Mark Cuban's onto something important with his frank ruminations on the subject of imposing tiered broadband. It's not a popular argument, but it is one worth consideration.
When it comes to broadband internet access, you can have speed or large volumes of data transfer. You can't have both. One certainty in the broadband world is that for those of us with cable or DSL modems connecting us to the Internet, there is still a finite amount of bandwidth available. When a user consumes a disproportionate and significant amount of bandwidth, it can and will slow down everyone. I hate that.
If the choice is between your being able to download more movies or other video and my getting the best possible speed from my Internet connection, I'm thrilled when you get kicked off. It can't happen soon enough. Speed is what I need. Take all your P2P downloads and get the hell off my Internet.
Cuban, who set league record in NBA fines as the owner of the Dallas Mavericks, is famous for speaking his mind. And he doesn't mask his irritation with folks who abuse the Internet to download megafiles. His blunt advice: leave now and "take your bit torrent client with you."
I have no sympathy for bandwidth hogs. You all are productivity killers for the rest of us. People who are working, people who are trying to play games, people who are in virtual worlds, people who are networking, people who are just trying to watch a YouTube video or their favorite TV show, you all are the reason why we get incredibly annoyed by slowdowns and buffering.
Maybe he was being flip but Cuban also suggested paying the extra monthly fee to add a DVR to your regular service. "If you want to watch those shows on your laptop, connect the composite video out in your DVR to the composite in on your laptop. Same with movies."
If he set out to strike a nerve, consider it mission accomplished.
Give Cuban credit for shining the spotlight. But is tiered pricing a reasonable--or even workable--proposal? Even as a short-term fix, there's likely to be a mountain of resistance to putting a cap on uber-downloaders. ISPs already face a credibility gap with the public. Who in their right minds still trust the Comcasts of the world to fairly meter a tiered service for heavy users? Besides, the cable companies have already frittered away any lingering good will by gouging customers at each opportunity. (The complaints get even louder in regions where there's only one cable Internet service provider.)
The bigger question that Cuban's post doesn't address is how to create the kind of infrastructure that can handle the load. Every time I watch my page stall out, I can't help but become green with jealousy thinking about Japan and Korea, where 100Mbit sustained connections to the home is no big deal.
Fact is that Bit Torrent is relatively efficient at transferring big chunks of data across the cybernetwork. Maybe even more big content providers should be using it, so people don't seek out less bandwidth-efficient alternatives.
This week Comcast began testing a new way to manage traffic in Chambersburg, Pa. and Warrenton, Va. Later this summer the company will expand the testing to Colorado Springs, Colo. Of course, everyone knows the real solution, though nobody in a position of influence has the cojones to say it out loud: we need a national broadband build out--the likes of which would be on a par with the Eisenhower administration's national highway system. Maybe Barack Obama or John McCain will have something to say before November? Probably not, but one can hope.
I'd like to believe that tiered access would incent the ISPs to invest in fatter pipes. But I don't expect that will happen. This country's perfectly fine with its pathetic 15th ranking out of 30 countries for broadband penetration rates (according to a 2006 survey by the Organization for Economic Cooperation and Development.)
So it is that at this this stage of the game, we're reduced to finger-pointing.
Had it not been for Jerry Yang and Tim Koogle, Mark Cuban would be just another middle-aged rich guy. Not George Soros-rich, but with enough shekels in the bank to spend a life of leisure.
Hey guys, I'm baaaack
In 1999, he sold Broadcast.com to Yahoo for the princely sum of $5.04 billion in stock (and then was smarter than the average bear by cashing out before the bubble burst). Up until then, Cuban was working with the proceeds from his 1990 sale of MicroSolutions, a computer reseller, for $6 million. Not bad, but not enough to buy a professional basketball team.
Now Cuban is part of the 10-person slate that Carl Icahn is proposing to take over Yahoo's board. Talk about a smack in the head! Of course, Cuban's a sharp tack and knows the ins and outs of the Internet business better than most. Still, maybe it's just me, but talk about biting the hand that feeds you. Yeah, I know, it's business, not personal.
You're sitting in a conference room negotiating the sale of your company, still haggling at the 11th hour over a price. But wait: Should you even be there to begin with?
Jerry Yang and David Filo apparently thought so. They flew up to Seattle last weekend to meet Steve Ballmer and Kevin Johnson at the Sea-Tac airport in a failed last-ditch attempt to reach a deal with Microsoft.
Mitch Kapor
(Credit: Mitch Kapor)This is the part where you're supposed to intone that it's not personal. (Cue The Godfather theme.) Yahoo's co-founders had their numbers crunchers nearby, but listening to Microsoft's blustering CEO belittle their demand to put a higher price on their life's work, could it really remain all business?
"It's too big of an issue, too big of a decision to make as a founder," said Mitch Kapor, who founded Lotus Development Corp., which was sold to IBM in 1995. "The CEO makes the ultimate recommendation to the board of directors, but it's not like selling something on eBay."
"At some point in the discussion," he continued, "the principals do have to sit down for a private conversation. But that neither ought to be the main flow of things or the final definitive meeting. These companies are too big and there are too many points of view to consider. If you're not fully embracing everyone on your side, you're probably not making the best decision."
Marc Cuban, who sold Broadcast.com to Yahoo in 1999 for $4.9 billion in stock, says that the range of emotions will hinge on myriad factors. But in an e-mail exchange, Cuban had a black-and-white reaction to any suggestion the give-and-take should get left to a trusted lieutenant.
Mark Cuban
(Credit: CNET)Are you serious? "Your life's work? That is easily the stupidest thing you could (do). (Yang and Filo) did the exact right thing sitting with Steve."
Maybe so, but Cuban also allowed that the emotional ups and downs involved in finalizing a sale will vary depending upon who's doing the negotiating.
"As far as the range of emotions, it depends on the individual person's goals for the company. If the company is you, it's one approach. If it's purely a business, another. If you have goals outside of the office, another."
Marc Fleury, the creator of JBoss, an open-source Java application server, sold his company to Red Hat in 2006 for $350 million in cash and stock. On the surface, at least, he had no problem hearing that Yahoo's co-founders sat in the room for one last meeting.
"I don't think that was the mistake," he said. "However, deals are finicky because so much depends on people. You are looking at a random sequence of events with a random output, where all the emotions come in. It is not a mistake; it is just the nature of the beast. Deals are 'stochastic' and not just the result of well thought- out machines."
This is why so much high-priced talent on Wall Street gladly volunteers to play the role of the dedicated heavy--if that's what it takes to fetch the best price--in any negotiation.
"That's part of the sales pitch of the investment bankers. They say, let them be the bad guy," says Scott Heiferman, the founder of Fotolog (bought last year by France-based Hi-Media Group for a combination of cash and stock worth $90 million) as well as iTraffic one of the first online ad agencies, which was sold to Agency.com for about $50 million in stock and cash.
Scott Heiferman
(Credit: Meetup.com)"But there's nothing necessarily wrong with a (founder) who has perspective," added Heiferman, who is also co-founder and CEO of Meetup.com. "You've got a vested interest so why shouldn't you have a principal at the table? Still, I do understand the argument that it might be too loaded for you with not seeing clearly because of all the blood, sweat, and tears that went into the company."
Crunch time will do that. And for lot of founders, he says, it calls into question what they want out of the company in terms of a legacy.
"I would suspect that Jerry Yang was thinking about the legacy that is Yahoo in the long term," he said. "The importance of any company to (a founder) should give you the guts to say, 'No, that isn't the right deal.' In other words, it means something to you. It's not just a notch on a bed post for some investment banker."
That still may not be enough to shield Yang and Filo from getting an earful from investors unhappy about losing Microsoft's buyout offer. Then again, most of them never were faced with the sale of a company they started.- prev
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