Telephony 2.0

If you’re familiar with Freakonomics (and the Freakonomics blog at NYTimes.com), you know their “hook”: using statistics to upset the common wisdom apple-cart, from tying reduction in crime rates to the increase in abortion rates to in-depth studies of baby-naming patterns.

In a post of interest to emerging IPTV providers, the Freakonomics blog takes a look at the impact of Internet video on “TV” — which of course these days means MSO- or carrier-provided programming for the most part.

The assumption being examined: if Web music seemingly has crushed the record industry, won’t Web video do the same to the economics of the traditional TV business?

Not surprisingly, they quote a study from a wonky Wharton economist that delivers a different take on the question:

While I find some evidence of substitution of web viewing for conventional television viewing, time spent viewing programming on the web — 4 hours per week — far exceeds the reduction in weekly traditional television viewing of about 25 minutes. Overall time spent on network-controlled viewing (television plus network websites) increased by 1.5 hours per week….

He goes on to say — and this is fairly-accepted conventional wisdom — that Web sampling or catch-up seems to stimulate traditional viewing.

One wildcard here would seem to be the concept of portability. At least part of the success of MP3s and iPods comes from the fact that they deliver a new and in some cases better user experience — all your music in your pocket.

The advantages of the Internet video experience center on on-demand, long-tail content (often free) but it’s hard to say the Internet video view experience is *better.* The emergenc of mobile video viewing, much like on-the-go-music listening, could change the equation.

The strategy many service providers seem to be at least considering takes a page from the Microsoft playbook of “embrace and extend”: offer some form of over-the-top video via IPTV systems with a focus on driving users from that environment to a richer, high-bandwidth-based IPTV experience. In short, the best of both worlds.

Telcos and cable providers spend untold hours on network capacity issues surrounding video delivery. Video delivery via the Web can be a bit more of a wild card — it’s hard to tell what service or individual video will hit big. But when something takes off, what would seem like a great situation can quickly become a bandwidth nightmare.

That seems to be the challenge facing Internet video service Veoh. The service began offering full movie downloads from its site via its VeohTV application, but as it grew in popularity it is only offering short previews and relying more on a peer-to-peer infrastructure — in which users effectively stream video to one another — to help reduce its bandwidth costs. Blog Contentinople reports that early Veoh users aren’t too happy with the situation.

It’s yet another version of the old quality of service (QOS) question, one that is particularly important when it comes to Web applications. Web apps are based on the idea that “just good enough” is good enough. At least it is until customers revolt.