Powerful forces shaping multi media

Here at MBC we have a genuinely broad portfolio of skills. One recent concern that we have helped advise on is the content characterisation of different delivery mechanisms, for accessing your multimedia fix, between this side of the Atlantic and the other.Very learned commentators have written about such a split – recently in the Financial Times of the UK, Eli Noam said:

Much attention has been given to the middling rank of US broadband penetration, which is lower than in several European countries or Japan. But this obscures the more fundamental, costly, and time-consuming platform upgrades that are taking place in the US.

In much of Europe, broadband is carried to the user’s home over the copper phone lines of the telephone companies, using a technology known as DSL. DSL is the cheap way to go and does not require much investment. But it is relatively limited in data capacity and range. In contrast, in the US broadband is in the process of increasingly being carried over fibre telecom lines and cable television networks, which are vastly more powerful.”

He concludes with the more societally subtle point that, as these two delivery infrastructures embed, they will bring with them greater regulation on the part of European countries lacking such a cable infrastructure – and greater competition in the US, where there will essentially be two competing networks. One will, through regulation, foster greater participation as entry costs will be monitored (despite the greater cost to the consumer). The other will be both more commercial and more dynamic.

Cable companies in the UK have not been noted for their successes. Only recently did NTL announce the loss of 6000 UK based jobs (a net loss lower than this, of 3,600 once newly created outsourced jobs accounted for). This is on top of an already poor quality of service record. We believe regulation itself is to blame for the failure to thrive of the cable companies; regulation of traditional telecoms, in itself stifling competition.

Author: Damian Merciar

Damian Merciar is Managing Director of Merciar Business Consulting, http://www.merciar.com, a niche business economics consultancy founded in 1998. He has over twenty years experience in the areas of commercial Business Strategy. He is experienced in the transition environments of nationalized to private sector state utilities and the senior practice of commercial management, advisorial consultancy, and implementation. He has carried out policy advisory work for government ministries and been an adviser to institutional bodies proposing changes to government. He holds an MSc Economics from the University of Surrey’s leading Economics department and an MBA from the University of Kent. Also attending the leading University in the Middle East, studying International Relations and Language, for which he won a competitive international scholarship, and has a BA (Hons) in Economic History and Political Economy from the University of Portsmouth. He is currently based in London.

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