The Growth of Online Streaming Versus Cost

There has been a lot of talk in the radio industry about how the growth of mobile device streaming is going to be stifled by over-demand and the lack of internet provisioning. The fact is, all of the major bandwidth companies are gearing up for this huge explosion in user demand by constantly building out their networks. According to Gerry Butters, the former head of Bell Lab’s Lucent Optical Networking Group, the amount of data coming out of an optical fiber is doubling every nine months. So therefore, the cost of transmitting over a fiber optical network also decreases by half, every nine months. The availability of wavelength multiplexing is also rapidly bringing down the cost of network transmissions, further assuring lower costs in the future. Could this be the new Moore’s law . . . or Butter’s Law?
As a matter of fact, smartphone and smart device usage has grown by 89% since the 1st quarter of 2010, while the cost of a megabyte of mobile data has dropped 46% in the same time period. A smartphone user today pays 8 cents a megabyte, compared to 14 cents a megabyte a year ago. Nielsen also reports that 40% of mobile subscribers in the US now own a smartphone, and that number is growing rapidly. I can also state factually from my own business involvement with deploying networks over the last 15 years, that we have seen our bulk bandwidth costs also drop significantly as well, especially in just the last few years alone. A lot of this has to do with the huge build-out of fiber networks during the late ‘90s.
Also, don’t forget, we are talking about streaming radio here, and even at a reasonable bit-rate in AAC+, we are not talking about downloading apps, watching Netflix, or surfing YouTube all day, which comprise a fair portion of that so-called “over-demand” that everyone in radioland is talking about. In any event, the rate of capacity will only increase over the next few years, as all the major providers are obviously aware of all the dark fiber left over from the dot-com bust, a market that laterally collapsed in pricing in the years following. Companies like Yipes, C&W, FPL FiberNet and others laid fiber everywhere prior to the collapse. At one point in the early 2000’s, there were over 12 million miles of unlit dark fiber lying beneath the streets of the US of A.
During the period of 2002 - 2006, Google and other companies bought massive amounts of dark fiber and still own it to this day, betting that at some point in the future, there would be a resurgence of demand. Just like every other market bubble before it; railroads, telephone, and tech companies included, the market levels out, and then begins a solid, steady growth over years or decades, providing a profitable, long-term, return on investment to those with foresight. Smart companies and progressive thinkers like Google and AT&T are now starting to capitalize on their long-term investment.
So how does all this affect the terrestrial broadcaster? For one thing, the cost of streaming a station or broadcast has dropped in half over the last few years. The introduction of AAC+ allows you to now stream at double the quality of MP3, using the same amount of bandwidth. More and more of your listeners are looking for you now on their desktops and mobile devices, and as this market grows, so does your ability to reach more people at more times of the day than you could previously without the internet to stream your signal across.
I do not think for one moment that the internet is any threat to terrestrial radio, rather, it is one more way to get your signal to your listeners. Recent studies by PEW Research, Infinite Dial and others show that the traditional AM/FM listener is still listening, just at different times of the day. In fact, internet listenership is up 35% over last year’s April metrics, according to Triton Digital. The majority of leaders in this field are terrestrial groups, led only by Pandora, and only time will tell how Pandora performs over the long run.
Terrestrial radio has many opportunities to benefit from the internet; listeners can follow in the home, car, office, beach, gym, half a country away while traveling . . . you name it. You should thank the stars that the internet is here to help you reach more of your listeners and interact with them. Cater to their needs using all these great tools we have to stream with; playlist interaction, info display, social media tie-ins, embedded players, online chat functions, the sharing of players, advertising delivery and so forth. Just like the song by Blue Oyster Cult, “Don’t Fear the Reaper,” “Don’t Fear the Internet” - embrace it and let it work for you. After all, your listeners are, so do you really have a choice?


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