A word on the FCC ruling

In the last week, we've heard a lot about why the FCC decision to loosen the media ownership rules is a bad idea. Opponents fret that the decision will lead to control of the airwaves by a few media conglomerates, suppress a diversity of views, and short-circuit the underpinnings of a free and democratic society.

Sounds like an overreaction to us. There are valid reasons why the changes make sense and are long overdue.

1) The media world is more diverse than ever. Cable, satellite, and the Internet have brought thousands of new choices -- and views -- to audiences. Take Iraq war coverage. The six major news networks had a range of perspectives coloring their coverage -- from ABC being the most critical to Fox being the most supportive. We've never had that kind of diversity of opinion. If that weren't enough, millions more could watch BBC or Al-Jazeera coverage.

2) For those concerned with consolidation leading to bias, there's a check in the system. It's called a free market. Consumers can vote with their feet -- or eyes -- and give their attention to other media providers. Advertisers can move ads to other networks, just as Procter & Gamble pulled ads from the Dr. Laura radio show. Large media properties can't bias their coverage for very long. Their customers -- audiences and advertisers -- won't allow it. Fox News is popular in large part because more conservative viewers tired of the perceived liberal bias of other networks.

3) Let's face facts: Media is a business. Public service ceased being a priority for many media companies long ago. Media companies make money by brokering attention. Period. Fragmenting audiences and a competitive advertising environment make it tough these days. Spreading content creation, ad selling, and technology costs across a multitude of outlets is essential to profitability -- and survival.

In short: A range of choices brought about by technology, combined with a free market, do a better job of preserving a free and diverse media than outdated FCC regulations do.

Home Networks Surge

Networked homes have arrived -- 12% of North American households have one. These networks aren't turning lights on and adjusting air conditioning, they're doing the same thing your network at work does: sharing computing resources like a printer. Many factors lead consumers to network their home. But a broadband connection and a couple of PCs are the top drivers -- nearly half of households with these ingredients network their home.

Almost 85% of those with a network today either set it up themselves or had help from a friend -- likely one with a plastic pocket protector. But it's not just those selling networking gear who see an opportunity in home networking. Broadband providers like BellSouth are selling home networking as a service, and retailers like Circuit City can't wait to come to your house and wire (or unwire) it.

And what about the smart home, with everything from the fridge to the microwave connected? We don't see much traction on that front until 2007, when components are cheap and reliable enough to warrant inclusion in your new microwave. But don't expect miracles. While your food will be warm when you walk in the door, a networked TV dinner of Salisbury steak will probably still taste like cardboard.

Later this month, we will publish two important reports: Forrester's 2003 Consumer Technographics® Benchmark (our annual update of all key consumer technologies like broadband, mobile, and DVD usage) and a look into migrating users from free to paid customers.

Have a great month!


Chris Charron
Devices, Media & Marketing Group Director

P.S. I'd love to hear from you -- about our research, challenges you face, research you'd like us to write, or data points you are looking for. Drop me a line anytime at chrischarron@forrester.com.

Research Referenced In This Issue If you printed this email, get links to the research featured in this week's issue by going to www.forrester.com/go and entering the five-digit number of the report you'd like to read. Best Practices For Media Site Design (16720) Canada's Cable TV Resurgence (16784) Devices & Access April 2003 Data Overview: Covers Electronics, ISPs, Home Networks, Imaging, Peripherals, And Security (16074) Intel's Centrino: It's More Than The Chips (16513) Media & Marketing Data Overview: Covers Media Consumption, Multitasking, Cannibalization, And Paying For Online Content (14534) Microsoft-AOL Pact Won't "Accelerate" Digital Media (16888) New FCC Ownership Rules Are Right, So Get Moving (16894) Verizon Kills The Consumer Wi-Fi Goose (16821) Verizon's DSL Price Drop Starts A War It Won't Win (16793) Who Will Network The Home? (16073)    Will Ad-Skipping Kill Television? (15459) Will Linksys Make Cisco A Hit With Consumers? Yes. (16560)

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