November 04, 2003

Infinite Bandwidth

What can you do if everyone has scads of bandwidth?

I've been thinking about this a bit, and decided that there's only one thing you can do. Video.

Obviously, streaming of movies, because that's what the Hollywood guys have been told will save their bacon.

But, also, calls home to Mum. Watching little daughter when she's at preschool. Video tutoring, Virtual holidays. One-on-one private therapy sessions. Alarm systems, etc etc. Teenagers being teenagers with each other because they like to compete with daddy's bandwidth bill.

Lots of apps.

Now, to get scads of video means that there really needs to be some way to pay for it. There will never be enough at a price of zero. So some feedback loop is required, otherwise I'll just leave the camera on mama's plant growth experiment while I go on vacations.

Metered access is very hard though. ISPs can't do it because they can only do their local bit. Telcos can't do it because they bicker too much and charge too much and they never deliver more than a pile of pretty brochures about what you could do if... Plus, they keep going broke.

So some sort of way to market-acquire the bandwidth is required, which means having a money to pay for it, and having an asset to acquire.

Going back to the first application, movies on demand, we can add that there is the fairly regular DRM requirement. That is, you want to show it, not lose it. This means the whole stream needs to be encrypted, and the device that decrypts is close to the monitor. In a nutshell.

If we assume that's all true - DRM is not being debated today, thanks very much! - we can now see that if we are feeding video in gratiutous amounts into people's homes, we need a box.

A box that handles the DRM, and buys the pipe to the other end. A vonage-with-a-video-camera. Or, an Internet Nutshell, because it has everything you need.

Now, institutional-wise, this is all fairly obvious. You can bet your bottom dollar that Microsoft are building one right now. In fact they probably have three nutshells already and have bought out another couple of companies growing them.

But the problem they will face is that everyone is scared of them.

So, other people will build. And try and not be as scary as Microsoft, which is pretty easy, it seems. These new people are more likely to succeed because they can negotiate with Hollywood without having to hire actors to play out the script. And, like it or not, the seller of nutshells probably needs Hollywood as much as Hollywood needs him.

The problem they will have is that they will need a payments solution.

For various reasons they don't want to go with credit cards. Banks can't hack it either, just like telcos.

Which leaves them a choice of - pick a payment system that's out there, or build their own. Now, doing their own is technically easy (for the likes of us here experienced payment system builders at least) but it does have the disadvantage that it makes the company that is bringing the box to the market somewhat stretched.

Hollywood will want an independant money, so that they can audit the flows. Auditing of film revenues is one of the scarier things on the other side of the celluloid. Plenty of games go on there, and it would make a nice script for a movie, except that they don't want to encourage copycats.

(Did you ever see a movie about where the producer got stabbed, and the director was put through the woodchipper? They just don't make those sorts of movies for some reason... OTOH, in films about films, the accountant always comes to a sticky end.

Why is this?)

Imagine how hard it gets when the company selling the film to the consumer is also the company running the payment, and it's all encrypted and protected behind this blah blah handwaving black box thingie?

It won't be scary enough to send Hollywood running off to Bill Gates, but it might send them running out the door.

So we need a payment system, independant of the nutshell.

That immediately means several things. Firstly, it has to be many payment systems. That's because one is never enough for the consumer, and no big rollout of kit is ever going to rely on one little company. This is a group that is investing hundreds of millions on a huge risky play. The payment system must not be strategically risky.

Which means we need multiple payment systems.

Which means we need one standard to talk to them all.

Which means something like XML-X!

(Yeah, you knew I was going to say XML-X, didn't you :-)

More than that, it needs to be solid. Those boxes need to work for up to five years with minimal patches. So you need the full kit. The full development cycle, the real McCoy when it comes to payments. Standards and testing and conformity.

Now, this story is going to be repeated time and time again to our noble Issuers. They will walk into a big hot sale. And they'll walk out again knowing they can't make the credibility grade.

It's for that reason that a common payment standard is needed. So you can go in and say "We will support you all the way to the vault on your project, but if the impossible happens, all your systems can switch across to our preferred backup payments processor..."

Us lot over here on the XML-X team have done our bit, by writing a standard and letting people use it. We even wrote a couple of language bindings for it - the ones we needed.

Pecunix picked it up and used it, and so far it seems to have worked for them.

It's really up to the Issuers if they want to drive this forward, and if they don't, personally, I don't have an issue with that, because there's more:

Think a bit more about the real layout of this new society where everyone has a vonage-with-a-video- camera. This nutshell thing.

Your teenage daughter is doing her chat thing with some anonynous punk on the west coast, and decides to get a little bit bare with it all.

Or, hubby is bored with you, and he needs some ... lift in his life. Or, you are conducting your new revolution for political tyranny by daring to use free speech in a rich democratic country, an increasingly popular crime. Or planning the next Greenpeace mission against the USS Enterprise.

Or, you're just using the system to check your stocks.

What you want is privacy. Which means crypto.

Actually, it means nymous crypto, but I'll not explain why in these brief words (the payments could be bearer or nymous or whatever).

So, the real obvious way to do this box is to pack in the video camera, the display board, the DRM decrypt chip, the fat fibre pipe connection into the box with the whole nymous infrastructure enabled.

It's not that clear how this would all pan out to me, as I don't know anyone who's in the biz of growing nutshells, and big companies that have already written their biz plan tend to be rather convinced that they know what's what.

But it is clear that what is needed in the payments field is a diversity approach.

Either the Issuers can create this commonality within diversity environment, with a common standard for the merchant users of their payment systems, or they will live a fractured, hard and mean life, picking up each and every merchant one by one, at excrutiating cost to each merchant.

And they'll miss out on the big future showing on a big screen in a big living room near them, tomorrow.


PS: I'm also personally somewhat agnostic as to whether XML-X is used. We wrote it partly to help, and partly to solve a real inhouse problem. That problem is solved. So we got our money's worth out of it. Thanks for all the fish, guys :-)

Posted by iang at November 4, 2003 09:05 PM | TrackBack