IPTV and the 'Last Mile' Problem

January 8, 2007, 4:18 PM by Scott M. Fulton, III

Scott Fulton, BetaNews: There were some key elements left out of Microsoft's IPTV set-top box demonstration of its Xbox 360 console in Sunday's keynote. First, it was obvious that while their product managers could download high-def video, they couldn't burn it to anything. Second, though, is the problem of just how the box is connected to the Internet. Will it go through your existing cable modem? Sure, as Microsoft mentioned, many of the major telcos have already signed on to use "IPTV Edition" as their software platform; but software doesn't get the signal into the living room. And if it's not the same signal as the one going to your computer, then where is it coming from...and who's selling it?

Getting IPTV into the living rooms of many ordinary consumers will be a big headache, just for geographical reasons. Our Sharon Fisher has experienced many of those problems first hand, and we asked her to tell us about some of them.

Sharon Fisher, BetaNews Senior CES Analyst: It's certainly true that adding IPTV support to the Xbox 360 enables Microsoft to hedge its bets on multiple levels, as Carmi Levy said – it will be supported on both their PC and gaming platform, and it will also let them hedge their bets and allow them to do an end run around carriers' set-top boxes.

But they still have to work with the carriers in one important area, and that's what's known as the "last mile," in telecommunications parlance. All the fiber backbones in the world don't help you get to each individual house, and that's going to be the real bottleneck. There's still a large percentage of the U.S. area and population that don't even have access to broadband yet. The carriers don't want to supply it to those areas because it's not cost-effective for them, so you've got the states and the federal government doing it to some extent. President Bush said in 2004 that all Americans should have access to broadband Internet by 2007. It's 2007 now and I can tell you that there's plenty of people who don't have it.

What I can't tell you is exactly how many people don't have it, because interestingly I haven't been able to find that statistic. I started with the Rural Broadband Coalition, went from there to the Department of Commerce's National Telecommunications and Information Administration, and went from there to the FCC, and nobody really knows. The NASCIO, an organization for state chief information officers, says that 30% of people aren't on the Internet at all and 28% have only dial-up access. Now, granted, some of this is by choice, but some of it is by access.

For example, I live in Idaho. I'm 20 minutes from downtown Boise, but I only got DSL a couple of years ago, and if I want cable TV I have to get a satellite dish; there's no cable modem here.

The other thing to keep in mind is that government agencies, including the FCC, define 'broadband' as 200 K. I have 256 K, and I can't even watch something on YouTube without it stopping and stuttering every few seconds. I'm not going to be able to get IPTV on that. According to the NASCIO, you need 12 Mbps to even start getting IPTV, and what you really need is 24 Mbps to 100 Mbps. According to the Idaho Office of Science and Technology, which is part of the State Department of Commerce and Labor, only 45-50% of the state has access to T1 speeds, which is 1.5 Mbps – a tenth of what you need for IPTV.

And you can't write this off as "well, that's Idaho." As of 2003, the U.S. was tenth in the world as far as its citizens having access to high-speed Internet, according to the Organization for Economic Co-operation and Development. In South Korea, which is first, 100% of the population has access to 30Mbps and 60% has access to 100 Mbps. Tell me how many Americans have that.

Scott Fulton: Sharon, you're not exactly in the woods where you are. If you were a consumer sold on the prospects of, say, an IPTV service for your home, what exactly would it take to make this happen? A decree from the mayor? A zoning ordinance? About a million dollars worth of construction?

Sharon Fisher: It would take money, Scott. A hell of a lot of money. The federal government has had a loan program for rural areas, and the state of Idaho has been providing this as well. For example, there's $10 million in the proposed state budget from the Department of Commerce and Labor to bring broadband to more parts of rural Idaho. But it's not clear whether new governor Butch Otter, and an even more conservative Idaho legislature, will approve that funding. Even if they did, it wouldn't help me -- I'm too close to Boise -- and it might not bring me up to the bandwidth required for IPTV. So I'd likely be out of luck.

Scott Fulton: Boise, for those of you who think they've heard that name before, is the home of the team that beat my beloved Sooners in the Fiesta Bowl on New Year's Day. Sharon's been very kind to me in not grinding my face into those facts all this week. Thanks, Sharon.