The deal that has been announced today between the Formula One group and Tata could end up transforming the way in which Formula 1 fans around the world view the sport. The gist of the story is that Tata has impressive capability to shift data around the world, using fixed line systems, which are part of something called the Tata Global Network (TGN). This links up the new TGN-Intra Asia Cable, a 6,700km multi-terabit cable system that connects Singapore, Hong Kong, and Japan, with the existing TGN-TIC and TGN-Pacific systems. There are also regional systems such as TGN-Atlantic, TGN-Northern Europe, TGN-Western Europe, and the TGN-Eurasia, in addition other networks which Tata part-owns. These ring the world and make it possible for eventual global high-quality connectivity, although there is still much to be done at local level where fibre-optic cables have yet to be installed and systems rely on the old copper wires that were used in telephone networks.
The TGN works at 1 terabyte per second (which means one trillion bytes a second). This is impressive but such is the rate of development at the moment that researchers at the National Institute of Information and Communications in Tokyo achieved a transfer rate of 13 terabytes per second, using a seven-core fibre optic cable.
In principle, however, the new deal means that rather than bouncing signals off expensive satellites, Formula One Management can one day deliver its TV feeds into homes all over the world. That in turn means that the sport can end its reliance on TV companies, which pay for the right to broadcast the sport and replace them with direct access to the consumer. This means that there is no longer any real need for middle men, who get back their investment in the rights by selling advertising. In future the Formula One group could do that itself, either by using traditional advertising breaks and on-screen signage, or by having coverage in each national market being sold to a sponsor. Thus there could be free-to-air coverage of F1 without advertising breaks with “Formula One, brought to you by Dunkin Donuts” style advertising. There is no doubt that in some places this would probably translate to pay-per-view access but that is never very popular with sponsors that want mass market exposure for the branding that they have on cars and drivers. Each regional market can be controlled, much as TV channels now do, stopping Internet users seeing their content, unless the viewer is in the right place.
It also means that there can be multiple feeds, which allows for pay-per-view access for more detailed information for passionate F1 fans and, in theory, it allows for inter-activity, such as viewers being able to select the cameras that they wish to see and, of course, access to the same kind of data that everyone has at the race tracks.
It also means that Formula One Management can save money as it will no longer have to send its now-ageing Broadcast Centre from race to race, which means not only a substantial saving in transportation costs, but also a calendar that can be packaged more cost-effectively than is currently the case, particularly if circuits are permanently wired and all that needs to happen is that the cameras are put in place. The editing of the programming can be done at a permanent facility in England (or wherever).
Bernie Ecclestone says that free-to-air TV in sport is doomed as the business is changing and media organisations cannot generate the same kinds of revenues as the pay-per-view services. But while Formula One looks ahead to a time when it can sell fans programming on http://www.formula1.com, there is more than a little irony in that it does not own the http://www.formulaone.com domain name. Trademarking was rather hit and miss back in the days when it did not much matter and so the expression Formula 1 (using the number) is not trademarked, the ™ which is forever being applied means only that a trademark has been applied for. The World Intellectual Property Organisation has rejected arguments that Formula One owns the expression “Formula 1”.
The http://www.formulaone.com domain is owned a company in the United States that sells thin films to protect windscreens. This in turn is owned by the chemical company which in recent days has been swallowed up by industry giant Eastman Chemical in a $3.4 billion deal. The new management might be willing to do a deal with Ecclestone and his people, but that would likely be a rather expensive arrangement and Mr E has never been keen on paying out for such things.
There is still some potential for the Formula One group to secure http://www.grandprix.com, which is privately owned. At this point I have to admit that I am in favour of all this Internet-connectivity for grand prix racing, if only because I am a significant shareholder in the company that owns http://www.grandprix.com. If those nice people at CVC Capital Partners wish to lob a few million my way I am sure that we can let them have it.