"SUP": (slang of "what's up?") inquiry used as a verbal or text greeting.

I couldn’t help wondering if that is what Kerry Stokes or James Packer will say to each other next time they meet.

It may be a short conversation that goes along the following lines.

Kerry to James, whilst nodding says, “Hey James, Sup”.

James to Kerry in response, “Nuttin’ much” as he walks away, shaking his head.

Thousands of words have been written about why Kerry Stokes increased his holding in Consolidated Media when he did and why James Packer returned fire almost immediately. This is a battle royal; it will be a bruising encounter for many because it is all about the FUTURE of media and broadcasting.

Both camps know intimately which way the future is headed and they will stop at nothing in an effort to become the leader of the pack and take in the riches that will flow from this prominent position.

Since the day when the dearly departed ex-CEO of Telstra Sol Trujillo uttered the immortal words Google schmoogle early on in his tenure. the sands have been shifting beneath everyone’s feet. I often wonder if Dear Sol even remembers his utterance and the unforeseen (at the time) and ultimate consequences of an ill-conceived relentlessly combative strategy that in my personal opinion set the company back years, it is also my personal opinion that the situation may not be recoverable by the new management.

That won’t be their fault and they will do their utmost to try to right the ship’s course, but the window was open for a long time and nobody was able to reach out and grab the opportunity that lay right there so invitingly on the ledge.

What needed to be done, quite simply, wasn’t.

At the time of Sol Trujillo’s departure, there was much speculation about who would succeed him. Much of the discussion centered on Kim Williams from Foxtel, and in my opinion, this would have been an excellent and brilliantly strategic appointment.

In the end, David Thodey from inside Telstra won the much-coveted role and so far the market has seen this as a solid appointment.

The question that I now ask myself is what sort of company will Telstra be in five years time and what sort of skill set will be required to run the “New” Telstra.

Who needs whom more?

Does Telstra need Foxtel? Do Seven and Kerry Stokes need Foxtel? Does James Packer need Foxtel? Do we need Foxtel?

The answers to the above questions are all a resounding “Yes” because, dear readers, the future is all about content and how this content will be delivered is what will be at the heart of the battle looming. Remember not so long ago Kerry Stokes acquired the minnow Unwired?

As Bob Cringley of Cringley.com so convincingly and correctly points out: “The future of television is internet television. There is no other in sight. No business or technology exists in a vacuum. They all have customers, users, competitors, and make use of resources in an environment that is not one of total abundance.

This means that if there is going to be something like television in the future, it is going to adapt to the distribution model that offers the highest price/performance, which is to say the highest performance for the lowest cost.

Whatever country you live in, there are generally four models for live entertainment video distribution — broadcast, cable, satellite, and internet.

Broadcast is a limited local resource and therefore more highly regulated than the others but it has traditionally featured the lowest cost per marginal user. That means it costs a lot to build and maintain a TV station but additional viewers within the service area can be added pretty much for free.

Cable offers more channel capacity than does broadcast but requires building a distribution network that’s fairly expensive. While one could imagine a cable TV “station,” the way the industry has grown is through cable operators becoming content aggregators offering many services over their expensive networks.

That’s the most efficient way for cable companies to serve the broadest audience and the only way that enables them to sell extra-cost services like pay-per-view, premium movie channels or, indeed, internet service. Remember, though, cable operators pay for nearly all of the content they carry, which is different from broadcast, where a lot of content is free to the broadcaster and some content even comes with money attached.

Satellite operators pay for their content, too. Satellite initially used wireless technology to offer cable content in rural areas where it was too expensive to build a wired network. Having gained economies of scale in the rural markets, cable couldn’t compete for satellite has come to town competing generally on price. But satellite offers no practical internet service. Internet TV is different from all these others.

It began as a parasite on telephone and cable networks so the cost of building the network generally wasn’t there, having already been covered for the most part by those earlier services. Internet TV is less of a network than a conduit. At present the internet service providers (ISPs) don’t pay for video content but then neither do they get paid for it. Yet, this common carrier attribute also makes internet service often more profitable for telcos and cable companies than the core services those companies were established to provide.

Whatever you pay for internet service, it is mainly profit for your ISP. The important lesson to learn when it comes to these competitive services is that the first three— broadcast, cable, and satellite — are all going up in cost to their providers while the cost of providing internet service is going down.

Next week, I will attempt to take a thoughtful stab at what the future of television will look like in five years time, and where Telstra may be five years from now.