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Access has become an issue. Telecom carriers are raising data rates because they can. Cable and satellite distributors are blocking access to some networks, also because they can. And there isn't much that consumers can do about it.
Don't believe me? Survey your communications choices. Do you have a smartphone? Do you use a carrier other than AT&T or Verizon? Go ahead and answer using the comments box below, but we already know from existing statistics that the big two control close to 200 million user accounts.
Television providers are similarly situated. DISH Network and DIRECTV have blocked programming on AMC Networks and Viacom in response to separate disputes over broadcast fees. DISH and AMC have yet to resolve their differences as of this writing, leaving millions of fans of the hit AMC drama Breaking Bad searching for a workaround.
When will the Web give us what we need?
Alternatives haven't emerged nearly as fast as either consumers or investors would like. Consider the terrible tale of Clearwire (Nasdaq: CLWR ) . Founded by cellular pioneer Craig McCaw, the idea was to create a national wireless network capable of delivering both voice and data at remarkable speed, freeing users from the grips of telecom networks.
Comcast joined Google (Nasdaq: GOOG ) and Intel as early investors in the company and its technology, which came to be called WiMAX. We praised its potential here at Fool.com. And yet today, several years later, WiMAX has fallen behind a broadband alternative called LTE introduced by -- surprise! -- telecom carriers that didn't like the idea of being disrupted by an upstart, Internet-driven network.
Clearwire's failure to emerge as hoped has allowed incumbents to remain lazy. On Twitter, legions of would-be streaming viewers of the Olympics complain that broadcast quality is much worse than they'd expected. NBC and Adobe teamed to create an app for watching events live via the Web.
The role of access networks
At this point, we need to pause because there are three sides to the business of streaming:
1. Access. The BIG issue. Those who control the pipes get to dictate traffic routes and delivery speed, and therefore affect the online viewing experience. And while net neutrality principles say they shouldn't, they can also prioritize handling of their own traffic while limiting traffic incoming from third-party services. Netflix (Nasdaq: NFLX ) and NBC parent Comcast (Nasdaq: CMCSA ) have debated this issue publicly. The potential damage arising from throttling its streams may very well be the No. 1 reason Netflix has chosen to build its own content delivery network.
2. Broadcast. Streaming isn't just as simple as a few clicks. The software for managing streams can be remarkably sophisticated. Consider Netflix. Because of its custom-built server software, subscribers can start a program on one device and move to another without losing their place. Google has made strides in this same area when it comes to movies rented and watched in YouTube.
3. Content. Networks have put plenty of content online. And not just Netflix, Apple, and Amazon.com. Besides its dubious Olympics offering, Comcast also has a streaming program under its XFINITY brand called Streampix for on-demand viewing of TV programs and movies. Chances are if you want to watch a certain television show or movie, it's available online -- for a price.
See the problem? Traditional pipe owners such as DISH and Comcast have little interest in allowing the Web to become a top-tier broadcast medium. All it would do is give users more incentive to cut the cord on their expensive monthly access services.
Let's repeat the Clearwire experiment
Regulators may not allow access providers to get away with anything that comes within spitting distance of violating the core net neutrality principle of fair access for all. But it also may not matter. Providers are testing new mechanisms for charging Internet users by the amount of data they use. Either way, incumbent access networks win.
And that's why, as both consumers and investors, we need Silicon Valley to try again. We need a national rollout of something resembling Google's "Fiber to the Home" experiment. We need an Internet access service that's entirely distinct from telecom or TV so that users have full freedom to choose how to best take advantage of the Web's innovations. Here's hoping that it happens in my lifetime.
Think I'm right? Wrong? Either way, old-school television and phone networks were revolutionary several decades ago. Now there's a new movement with some serious money-making potential for investors that spot it early. Do you know the three likely winners of this new industry revolution? A free special report will get you up to speed, so check it out now.