Ari Fitzgerald and Dave Thomas report on this year's Consumer Electronic Show in Las Vegas and highlight strategies for monetizing bandwidth in a fast changing technological environment.

It has been said that there is something for everyone in Las Vegas. So too with the Consumer Electronic Show (CES). Ignoring the advice about "what happens in Vegas..." we offer our impressions of this year's version of the blinking, thumping, sprawling gadget bazaar of more than 150,000 souls that invades Las Vegas every January.

So other than fleeing the post-holiday blahs of dreary winter (which is reason enough), why would two Washington, DC-based communications lawyers make the CES pilgrimage? Because our livelihood and those of our clients depend on the support and advancement of the consumer electronics industry. CES is the closest thing to a crystal ball that there is: if you really want to think strategically in our fast-changing worlds of electronic communication and technology, there is no better place to observe, reflect, plan and act than CES.

Among many other things, CES is a commercial and cultural crossroads. The consumer electronics behemoths like Samsung, Sony and Sharp are there. So too are the upstarts from Stockholm to Seoul, hawking everything from light bulbs, GPS-enabled ski goggles, and rhinestones for your daughter's smart phone.

CES is also the place to see and learn about the new 4G-enabled tablets that will compete against the iPad, smart refrigerators and ovens that will help you to conserve energy and cars that practically drive themselves. But don't look for Apple at CES. That company, which consistently has made the most dramatic impact on consumer electronics in recent years, makes its own show every year of not being at CES.

Let's start from what we know best: electronic communications, or, more precisely, monetizing bandwidth.

Is there ever going to be enough or too much bandwidth? Based on what we saw at this year's CES, we doubt it. The bandwidth demands of the new gadgets we saw at this year's show pose a monumental challenge. There is a shortage of spectrum – the reallocation of which is like pulling teeth. Then there are bottlenecks in terrestrial backhaul that must be addressed. And the new gadgets, coupled with the restrictions imposed in the FCC's recent Net Neutrality order (see companion article by Dan Brenner) will put increased capacity demands on network providers. The whole world is watching what is happening now in the United States with respect to this issue. And it all boils down to how much government and political intervention is too much – and how much should be left to the marketplace.

The modern Web makes it more possible than ever for anyone with reliable bandwidth access – artists, entrepreneurs, software developers, gamers, small businesses, scholars – to find a market for their content or services. Fiber-to-the home and cable hybrid-fiber coax protocols now allow the public to enjoy blazingly fast Web connections that enable an extensive array of on-line gaming opportunities and a potentially endless base of gaming enthusiasts. Internet gaming is no longer just about hand-held controllers with buttons and knobs or joysticks, or ands that in one game is your tennis racquet, in another your fishing pole, and in another your assault rifle. At this year's CES, we saw how Microsoft's X-Box 360 Kinect can translate your body movements and transport you to the center of the disco inferno or make you the ultimate cage-match fighter -- all without any handhelds. Talk about wireless.

And just as HD has become as affordable as it is dazzling, along comes 3D. Not just 3D TVs, but 3D cameras and projectors – and even 3D sans special glasses. This year's CES offered a plethora of such devices. A crowd favorite was the 3D printer, which allows you to design a device on the computer and print (fabricate) it in plastic.

At this year's CES, Cisco demonstrated its all-content, all devices Videoscape software, which, among other things, enables over-the-top content distribution. Once rolled out, it could revolutionize content delivery. Of course over-the-top video is already here and it is here to stay – in fixed and mobile applications alike.

True enjoyment of these innovations requires significant bandwidth via all types of devices. Consumers will not tolerate any thing less. There are two basic ways to deliver that bandwidth: over wires and over the air.

First the wires

The R&D arm of the Cable industry, CableLabs, continues to wring more and more capacity out of existing hybridfiber coaxial cable networks. At the same time, Verizon, AT&T and other legacy US telecom providers are expanding their fiber-to-the home networks (albeit at a slower pace). Thus, in many places in the US, consumers have a real choice among high-speed, fixed broadband providers.

Now the airwaves

We want to be able to do everything we can do in the fixed environment on our mobile devices (and more), but up to this point, mobile speeds and network capacity have been lacking. That is about to change in the US, however, for a couple of reasons.

First, 4G is finally being deployed extensively by the larger, more entrenched mobile providers. Following Clearwire's WiMax deployments, Verizon and AT&T are now constructing their LTE networks throughout the country. These new network deployments will enable high-function and high-bandwidth applications (like live-streaming and full-motion HD video) that until now have been limited to the fixed, wired environment.

Second, AT&T's exclusivity regarding Apple's dazzling iPhone platform has finally ended. Verizon will start shipping iPhones in February 2011, a nice complement to its 4G service launch. This iPhone platform competition (Verizon's mobile network is thought to be more reliable than AT&T's) should be well-received by consumers.

Add to this Google's surging open-source Android platform, Verizon's continued support of Android and the deployment by T-Mobile and Sprint/Clearwire of their own 4G networks that support Android, and the true potential of mobile broadband is poised to emerge.

What does this mean for communications and content providers, not to mention technology companies that support the delivery of these products? More opportunities, for one. More innovation. More competition. More potential ways to touch the consumer.

But the opportunity is not just limited to the traditional players. GM, Ford, GE, Kodak and other giants of US industry were also conspicuously present at CES, demonstrating everything from smart household appliances to smart cars. Again, enjoyment of these Internet-enabled machines will require a lot of bandwidth.

With a little distance from the flash and roar of the floor of the Las Vegas Convention Center and "Rat Pack" images fading to black, strangely, CES reminds us of the bumper-sticker exhortation to "Think Globally, Act Locally." Technology is the great equalizer, but our ability to take advantage of it will depend increasingly on our access to local network capacity.We got an amazing window into that reality at CES.

That's what happened to us in Vegas. Really.