently, I actually read the FCC's 14-page statement.

It all goes back to 1910 when the Federal Trade Commission first established its jurisdiction over telecommunications, along with the notion of "natural monopoly," the helpful suggestion of the Bell Telephone Company.

(Nothing like a "free market" married to a "natural monopoly." Our current worst-of-all-approaches telecommunications un-regulation is its bastard offspring.)

Twenty years later the 1934 Communications Act established the FCC, which remains the underlying architecture of US telecom regulation. The 1934 law chartered the FCC to regulate telecommunications, but not necessarily promote its development.

The Telecommunications Act of 1996 - of which we in the Internet industry are so fond - brought significant change to the communications the industry landscape. In addition to letting us plug in our 2400 Bd modems, the 1996 law formally defined two types of public communications services: "regulated telecommunications services" - conventional telephone service - and "information services" that were not subject to the requirements governing telecommunications services. The FCC later ruled in 1998 that the agency "did not find it appropriate" to classify Internet access as a telecommunication service "in the absence of a more complete record focused on individual IP service offerings."

Fast forward to 2010 and the United States is now in 16th place in broadband speed -ahead of Greece, behind Portugal. The FCC proposes a plan to get broadband Internet to every one of the US 300 million residents and gets a giant smackdown from the Supreme Court. Why? Because neither the 1934 nor 1996 Telecommunications Acts give the FCC "statutory authority" over the Internet.

So the FCC responded with its May 6, 2010 proposal  for "light-touch" Internet oversight by the FCC. First, the proposal describes three approaches. The first is doing nothing - the favored Republican Party answer to all questions of public policy. The second alternative is the dreaded reclassification of the Internet access as a regulated telecommunications service. But don't get hysterical just yet. It's just an alternative.

The third alternative, which is the one that the FCC is putting forward, is further defining "information services."

This redefinition rests on another Supreme Court decision (so-called Brand-X) about whether cable modems should be classified as information services or telecommunications services. In that case, the court's majority ruled that federal telecommunications law left policy "in this technical and complex area" to be set by the FCC. In a dissenting opinion, Justice Antonin Scalia wrote "the 'computing functionality' and broadband transmission component of retail Internet access service must be acknowledged as two separate things."

The FCC's proposal makes the case that both the majority and dissenting opinions in Brand X provide the basis for FCC Internet oversight.

If this arcane legal reasoning seems too recherché, the FCC's proposal states right up front: "The Commission does not regulate the Internet. The policy of preserving the Internet as a generally unregulated, free-market forum for innovation, speech, education, and job creation finds expression in (among other provisions) section 230 of the Communications Act, which states Congress's conclusion that "[t]he Internet and other interactive computer services have flourished, to the benefit of all Americans, with a minimum of government regulation." (47 U.S.C. 230(a)(4))"

What's that you say? That's just there to put folks off the scent of the FCC's true intentions? Better hurry up and unload that worthless fiat paper money and get out of Dodge before the FEMA lizard-people come to eat your children and haul you away to those secret Venusian prison camps.

Fox News, with its customary fair and balanced perspective, offers "FCC Goes For Nuclear Option - Seeks To Control Interent," and "Genachowski's 'Third Way' Is a Washington Internet Takeover."

Over at Whited Sepulchre we have: "The announcement last week by Federal Communications Commission Chairman Julius Genachowski that the agency planned to assert authority over the Internet raises all kinds of red flags...Every street in America should look like one of Chairman Mao's Cultural Revolution Rallies."

And at Freedom's Phoenix, "FCC Chairman Julius Genachowski's Mussolini-like Internet Power." It's right there next to "Obama's secret plan for the 4th reich? Part 1," and "The Military is Spraying Our Skies."

Despite the fact that everyone, from the Washington Post to career conspiranoid Alex Jones - Police State 4: The Rise Of FEMA - Don't Miss Out! Get Your Subscription Today! - is saying that Chairman Mao Tse Genachowski is enacting a diabolical master plan for crushing the free spirit of the Internet - not to mention Avatar downloads from BitTorrent - under the FCC's Wehrmacht, the FCC is not, repeat IS NOT, proposing to regulate ISPs like telephone companies.

How do I know this? Because unlike most of these reporters, apparently, I actually read the FCC's 14-page statement.

It all goes back to 1910 when the Federal Trade Commission first established its jurisdiction over telecommunications, along with the notion of "natural monopoly," the helpful suggestion of the Bell Telephone Company.

(Nothing like a "free market" married to a "natural monopoly." Our current worst-of-all-approaches telecommunications un-regulation is its bastard offspring.)

Twenty years later the 1934 Communications Act established the FCC, which remains the underlying architecture of US telecom regulation. The 1934 law chartered the FCC to regulate telecommunications, but not necessarily promote its development.

The Telecommunications Act of 1996 - of which we in the Internet industry are so fond - brought significant change to the communications the industry landscape. In addition to letting us plug in our 2400 Bd modems, the 1996 law formally defined two types of public communications services: "regulated telecommunications services" - conventional telephone service - and "information services" that were not subject to the requirements governing telecommunications services. The FCC later ruled in 1998 that the agency "did not find it appropriate" to classify Internet access as a telecommunication service "in the absence of a more complete record focused on individual IP service offerings."

Fast forward to 2010 and the United States is now in 16th place in broadband speed -ahead of Greece, behind Portugal. The FCC proposes a plan to get broadband Internet to every one of the US 300 million residents and gets a giant smackdown from the Supreme Court. Why? Because neither the 1934 nor 1996 Telecommunications Acts give the FCC "statutory authority" over the Internet.

So the FCC responded with its May 6, 2010 proposal  for "light-touch" Internet oversight by the FCC. First, the proposal describes three approaches. The first is doing nothing - the favored Republican Party answer to all questions of public policy. The second alternative is the dreaded reclassification of the Internet access as a regulated telecommunications service. But don't get hysterical just yet. It's just an alternative.

The third alternative, which is the one that the FCC is putting forward, is further defining "information services."

This redefinition rests on another Supreme Court decision (so-called Brand-X) about whether cable modems should be classified as information services or telecommunications services. In that case, the court's majority ruled that federal telecommunications law left policy "in this technical and complex area" to be set by the FCC. In a dissenting opinion, Justice Antonin Scalia wrote "the 'computing functionality' and broadband transmission component of retail Internet access service must be acknowledged as two separate things."

The FCC's proposal makes the case that both the majority and dissenting opinions in Brand X provide the basis for FCC Internet oversight.

If this arcane legal reasoning seems too recherché, the FCC's proposal states right up front: "The Commission does not regulate the Internet. The policy of preserving the Internet as a generally unregulated, free-market forum for innovation, speech, education, and job creation finds expression in (among other provisions) section 230 of the Communications Act, which states Congress's conclusion that "[t]he Internet and other interactive computer services have flourished, to the benefit of all Americans, with a minimum of government regulation." (47 U.S.C. 230(a)(4))"

What's that you say? That's just there to put folks off the scent of the FCC's true intentions? Better hurry up and unload that worthless fiat paper money and get out of Dodge before the FEMA lizard-people come to eat your children and haul you away to those secret Venusian prison camps.

Oh sure, we'll get a separate-but-equal version "later in the year," Skype says. They just neglected to mention which year.

Much of Skype's success can be attributed to individuals who use it, like it and go on to insinuate the service into their work lives.  It's certainly not Skype's talent for PR. (I was once dis-invited to a Skype event when someone realized I was a journalist, not a system integrator.)

So it's not unreasonable to think Skype should be more politic - if not actually attentive - to the notoriously independent-minded Mac community.

On the other hand, Skype does enough of what it does, and does it well enough, to make it easy for people to keep paying them money.

Before eBay sold Skype back to its founders, eBay reported $620 million in net revenue from Skype (eBay Inc. Fourth Quarter and Full Year 2009 Results, Jan 20, 2010) with a 24% margin (eBay Q3 09 Financial Highlights, October 21, 2009.

Maybe the company's blinkered product strategy is part of that success. 

Oh sure, we'll get a separate-but-equal version "later in the year," Skype says. They just neglected to mention which year.

Much of Skype's success can be attributed to individuals who use it, like it and go on to insinuate the service into their work lives.  (It's certainly not Skype's talent for PR; I was once dis-invited to a Skype event when someone realized I was a journalist, not a system integrator.)

So it's not unreasonable to think Skype should be more politic - if not actually attentive - to the notoriously independent-minded Mac community.

On the other hand, Skype does enough of what it does, and does it well enough, to make it easy for people to keep paying them money.

Before eBay sold Skype back to its founders, eBay reported $620 million in net revenue from Skype (eBay Inc. Fourth Quarter and Full Year 2009 Results, Jan 20, 2010) with a 24% margin (eBay Q3 09 Financial Highlights, October 21, 2009.

Maybe the company's blinkered product strategy is part of that success. 

It seems that the Kin is the dumbest smartphone in a competitive lineup of contemporary devices that almost-but-not-quite do things. 

"You can't watch Web video, you can't send photos or video on Twitter," writes PC World's Jared Newman. "The Web browser doesn't support tabs, there's no native calendar or ability to sync other calendars, and there's no native GPS for accomplishing the very social function of meeting up with friends in real life. All of these limitations make the $30-per-month data plan requirement hard to swallow."

Let me guess how that's going to work out. A year from now the Kin will show up in Dilbert cartoons and "greatest blunders" lists - the one that includes New Coke.

The point here isn't the phone. The point is that once again someone has brought something to market without asking customers what they wanted.

For the last four months I've been studying what makes a VoIP business successful (hint: it has nothing to do with venture capital) or unsuccessful. In the course of this research, this struck me from Japanese telecom giant and VoIP pioneer, SoftBank's annual report:

"The SOFTBANK Group does not subscribe to traditional arguments like 'We are an infrastructure company, and therefore do not understand content,' or 'We are a content company, and are therefore not familiar with infrastructure.'...a unique business model... enables us to provide comprehensive services from the customer's perspective. In other words, the company first identifies an end-user service and develops the components to deliver it, instead of developing components that are then marketed to customers and business partners."

Oh, and BTW: SoftBank posted record operating income every year for the last five years. In FY 2009, the company's net income grew 124% to  ¥96,716 million ($1.03 billion) on sales of ¥2,763,406 ($29.1 billion).

While You Were Making VoIP Calls on Your TV at CES, Mobile TV Was Calling Your Phone - Jan 12, 2009

The Open Mobile Video Coalition (OMVC) debuted the new ATSC candidate standard for broadcast - free-to-air - mobile TV rolling toward final approval later this year. At CES, the OMVC was showing live broadcasts on prototype handsets, mobile video players, PCs, and in-vehicle video players.

This just could be more important even than making a videophone call via your 54-inch HD TV. It might even be - dare I say it? - even more important than Skype's announcement last month about the VoIP's demise; a discovery, let me add, that is hardly original - Jajah co-founder Roman Scharf famously tried this attention-attracting gimmick back in 2006.

Why is the OMVC's announcement important? Because it's a potential game-changer.

Long, long ago, in a galaxy far, far way...in 1927, to be exact, American Telephone & Telegraph and Bell Laboratories demo-ed what the New York Times called "the first practical demonstration of television," in which live picture and sound were transmitted from Washington, D.C. to New York City over phone lines.

The following year the Times heralded the dawn of the television age, writing, "Radio Pictures for the Home is Next Step in Broadcasting. Television - that is, seeing motion pictures on the radio - is approaching."

When was the last time you watched TV on your wired POTS phone? Contrary to high tech pundits' predications 80 years ago, television didn't conquer the world via either copper phone wires or electro-mechanical "photo-radio machines."

But when it comes to mobile TV, the U.S. perspective is just as primitive as that 1927 NY Times story.

We're stuck in a model where cell phone carriers decide if, and for how much, we can watch Daily Show clips on our handsets. Mobile TV here is dominated by businesses whose revenue model is selling minutes to people making phone calls, as opposed to broadcasters whose revenue model is selling audience access to advertisers. Which explains why mobile TV penetration is low in the U.S. compared to the rest of the world.

Mobile TV delivered by TV broadcasters is, well, so obvious it makes you want to bang your head against the wall.

"Broadcasters definitely have the edge in cost and effort over cell phone carriers - they're using the existing infrastructure that's already in the ground," explains OMVC Executive Director Anne Schelle.

"It's fairly inexpensive for a broadcaster to put up a mobile transmitter on an existing tower - as little as $50,000 and as little [installation time] as four hours. In the mobile industry it takes as much as a year to put up a single cell site."

Of course, it doesn't matter if it's cheap to build if no one wants to buy. But local broadcasters have much of what mobile viewers want, Schelle says. They have stuff you need to know right now  - like when a hurricane is headed your way or a 15-car accident closes the freeway.

"If you look at broadcasters, they have the most highly watched shows," Schelle says. "If you look at [mobile] carriers, what they're offering is very limited. If you look at the two countries that have really deployed broadcast [free-to-air] mobile TV - Japan and [South] Korea, both have 50 percent penetration [for mobile TV viewing].

"When the iPhone was introduced there, consumers didn't flock to it because it didn't have mobile TV," she adds.

But Doug is right that TV will get smarter. The phone's return channel gives broadcasters a direct connection to viewers and opens opportunities for interactivity.

"At NAB there was a demo with mobile DTV on a tablet computer showing Dancing With the Stars and you could vote by touching your favorite contest," says Schelle. "Think American idol and being able to vote on your handset."

Put it all together and you get - dare I say it? - TV 2.0, propelling local broadcasters into become new media companies. The payoff potential is big. Research firm BIA predicts that by 2012, $1.1 billion in additional advertising revenue will flow to local TV stations from mobile TV services.

Right now there's a boatload of handsets that pick up broadcast TV - even analog TV. You wouldn't know that here in the U.S. because you can't buy them here. 

Of course, these handsets don't support our broadcast standards, but, as evidenced by the OMVC's dog and pony show at CES, component makers are gearing up and Schelle expects devices equipped with ATSC-mobile TV receivers to be on retailers' shelves by 2010.

Of course, this seems like grim news for carriers. But don't write them out of the equation just yet. Carriers may just find a new and interesting use for that bandwidth. Remember that 1927 television broadcast over telephone lines? We call that broadband multimedia today.

It's hardly radical to observe that when something becomes ubiquitous, those who don't have access to it become second-class citizens.

When no one had indoor running water, living with an outhouse wasn't a hardship. However, when everyone has plumbing and you're so poor you can't afford to install it, an outhouse is a hardship. Likewise electricity, central heating, and the telephone.

Today, if the only access you have to the Internet is through a very expensive satellite service that you can't afford, you're outside life's mainstream. 

So I would make a case that just like water, sewer - and in my hometown, Santa Clara, electricity - broadband should be provided as a matter of public good.

I'm not saying that every municipality should get into the telecommunications business.  There's more than one way to skin a cat. We can let a thousand flowers bloom and see which ones have staying power.

However, using Santa Clara again as a model, public utility ownership works very well, allowing the city to make long-term investments and set rates without concern for Wall Street and CNBC's talking heads.

Santa Clara started its own electric company in the early 1900s when the City Council got fed up with what the city was being charged for its street lights. Then, as now, there were naysayers promising that City would quickly become insolvent.

Instead the City thrived.

In the 1950s and 1960s PG&E came a-wooing, offering to relieve the City of the headache of running an electric company. While neighboring cities were happy to sell out, Santa Clara's unusually forward-thinking city administration - a Democratic mayor and a Republican City Manager, both occupying the same left-wing ideological geography as the Eisenhower administration - resisted PG&E's siren song.

Not only did Santa Clara retain ownership of its distribution grid, the city instead grew its utility, becoming an energy producer, and investing in renewable power sources long before it was fashionable.

These days, not only are our electric rates 30 percent less than our neighbors', we're also on our way to becoming self-sufficient in electricity, with power to contribute to the state grid during high usage periods.

I've heard recently that Santa Clara is considering a citywide WiFi service. This follows now-defunct MetroFi's unsuccessful venture in delivering advertising-supported WiFi service. And I'm all in favor.

MetroFi's failure indicates that an ad-supported revenue model isn't going to bring ubiquitous broadband. And we know that the subscription model hasn't. So it hardly seems unreasonable to suggest taking a different road.

And maybe WiFi isn't the best way to go. Maybe we should use the power lines we own to deliver broadband over power line. Or maybe WiMax is where we should invest.

The point is that we're in control of our own destiny. And come to think of it, if you're Dan Hesse, maybe you should be afraid. A career of charging high rates for a commodity service probably won't get him a city job running Santa Clara's public broadband network.