• A mismatch between inexpensive optical bandwidth at the core of the Internet and expensive last-mile bandwidth provided by copper wire and co-axial cable.

• A lack of available fee-based content caused by the media industry. 

• A distribution system that relies on expensive centralized sites.

In order to correct this, a couple things need to happen:

1. Last mile bandwidth needs to move to fiber in order to place it on the same 1 year doubling rate experienced by providers of core bandwidth.  The best way to force the regional bells and cable companies to move quickly to last mile fiber is to introduce competition into the local loop.  Clearly, the CLEC model didn't work (the regional bells actively worked to undermine their ability to ride their networks).  The only hope is a high capacity fixed-point wireless provider that can enable hundreds of Mbs of connectivity for a reasonable cost.  This would require that the US provide one or two companies with a sanctioned monopoly on the spectrum required (in contrast to selling it at an auction).  This new competitor could have a nation-wide system up and going in a couple of years.  The fear here is that this new competitor will chew up this available bandwidth by replicating current cable offerings.

2. A move to fixed price all-you-can-eat media services.  This new system would quickly trounce TV/cable as the best means to get professionally produced content.  The result would be a radical improvement in revenues for media companies and an increasing demand for fatter pipes to get it onto the hard-drives of consumer PCs faster.

3. A new distribution architecture.  A bright spot is the impending roll-out of smart desktop software (personal broadcast networks -- a combination of P2P, desktop-webapps, and webservices) that will use plentiful desktop storage and programmed downloads (24x7 utilization of the current thin pipe) to provide high-quality, media-rich consumer experiences.  When the pipe does open up, these low-cost systems will allow fill the available capacity as quickly as it becomes available without a corresponding increase in costs.

9:22:37 AM