Here's what's lurking inside of Amazon Fire

I'm going to go out on a limb here and say that, despite all the press, the Amazon Fire has little to do with your TV or Gaming, and has more to do with building a Peer-to-Peer distribution center inside your firewall.  Imagine if Amazon were to use your garage as a remote distribution center for physical goods, and you start to see what they're up to with your broadband connection.

The hardware specs are impressive, and are needed - I suppose - for this thing to become a gaming center.  But the specs are overkill for simple video streaming, so there must be something else in play.

Without getting into the Net Neutrality debate, you already know that Netflix and Comcast have differing views as to who should pay for incredible bandwidth demands of millions of viewers all streaming House of Cards at once.  Comcast thinks Netflix should pay its share for 'over the top' use of their network.  Netflix thinks Comcast should just be quiet (and grateful) that all their customers pay them fees each month access the Internet.

What tends to go missing here is the impact of the so-called "Busy Hour" problem.  Basically, it's not that Netflix users need to download so many Megabytes that's the problem, it's that they all want to do it during the peak viewing hours of 6-11PM where, by some measures, Netflix accounts for >50% of all Internet activity.

Which, brings us back to Peer-to-Peer.  If Amazon turned every Fire device into a peer-to-peer client and server, then all those bytes wouldn't have to be served directly off of S3, and 'peered' into Comcast.  Fundamentally, I think Comcast could get behind this idea, because they don't really want all that excess burden on their networks either.  Why pull the next episode down from the Internet (and cross multiple routers) when your neighbor already has it on their own Fire?  If all that traffic stays on-net (from the vantage point of a Comcast neighborhood router), then everybody wins.

Furthermore, Netflix already has all the algorithms it needs to predict and prepare for what you are about to watch.  If you've gone to bed at 11PM having just finished episode 3 of House of Cards, are they really going out on a limb to think you might return the following night to watch episode 4?  And, if that's the case, why not download that episode ahead of time, in the middle of the night, when Comcast doesn't really care what you're up to anyway?  Remember, what Comcast worries about is having their customer complain, during prime time, that ISP speeds are slow.  If Amazon and Netflix could timeshift their downloads and/or seamlessly do neighborhood peer-to-peering, most of the download/Capex hassles vanish for Comcast.  They get less network traffic, Netflix avoids peering charges and you experience 'faster' speeds because some content is already cached and waiting for you.  Everybody wins.

(Also, remember that when you're watching Netflix, you're actually downloading a file stored on Amazon Web Services.  Netflix has always been a huge customer for AWS, and AWS has always done a good job of serving them.  Werner Vogels and Jeff Bezos have never seen it as a conflict of interest that some of their employees need to provide the best possible Infrastructure to Netflix, and others have to develop streaming video services to compete against them.  Solving the problem of peering and busy hours would be a huge benefit to both of them.  Interestingly, it's a problem already solved by all the illegal filesharing sites, so adapting it to AMZN and Netflix is very doable.)

Let's see how this plays out, but I think your broadband connection and that little-bit-of-shelf-space beneath your TV just became part of Amazon's worldwide distribution network.  You can choose to connect the HDMI cable if you want to, but I don't think Amazon cares.  Just remember to hook up the Ethernet, will you?

$578: AT&T's per-sub-valuation of T-Mobile

Interesting behind-the-scenes look at the AT&T / T-Mobile deal, how private-vs-public sales deals work, and what the main assets are.  (Namely, subscribers and spectrum in population-dense areas.)

Ar(T) history...

CenturyTel and Qwest in $10.6 Billion Deal

Early news this morning about a *major* consolidation in the Wireline space.  It's an all-stock deal.

http://dealbook.blogs.nytimes.com/2010/04/22/centurytel-and-qwest-said-close-to-a-merger/?hp

What 'multitasking' means for Phone Operators...

In short... not good.

When smartphone companies like Apple announce they'll support multi-tasking as a 'new' feature, it sounds a bit like a TV company saying they'll support color. Hasn't multi-tasking been around for a while already? Yes, but Apple (and others) have essentially crippled it, so that all of the phone's resources were available to one app at a time. (Some privileged apps, usually Apple's, were allowed to run in the background.)

Until now, this 'running in the background' has kept a lot of voice competitors out of reach. After all, how useful is Skype - for receiving calls - if you're considered 'offline' whenever your phone is off, or you're doing something else, like listening to music. If Skype could run in the background, then the whole dynamic changes. In fact, that's just what Apple's recently announced.

Expect a huge influx of competing apps that will make use of this, and allow routing calls over VOIP, thereby bypassing the wireless networks in homes and offices. Also, assuming Verizon and AT&T can't block it, you can expect a lot more 'data' to flow over the carriers and - eventually - less 'voice'. You still need the 3G connection (at least, when you're away from WiFi) but you won't need nearly as many minutes. Presumably, AT&T knows this, and will bolster revenue from the 3G-side, as well as work their Interconnection magic to recoup some costs from voice termination. This will 'hide' the costs from the consumer, and spread it around a bit to the network players. But, in all things consumer, we are definitely headed towards a 'per Megabyte' pricing model rather than a 'per minute' one. And, regardless of costs, we're about to see a lot more players in the 'telco' business, if you broaden 'telco' to mean: An application that can originate or terminate a voice call to your mobile device.

FCC loses key case

An appeals court ruled in favor of Comcast on the matter of Net Neutrality, declaring the FCC didn't have jurisdiction. Offhand, it's interesting this came out the same week as the IPad - undoubtedly, Steve Jobs was planning on passing much 'content' over the neutral net. In any case, I agree with the WSJ's opinion that the immediate winners are the Cable companies and the Wireless carriers. No doubt the big "content pushers" (i.e. Google, Apple, Amazon, etc...) are licking their chops and readying an appeal.

More here.

New life for copper?

Mark Twain once famously said "The reports of my death are greatly exaggerated".  Maybe the Telcos are thinking the same thing.  A new report out by equipment maker Ericsson indicates that, under the right circumstances, they can get up to 500 Mb/sec with multiple twisted pairs "bonded" together over a relatively short distance of 500 meters.  Still, if this last "quarter mile" can be made more economical with existing infrastructure, then we'll be seeing competition heat up even more for Broadband.  

See the whole article here...